General Motors (NYSE: GM) To Sell Saturn Brand to Penske Automotive (NYSE: PAG)

General Motors Corp. (NYSE: GM) announced Friday that they have a tentative deal to sell their Saturn brand to former race car driver and dealership group owner Roger Penske.

GM will sell its 350 Saturn dealerships to the Penske Automotive Group (NYSE: PAG), Penske’s dealership group. Penske stated that he will sign all the dealers to new franchise agreements and will retain all of Saturn’s 13,000 employees.

"I would expect that the model that we're putting together, the distribution model, will be profitable day one," Penske said in an interview with The Associated Press. "We'll have less costs. We'll not be in the manufacturing side."

The Saturn brand was first unveiled in 1983 as GM’s way to sell small cars in the U.S., but the brand didn’t launch until 1990. Since then, the brand has never been very profitable for General Motors. It did have a boost in 2007, but by 2008, its sales dropped 22% with the downturn of the automotive industry.

Penske Automotive Group Inc., which is based in Bloomfield Hills, MI, owns the second-largest U.S. automobile retail chain by sales and consistently scores high in customer satisfaction surveys. The company also has race teams in the IndyCar, NASCAR and Grand-Am series. Penske received wide acclaim for heading Detroit's successful effort to host the 2006 Super Bowl.

Penske Automotive's stock price rose 28 cents, or 1.9 percent, to $14.88 in afternoon trading. The stock has enjoyed a brisk rally this year, more than tripling from an 52-week low of $4.82 in March.

GM, which filed for bankruptcy court protection Monday, has said it plans to part ways with its Saturn, Hummer, Pontiac and Saab brands. Earlier this week, GM said it found a buyer for Hummer in China's Sichuan Tengzhong Heavy Industrial Machinery Co.

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