GM CEO Fritz Henderson said in statement that Saturn and its dealership network will be phased out.
"This is very disappointing news and comes after months of hard work by hundreds of dedicated employees and Saturn retailers who tried to make the new Saturn a reality," Henderson said in a written statement. "PAG's announcement explained that their decision was not based on interactions with GM or Saturn retailers."
In a statement, the Bloomfield Hills, Mich.-based auto retailer says an agreement with another manufacturer to continue producing Saturn vehicles after GM stopped making them fell through, leading Penske to terminate talks with GM.
Penske said it negotiated terms and conditions to make Saturn cars with another manufacturer, but that company's board of directors rejected the agreement. Penske spokesman Anthony Pordon would not identify the other manufacturer.
"Without that agreement, the company has determined that the risks and uncertainties related to the availability of future products prohibit the company from moving forward with this transaction," the company said in a statement.
In June, GM and Penske agreed to take over the Saturn brand and related dealerships, although GM would produce the vehicles for a limited period of time.
GM said Saturn vehicle owners can still go to their Saturn dealer for service and would be able to go to a certified GM dealer for service once Saturn dealerships are closed.
It was expected that GM would announce the completion of Saturn's sale to Penske in the coming days.
Share of Penske fell $1.93 to $17.25 in after hours trading. They rose $1.32, or 7.4 percent to $19.18 in regular trading Wednesday.
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