June 5, 2009 (FinancialWire) — Penske Automotive Group, Inc. (NYSE: PAG) said it has signed a memorandum of understanding with bankrupt General Motors (NYSE: GM) regarding the Saturn brand.

Under the terms of the MOU, if the transaction is completed, Penske Automotive Group would obtain the rights to the Saturn brand, acquire certain assets including the Saturn parts inventory, and have the right to distribute vehicles and parts through the Saturn Dealership network.

General Motors would continue to provide Saturn Aura, Vue and Outlook vehicles, on a contract basis, for an interim period.

Saturn began selling cars in 1990 and has sold more than four million vehicles. The brand has regularly scored high in customer satisfaction surveys, such as the benchmark J.D. Power surveys.

The brand was started under the management of late GM helmer Roger Smith in the 1980s, as a “clean sheet” approach to car building that would sidestep GM’s entrenched bureaucracy and “platform engineering” methodology, which blurred the distinctiveness of individual GM brands. Saturns were meant to compete with Japanese brands such as Toyota and Honda, that had won over a generation of American car buyers by building high quality small cars.

Early Saturn cars were built with innovative features such as dent-resistant plastic bodywork. Customers reported high satisfaction with the brand’s “no haggle” approach to selling cars at the retail level. In recent years GM decided to sell Saturns that were built on common platforms, using the traditional GM approach.

Penske and GM said that further details of the transaction, such as the selling price, are not being released at this time. The closing of the transaction is scheduled to occur during the third quarter of 2009.

Bloomfield Hills, Michigan-based Penske Automotive Group operates 310 retail automotive franchises, representing 40 different brands and 25 collision repair centers. Penske Automotive, which sells new and previously owned vehicles, finance and insurance products and replacement parts, and offers maintenance and repair services, has 158 franchises in 19 states and Puerto Rico and 152 franchises located outside the United States, primarily in the United Kingdom.

Penske is also the exclusive distributor of the smart fortwo, and supports over 75 smart retail centers in the United States.

For Detroit-based GM, which filed for bankruptcy protection on June 1, the deal is part of plan to reduce its portfolio to four brands. Earlier this week the company signed a deal to sell its Hummer brand to China’s Sichuan Tengzhong Heavy Industrial Machinery.

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