General Motors Corp has reached a preliminary agreement to sell its Saturn brand to Penske Automotive Group in a deal that could preserve more than 350 dealerships and 13,000 jobs, the companies said on Friday.

The tentative deal for Saturn, which the companies hope to complete in the third quarter, would be the second sale of a brand announced by GM since it filed for bankruptcy on Monday in an effort to drop unprofitable lines and leave court protection as a leaner company.

Penske, the No. 2 U.S. auto dealership group, would acquire rights to the Saturn brand and other assets, while bankrupt GM would continue production of the Saturn Aura, Vue and Outlook on a contract basis if the transaction were completed, GM and Penske said. Terms were not disclosed.

This is a day that we have all been hoping would come together, since probably the end of November when GM made its first viability plan, said Todd Ingersoll, a Saturn dealer from Connecticut and a member of the Saturn dealer steering group.

GM created Saturn in 1984 to compete with Japanese vehicles in terms of quality and service and initiated no-haggle flat-price sales for its models. The Saturn brand has languished for the last decade, and GM said in February that it would either be spun off or shut.

The win for the Saturn team is that the brand lives and the win for the retailers is our investment and our belief that we work for a great company has been upheld by someone like (Penske Chairman) Roger Penske, who really mirrors a lot of the Saturn beliefs, that customers come first, Ingersoll said.

GM had said that more than a dozen buyers had expressed interest in the Saturn brand and its retail network. Penske had also said it was interested in the Saturn brand in early May.

GM plans to narrow its focus to the Chevrolet, Buick, GMC and Cadillac brands and trim its dealership network.

The automaker has notified about 1,100 dealerships that it would not renew their long-term agreements after October 2010, and about 470 dealerships represent brands GM plans to trim from its lineup: Saturn, Hummer, Saab and Pontiac.

Overall, GM expects to have about 3,600 dealerships, but executives have said that figure is not etched in stone.

On Tuesday, GM announced plans to sell its Hummer brand to little-known Chinese heavy equipment manufacturer Sichuan Tengzhong Heavy Industrial Machinery.

Shares of Penske were up 45 cents, or 3.08 percent, at $15.05 Friday on the New York Stock Exchange. GM shares are trading at 97.3 cents on the Pink Sheets.

(Reporting by David Bailey; Editing by Steve Orlofsky and Gerald E. McCormick)

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