Roger Penske, former race car driver and current mega businessman, has scored a killer deal and he knows it. Only four days after General Motors announced that the company was moving into bankruptcy, Penske Automotive swooped in an bought up the Saturn brand. There’s a lot to this deal, which I wanted to discuss, but there’s a lot more to learn from this deal.
First, let’s talk about the speed at which this occurred. It’s possible (and highly likely) that GM and Penske had been in talks before this week’s announcement. That means that there’s a good chance that when the Obama administration descended on GM, they came in understanding that GM is not well-run, is bloated and needed to get smaller, all things which GM should have already figured out, but didn’t.
Penske scooped up Saturn within days because the brand is worth a fortune and he knows how to use it. This means that GM labored on the Saturn brand for 19 years and never turned a profit on something that will probably be profitable for Penske right away. Does that put how badly run GM has been into perspective? It should.
Second, Penske isn’t completely going into the car building business. He’s going to outsource care manufacturing back to GM, and several other manufacturers. This takes business leverage to a fantastic level. See, here’s where Penske understands how great this opportunity is. He can buy a car company without actually paying to build factories, create a brand name, go into engineering or anything. Sure, his company will get into some of that, but what they are really doing initially is just deciding what should be built and how to sell it. Genius.
This should show why nobody should be crying for GM. It’s terrible that unemployment is so bad now in Michigan and most of the people who worked for GM are absolutely not at fault. But it also shows how the Obama administration knows more about how to run a business than GM, and that’s not good for a car manufacturer.
