Penske Picks up “Belle” of GM

by The Investment U Research Team

In perhaps one of the few success stories that will come from the bankruptcy of General Motors (OTC: GMGMQ), Saturn will be sold to Penske Automotive Group (NYSE: PAG).

As a brand Saturn was supposed to reinvent GM, but unfortunately it became the other way around. GM’s poor product construction remade Saturn. The brand suffered from it’s inconsistent products.

If Penske can turn their success in racing and autos into improving the product quality of Saturn, they may well have gone home with the “Belle of the Ball.”

In many ways Saturn was one of the best aspects of GM. Through their focus on satisfaction and loyalty, Saturn truly “got” why customers came back – Their dealers recognized the importance of the relationship. And customers responded.

As an owner of almost 300 auto franchises, Penske should understand the sales side of autos more than most. If they can retool GM’s failed products and quality focus, we could look back in ten years to see Saturn taking the position it was designed to fill – that of a automotive leader – instead of an also ran.

Penske represents a substantial value, being down almost 40% from its high in 2007, and the addition of Saturn makes this company one to look at for long-term growth options.

Symbols mentioned in this article: GMGMQ and PAG.

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