Penske Automotive called off discussions to buy Saturn from GM Wednesday because it could not find a new supplier. The move has effectively killed the Saturn brand dead.

 
Here's the pertinent sentence in Penske's statement announcing its decision to nix the deal: "Penske Automotive Group negotiated the terms and conditions of an agreement with another manufacturer; however, that agreement was rejected by that manufacturer's board of directors."

Which manufacturer was it? Most news accounts had Penske buying GM-Saturn replacements from Renault, which would have sourced the cars through its South Korean affiliate, Samsung. Another possibility was a Chinese automaker, rumored to be either SAIC, Chery or FAW.

I still believe Penske's deal would have instead involved Renault's alliance partner, Nissan, which has too much excess capacity here. Roger Penske was said to prefer his Saturns be built in North America.

GM had previously indicated that it would have supplied the current Saturn Aura, Vue and Outlook to Penske Automotive for another two to three years. But Penske has apparently run out of time to find its post-GM supplier.

So what does this mean for GM and for Penske?

GM says any proceeds from the sale of its Saturn division would not have seriously affected its bottom line. CEO Fritz Henderson's plan to take GM stock public next year and to start paying back U.S. government loans will not be affected.

With the Penske deal off, GM's dealer wind-down agreements stand. About 350 Saturn dealers will close by the end of 2010. There will be no 2011 Auras, Vues or Outlooks.

For Penske Automotive, it means its namesake, Roger Penske, will not become an automaker. Even if Penske had continued to run Saturn by sourcing cars and trucks from other automakers, he would have eventually needed some number of designers, engineers and marketing people to distinguish the Penske Saturns from his supplier's cars, whether Nissans or Samsungs.

This isn't the time to get into the auto business, even if you're as smart and disciplined a businessman as Penske. For the next decade at least, Saturn would have been a modern-day American Motors or Studebaker, if that. It's almost impossible to think of the man whose team has won more Indianapolis 500 than anybody, who has saved Detroit Diesel and Hertz truck leasing and who brought Daimler's smart cars to U.S. as someone who would accept hand-me-down car designs.

Even the smart car deal, which doesn't look like a great success right now, will probably benefit Penske in the future in his dealings with Daimler's Mercedes-Benz. He is already among the most prominent Mercedes dealership owners worldwide.

The Penske-Saturn deal nearly fell apart back in August. Post-GM sourcing always has been the biggest hurdle. It's not surprising that this deal fell through. The only surprise in this story was when GM and Penske signed the Memorandum of Understanding in the first place.