Oct. 1 (Bloomberg) -- Renault SA dropped plans to provide vehicles for General Motors Co.?s Saturn brand after talks with would-be buyer Penske Automotive Group Inc. broke down at the last minute, Chief Operating Officer Patrick Pelata said.
?We negotiated with them but we were unable to reach agreement at the end,? Pelata said in an interview today.
GM said yesterday it will close Saturn after Penske ended discussions to buy the brand, citing Renault?s decision to pull out of the vehicle-supply talks. In a statement, which didn?t mention Boulogne-Billancourt, France-based Renault by name, Penske blamed the proposed supplier?s board for rejecting an agreement it had reached with management.
Renault Chief Executive Officer Carlos Ghosn didn?t recommend approval of an agreement with Penske at yesterday?s board meeting, Pelata said after a news conference in Paris. Ending the talks ?was not a board decision,? he added.
?The deal probably made a lot of sense to Renault at first glance,? Mike Tyndall, a London-based European autos specialist with Nomura Securities, said in a telephone interview. The proposal may have drawn objections from Nissan Motor Co., Renault?s 44 percent-owned Japanese affiliate, he said.
?When they looked into the details they probably realized it would do the Renault-Nissan alliance more harm than good,? Tyndall said. ?They?d be using potentially cheaper versions of alliance products to compete with Nissan in its most important market.?
Shares Drop
Penske fell as much as $3.23, or 17 percent, to $15.95 and was down 16 percent as of 1:10 p.m. in New York Stock Exchange composite trading. The stock has more than doubled this year. Renault fell 21 cents, or 0.6 percent, to 31.66 euros in Paris trading, paring its advance this year to 71 percent and valuing the company at 9.02 billion euros ($13.1 billion).
Renault?s eight-member executive committee rejected the agreement yesterday before it went to the board, Frederique Le Greves, a company spokeswoman, said today. She declined to give any reasons for the decision.
Penske, which is based in Bloomfield Hills, Michigan, said it dropped the Saturn purchase because it couldn?t be sure of finding another supplier to replace Renault after 2011, when GM would have stopped producing vehicles for the brand under the terms of their draft agreement.
Product, Currency Accords
?In our mind we had a detailed agreement early Wednesday including product content, foreign currency and production dates,? Penske Automotive President Rob Kurnick said in a telephone interview. Renault told Penske the deal was going to its board, executive committee and works council for final approval, Kurnick said.
Penske?s exit forces changes to GM?s post-bankruptcy plan to shed U.S. brands, which provided for the sale of the Saturn, Hummer and Saab units and the shutdown of Pontiac. The Detroit- based automaker said in June that the Saturn sale would save 13,000 jobs and 350 dealerships.
The brand?s disappearance may also create a public- relations headache, said analysts including Paul Melville of Grant Thornton LLP in Southfield, Michigan. GM?s assurances that warranties will be handled by other dealerships won?t completely appease concern among Saturn drivers, he said.
?No Plan B?
Penske probably could have found another company to supply vehicles, said Stephen Spivey, an auto analyst with Frost & Sullivan in San Antonio. ?I?m a little surprised that there was no plan B here.?
Saturn was created in 1985 amid a push by GM to slash structural costs, with a factory that operated outside the national United Auto Workers union agreement and a no-haggle pricing policy at dealerships. Deliveries peaked in 1994 at 286,003 vehicles.
Roger Penske, 72, who started his automotive career as a racer and Chevrolet dealer, holds interests including a truck- leasing business and the exclusive right to distribute Daimler AG?s two-seat Smart minicar in the U.S. He has won the Indianapolis 500 a record 15 times as car owner.