DETROIT — General Motors Co. said Wednesday it would shut down its Saturn division after an agreement to sell it to Penske Automotive Group Inc. fell apart.
The Bloomfield, Mich. dealership headed by Roger Penske walked away after it was unable to find a manufacturer to supply vehicles to it after a contract with GM runs out in 2011. A tentative deal for Saturn was announced on June 5.
GM CEO Fritz Henderson said in statement that Saturn and its dealership network will be phased out.
"This is very disappointing news and comes after months of hard work by hundreds of dedicated employees and Saturn retailers who tried to make the new Saturn a reality," Henderson said in a written statement. Penske's announcement "explained that their decision was not based on interactions with GM or Saturn retailers."
Shares of Penske fell $1.79 or 9.3 percent to $17.39 in after hours trading. They rose $1.32, or 7.4 percent to $19.18 in regular trading Wednesday.
Penske said it negotiated with another manufacturer to make Saturn cars, but that company's board of directors rejected the agreement.
Penske spokesman Anthony Pordon would not identify the other manufacturer.
"Without having an agreement in place with that other manufacturer, our management team determined the risks and uncertainties related to the availability of that future product prohibits Penske Automotive Group from moving forward with the transaction," Pordon said.
GM had agreed to keep building the Saturn Aura, Outlook and Vue models through 2011. After that Saturn would have to come up with its own products.
Without another supplier in place before the deal was signed, Penske couldn't run the risk of taking on Saturn, Pordon said. It takes several years to design new vehicles or engineer foreign vehicles to meet U.S. standards. Penske would run the risk of having no products to sell once the GM contract expired.
"There's a pretty long lead time," Pordon said. "You've got to try to time this so as the supply of one ends and the other one comes on board."
Pordon said there is little if any chance that the talks could be reopened.
GM said Saturn vehicle owners can still go to their Saturn dealer for service and would be able to go to a certified GM dealer for service once Saturn dealerships are closed.
It had been expected that GM would announce the completion of Saturn's sale to Penske in the coming days.