May 22, 2009 at 3:17 pm

Mitsubishi interested in supplying vehicles to Saturn dealership network

Chrysler's Peapod Mobility electric car (Charles V. Tines The Detroit News)

Japanese automaker Mitsubishi Motors Corp. is in talks to supply vehicles to Saturn dealers if the brand and dealer network is sold this year, according to sources familiar with negotiations.

Mitsubishi is among several manufacturers, including Nissan Motor Co., talking to parties interested in acquiring Saturn's dealer network from General Motors Corp., sources said.

A deal would give Mitsubishi a stronger presence and help it boost production in the U.S. by tapping into a network of about 380 Saturn dealerships, which need new vehicles once Saturn stops production. GM has said Saturn will be phased out at the end of this year but could supply vehicles on a contract basis beyond 2009.

It is unclear whether Mitsubishi vehicles would be sold under the Saturn name -- or vice versa.

It is the latest attempt by Mitsubishi to boost its production and presence in North America. The Japanese automaker had been in talks with Chrysler LLC to produce and sell a small electric car called the "Peapod Mobility," but talks have been suspended while the Auburn Hills automaker is in bankruptcy court.

"In this sort of environment, Mitsubishi is not on many people's shopping list," said Todd Berko of Bel Air Partners, a New Jersey-based financial firm that specializes in representing dealers. "If you can get a Honda at a good price and it will last you 10 or 12 years, same with Nissan and Toyota, and prices are cascading downward, the people at the bottom are getting crushed the fastest."

A Mitsubishi spokesman said he was unaware of the company's interest in providing vehicles to Saturn's dealer network.

Mitsubishi has one North American passenger car assembly plant, in Normal, Ill., about 150 miles south of Chicago.

The Japanese automaker sells coupes, convertibles, sedans, sport utility vehicles, and light trucks through a network of about 430 dealers in North America, and like most automakers, is suffering through a slump. Last month, Mitsubishi sold 3,919 vehicles, down 55.9 percent from a year earlier.

The Saturn negotiations involve pairing parties interested in Saturn's dealer network with one or more auto manufacturers interested in supplying vehicles that could be sold under the Saturn name.

"It's going to be up to the buyer to determine where they want to source products from," Saturn spokesman Steve Janisse said. "If they're discussing it with Mitsubishi or anybody, that's up to them and I'm not aware of those conversations."

Saturn has narrowed the list of potential bidders from about 12 to "two or three," according to a source familiar with the talks. GM hopes to conclude a deal by the end of the third quarter. At least one of the finalists is considering using Mitsubishi, and possibly others manufacturers, to provide vehicles, a source familiar with talks said Thursday.

The finalists includes Detroit auto tycoon Roger Penske, who is interested in acquiring Saturn's dealer network. Penske is the head of Bloomfield Hills-based Penske Automotive Group Inc., which operates more than 300 franchises in the United States and internationally, selling 40 different brands. The billionaire Detroit booster also has exclusive U.S. distribution rights for the Smart minicar.

Penske could form a venture with Nissan, the Japanese affiliate of Renault SA, according to a source familiar with talks. He has been in talks with two local dealers, Joe Serra and David Fischer, about acquiring the Saturn dealer network.

Serra said it is too early to say whether he would play an active role in acquiring Saturn.

"The role I've been asked to play is almost like just being a resource for him," Serra said. "Anything I can do to assist him and identify if this even makes sense and is doable, workable." Another finalist is Telesto Ventures, which includes Oklahoma City-based private equity firm Black Oak Partners LLC and several Saturn dealers.

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