Geely to Buy Volvo From Ford

Zhejiang Geely Holding Group signed a binding deal Sunday to buy Ford Motor Co.’s Volvo Cars unit for $1.8 billion, representing a coup for the independent Chinese automaker which is aiming to expand in Europe.

The purchase gives Geely a European luxury car brand with a reputation for safety and quality at a time when China, which last year surpassed the U.S. as the world’s largest car market, is eager to improve its competitiveness by acquiring foreign automotive brands that might help it improve its technology and expand into overseas markets.

The price, which includes a $200 million note with the remainder to be paid out in cash, is far less than the $6.45 billion Ford paid for the Swedish automaker in 1999. The U.S. automaker has been trying to sell Volvo since late 2008 to focus its resources on managing its core Ford, Lincoln and Mercury brands.

“We think it’s a fair price for a good business, and yes, we’re happy with the deal we’ve achieved with Geely,” said Ford Chief Financial Officer Lewis Booth on Sunday at a news conference at Volvo Cars headquarters in Goteborg, on Sweden’s west coast. Booth added that his company believes that, under Geely, “Volvo can continue to build its business and return to profitability.”

The agreement was signed by Booth and Geely’s chairman, Li Shufu, and witnessed by Li Yizhong, the Chinese minister of industry and information technology, as well as Swedish Minister for Enterprise and Energy Maud Olofsson.

It’s The End Of The Road For Saab

General Motors said it would begin shutting down its money-losing Saab brand after last-ditch talks to sell it to a small Dutch sports car builder collapsed on Friday.

The move by GM to abandon the 60-year-old Swedish auto brand would eliminate 3,400 jobs in Sweden and drop 1,100 Saab dealers who have watched with increasing concern as 10 months of talks to sell the brand sputtered out in recent weeks.

Swedish government officials and representatives of GM had been negotiating as late as Friday morning in Stockholm before the automaker concluded that it was not going to be able to conclude a deal to sell Saab to Spyker Cars.

Swedish Enterprise Minister Maud Olofsson blamed GM for not doing enough to save Saab during the 20 years it controlled the brand and its losses mounted.

“It is ultimately the owner who is responsible for the company,” Olofsson told reporters. “It is difficult to see what we could have done differently.”

GM had been in exclusive talks with Spyker this month after an earlier deal with Swedish luxury car builder Koenigsegg collapsed last month.

John Smith, the GM executive who steered Saab negotiations, said trying to complete a deal with Spyker against the month-end deadline for a deal set by the GM board had been a long shot he compared to trying “to make a shoestring catch.”

GM said it would shut down Saab operations, including its production hub in Trollhattan, Sweden, starting in early January. It said Saab would satisfy debts, including supplier payments and honor warranties.

Saab has been a consistent money-loser for GM. The brand, which attracted a following of loyalists for quirky hatchbacks with turbocharged engines, lost about $340 million in 2008 and had projected a similar loss this year.

Autos analyst Erich Merkle of Autoconomy said GM was spread too thin before it decided this year to retain only the Chevrolet, Buick, GMC and Cadillac brands. It couldn’t give Saab the sustenance it needed to compete, he said.

“Saab has been starved by GM which had so many mouths to feed that Saab was like the smallest puppy pushed out of the litter,” Merkle said.

Efforts by GM to cut costs by building more recent Saab models on GM platforms diluted the brand’s cachet and an effort to sell Saab as “Born from Jets” fizzled.

“GM is better off just clearing the decks and taking the pain now,” said George Magliano, an auto analyst at IHS Global Insight. “This was inevitable.”

GM bought 50 percent of the Saab car operations in 1990 for about $700 million. It paid $125 million and assumed debt for the remainder of the unit in 2000.

It’s The End Of The Road For Saturn

After months of negotiations aimed at saving the Saturn brand, General Motors said it will stop making Saturn vehicles this year and wind down the brand by the end of 2010.

Saturn’s last hope, a sale to Penske Automotive Group, fell apart. A Penske statement said it was notified that its tentative deal with an undisclosed automaker (identified by the Wall Street Journal as French automaker Renault) to supply vehicles to sell as Saturns had been rejected by that company’s board. 

A deal signed in June for GM to sell the brand to the dealer chain run by entrepreneur and former race driver Roger Penske called for GM to supply Saturn’s current Aura, Outlook and Vue vehicles for two to three years. Penske was responsible for finding another supplier for vehicles after that.

“You can probably hear it in my voice that this is very, very disappointing,” said Anthony Pordon, Penske’s senior vice president. “When we sat back and looked at everything after they rejected the deal, we felt there were too many risks involved to really move forward with this transaction.”

Tom Pyden, a spokesman for GM, said dealers now have until October 2010 to wind down. GM has stopped making the Aura and will halt Outlook and Vue production before the end of this year.

Roger Penske To By Saturn From GM

General Motors will announce it has reached a preliminary deal to sell its Saturn division to auto dealer Roger Penske, the Wall Street Journal reports, citing people familiar with the matter.

GM’s deal will allow Penske, who runs Penske Automotive, to take over the brands, trademarks, service and parts operations and distribution operations related to the brand. In addition, Penske will strike deals with various automakers, including GM and Renault, allowing him to buy vehicles from those auto makers’ factories to fill out the Saturn vehicle portfolio, the Journal reports.

Penske will initially buy Saturn vehicles from GM that are already part of the Saturn lineup, but eventually branch out to purchase vehicles from Renault and its Korean Samsung Motors unit, the Journal reports. Other automakers could be part of the arrangement.

GM and Penske have a memorandum of understanding signed, and the deal is considered tentative at this point. The price tag on the Saturn deal wasn’t disclosed.

GM Set To Unload Hummer

General Motors Corp., fresh from filing for bankruptcy protection, will start its second day of court proceedings by announcing the tentative sale of the Hummer brand, The Wall Street Journal reported, citing people familiar with the matter.

GM has settled on a buyer that could take over the brand by the end of the third quarter, but is withholding the name of the buyer until a later date, the report said.

GM will continue producing Hummer H2 and H3 trucks and SUVs at plants in Louisiana and Indiana for the buyer, it said. The buyer is reportedly committed to build alternative-fuel models for the brand at some point.

Judge OK’s Chrysler Sale To Fiat

A federal bankruptcy judge has approved the sale of most of Chrysler’s assets to Fiat, clearing the way for the American automaker to exit court protection shortly.

Judge Arthur Gonzalez said in a court filing  that he approved the sale, the major piece of a plan orchestrated by a federal auto task force.

The plan gives a 55 percent stake of the new company to a union-run trust for retirees, a 20 percent stake to Fiat that can ultimately grow to 35 percent and smaller stakes to the U.S. and Canadian governments.

Chrysler LLC was forced into court protection on April 30.

The sale to Fiat means Chrysler could be out of bankruptcy within the government’s original timeframe of 30 to 60 days.

Buick Sales Jump 63.6 Percent – In China

General Motors said that sales in China soared 50 percent in April to a monthly record of 151,084 vehicles, thanks to strong demand for Buick brand cars and Wuling minivehicles.

Sales of the Buick Excelle sedan, a staple in GM’s Shanghai-produced portfolio, more than doubled from a year ago to 22,078, the company said in a statement.

Overall Buick sales jumped 63.6 percent in April to 38,071 units, it said.

GM’s minivehicle joint venture, SAIC-GM-Wuling, has been one of the biggest beneficiaries of Chinese government policies aimed at encouraging purchases of small cars and minivans. Wuling minivehicle sales surged 60.6 percent from a year earlier in April, to 95,544 units, it said.

Vehicle sales in China so far this year have outpaced those in the U.S. If those trends continue, China would replace the U.S. as the world’s biggest auto market.

Pontiac Drives Into The History Books

General Motors will kill off its venerable Pontiac brand as part of a government-supervised restructuring plan.

Citing unnamed sources familiar with the plan, The Detroit News reported that GM has already notified Pontiac dealers that the 83-year-old brand will be discontinued as part of a restructuring effort. 

The loss of Pontiac will mean the end of an iconic brand that symbolized fast-driving, V-8-powered muscle cars in the 1950s, 1960s and 1970s.  The News said Pontiac sales fell 25 percent last year to 267,348, down from its late 1970s peak of about 900,000.  Its elimination will leave GM with four core brands: Chevrolet, Cadillac, Buick and GMC.

GM has already announced the elimination of Hummer, Saturn and Saab.

Germany Tries To Save Beleaguered Opel

Germany’s economy minister is on his way to the United States for talks aimed at securing the future of General Motors’s German-based Opel unit.

Karl-Theodor zu Guttenberg left for New York, where he will meet with banking leaders.

He then heads to Washington for talks with Treasury Secretary Timothy Geithner and GM Chief Executive Rick Wagoner on Opel’s future.

German leaders are worried that the crisis for American carmakers could bring down Adam Opel GmbH, GM’s beleaguered subsidiary.

Opel says it needs $4.2 billion to get through the economic crisis. It has sought help from the German government, but officials in Berlin insist that U.S. parent GM first come forth with a proposal for the future.

GM Heading For The Trash Heap?

Of all the words in General Motors Corp.’s 402-page annual report, none is more jarring than two written by the company’s auditors: “substantial doubt.”

The doubt, according to Deloitte & Touche LLC, is about whether GM can overcome its staggering losses and generate enough cash to stay in business, or remain a “going concern,” as accountants would say.

GM concedes in the report filed that it’s on the edge of bankruptcy and won’t be able to avoid it unless it gets more government money and successfully executes a huge restructuring plan.

It’s no surprise that auditors would question GM’s viability. The behemoth lost $30.9 billion last year, is living on $13.4 billion in government loans, and is seeking up to $30 billion as it tries to survive the worst auto sales climate in 27 years.