Chinese automaker agrees to buy Volvo

Maybe, in the end, the piecemeal dismantling of the U.S. automobile industry will turn out to have been a good thing -- that the sold-off subsidiaries will thrive under new ownership that lives in far-different continents and plays by far-different rules, and far-stronger U.S. automakers will emerge. But it's hard to see, now, how the Ford Motor Co.'s sale yesterday of iconic Swedish automaker Volvo to a Chinese conglomerate will ever turn out well. Yesterday's $1.8 billion sale, announced at a news conference in Goteborg, Sweden, turns Hangzhou-based Zhejiang Geely Holding Group, owner of Geely Automobile, from a small Chinese carmaker into a major player in the world automotive industry, according to the New York Times. Ford, the only one of three major U.S. automakers that did not take a bailout from the U.S. government, had already sold off its Jaguar and Land Rover subsidiaries in a restructuring effort. Zhejiang Geely promised to keep Volvo production facilities in Sweden, even though Ford already assembles Volvos for the Chinese market at a plant in Chongqing, which also assembles Mazdas for sale in China. Zhejiang Geely also promised to keep Volvo separate from its Geely Automobile subsidiary, which builds small cars and is China's 12th largest automaker but the country's second largest completely independent of government ownership, the Times said. “I want to emphasize that Volvo is Volvo and Geely is Geely — Volvo will be run by Volvo management,” Zhejiang Geely founder Li Shufu said at Sunday's news conference. “We are determined to preserve the distinct identity of the Volvo brand.” The Swedish government seemed satisfied with the deal and issued a statement endorsing it, the Times said. Having been scared last year by the near-collapse of Saab, the Swedish government has acquiesced to the sale of Volvo to an apparently well-heeled Chinese buyer. “The future road for Volvo Cars is now defined,” said Maud Olofsson, the Swedish deputy prime minister and minister for enterprise and energy. “Regardless of who owns Volvo Cars, its brand will still be Swedish.” The deal is scheduled to close in the third quarter of this year, the Times said. Ford lost billions on the sale, 11 years after it paid more than $6 billion for the Volvo brand. But Ford integrated Volvo technology and know-how into its own vehicles, the Times said, and will still supply engines and body parts to the company for an unspecified time.

GM announces shutdown of Hummer

Just when it seemed that General Motors had started down the yellow brick road to solvency comes word that a deal to sell its money-losing Hummer brand to a Chinese company had collapsed. Sichuan Tengzhong Heavy Industrial Machines said Thursday that it was pulling out of an agreement reached eight months ago to buy Hummer, the builder of large sport utility vehicles modeled after the military's Humvee troop transport vehicle. The Chinese company said it was unable to get approval from the Chinese government for the $150 million deal, according to the New York Times. General Motors, which has been trying to sell off subsidiaries in an effort to emerge from bankruptcy protection, said it would close the brand. GM finally was successful this week in selling Saab, but has already announced the closure of Pontiac and Saturn. Had the deal been approved, Tengzhong would have been the first Chinese company to sell vehicles in North America, the Times said. "Tengzhong worked earnestly to achieve an acquisition that it believed to be a tremendous opportunity to acquire a global brand at an attractive price,” Tengzhong said in a statement.
“We have since considered a number of possibilities for Hummer along the way, and we are disappointed that the deal with Tengzhong could not be completed,” said John Smith, G.M.’s vice president for corporate planning and alliances. “G.M. will now work closely with Hummer employees, dealers and suppliers to wind down the business in an orderly and responsible manner.” Hummer caused a splash after its introduction in 1992 with celebrity endorsements, including by California Gov. Arnold Schwarzenegger, who owned several of the powerful-looking SUVs. GM bought the company in 1999. But rising fuel prices dimmed demand for the vehicles, and it became a symbol of inefficiency because of its gas mileage. Hummer sold only 265 vehicles in the United States in January and just over 9,000 last year, a decline of 67 percent, the Times said.

Saab closure could be the result of poor GM management

From New York comes word that embattled General Motors has decided to shut down Swedish automaker Saab, the iconic 3,400-employee company it bought 20 years ago. GM has been trying for months to sell off the brand as part of its bankruptcy filing but was unable to reach deals with at least two suitors, according to Cable News Network (CNN). A long anticipated arrangement with Swedish exotic carmaker Koenigsegg fell through earlier this year and a last-minute deal with Dutch automaker Spyker couldn't be concluded in time to save the brand. "Despite the best efforts of all involved, it has become very clear that the due diligence required to complete this complex transaction could not be executed in a reasonable time," said Nick Reilly, president of GM Europe, CNN reported. "In order to maintain operations, Saab needed a quick resolution. We regret that we were not able to complete this transaction with Spyker Cars." The Koenigsegg deal's collapse followed a similar pattern, with last-minute complications also scuttling that arrangement. "In the end, Koenigsegg discovered some issues they didn't think could be overcome in a timely fashion," said John Smith, GM's vice president of corporate planning and alliances. "Like everybody, we would have preferred a different outcome." Well, that's what they say and, maybe in today's worldwide credit starved business environment, that's exactly what happened. But in light of the September failure of a deal to sell GM's Saturn subsidiary, and GM's decision to shut down its Pontiac brand, there may be another dynamic at work. If the Pontiac, Saturn and Saab brands were in good shape, any carmaker -- except, perhaps, for the other bankrupt U.S. company, Chrysler -- should have been happy to own them. At the price GM should have been willing to part with them -- the largest U.S. automaker is a highly motivated seller, remember -- there shouldn't have been any reason for all three deals to fall through in such a similar manner. GM's deal to sell its Hummer brand to Sichuan Tengzhong, a Chinese heavy equipment maker, is still awaiting government approvals, CNN said.

General Motors could close Saab next week

The latest word from General Motors Corp. in Detroit is that it could close its Saab Automobile subsidiary next week if it cannot find a new buyer after a reported deal to sell the legendary company collapsed. The troubled U.S. automaker said today that its board would meet next week to decide the fate of the 70-year-old Swedish automaker, which it bought in two parts in 1990 and 2000, according to the New York Times. GM could be forced to close the 4,000-employee company because Swedish exotic car maker Koenigsegg unexpectedly pulled out of the deal Tuesday. Koenigsegg issued a statement blaming the collapse on GM taking too long to close the deal. “The time factor has always been critical for our strategy to breathe new life into the company,” Koenigsegg said. “Unfortunately, delays in closing this acquisition have resulted in risks and uncertainties that prevent us from successfully implementing the new Saab business plan.” GM appeared surprised by Koeinsgegg's decision, Reuters said. “We negotiated in good faith and we met all our timing obligations under the agreement,” said a G.M. spokeswoman, Renee Rashid-Merem. GM chief executive Fritz Henderson said he was "very disappointed" by the failure of the Saab deal. But Henderson should not have been surprised. It is the third time in the past two months that a GM brand sale was scuttled at the last minute. Its proposed sale of its Saturn brand to Penske Automotive Group collapsed just before it was final in September, and GM pulled out of a deal to sell its Opel operations in Europe last month. GM is being forced to sell off some of its parts as it reorganizes under bankruptcy court protection.

General Motors emerges from bankruptcy after crash diet

The rich elite in the United States must be different from ordinary folks. How else to explain the behind-the-scenes maneuvering that brought the largest U.S. automaker, General Motors, out of bankruptcy in a lightning-quick six weeks and lighter by tens of billions of dollars in debt. With the completion of the sale of assets Friday to a company set up solely to liquidate them under bankruptcy court supervision, GM returns to the competitive world of automobile designing, building, servicing and selling -- largely under the same management that led the company's decline, according to Cable News Network (CNN). Of course, there'll be some major differences -- GM is now more than 60 percent owned by the U.S. Treasury. In addition, by the end of next year, the new GM will also be lighter by tens of thousands of jobs and thousands of dealerships across the country. "This is an exciting day for General Motors, one that will allow every employee, including me, to get back to the business of designing, building and selling great cars and trucks and serving the needs of our customers," GM Chief Executive Fritz Henderson said, CNN reported. "We deeply appreciate the support we've received. We'll work hard to repay the trust, and the money, that so many have invested in GM." But Henderson, who took over the top spot at GM after the Obama administration forced out then-CEO Rick Wagoner as a condition of loaning the automaker as much as $50 billion, faces a daunting challenge. GM lost most of its market share, now 20 percent of the U.S. market, in the last few decades, was overtaken by Toyota Motor Co. of Japan as the world's largest automaker, and even lost its standing as a component of the Dow Jones Industrial Average. GM also will be losing its Saturn, Saab and Hummer brands, and previously decided to drop Pontiac. Henderson even said that he didn't know if GM would be able to repay the billions it borrowed from the treasury, according to CNN, but probably wouldn't have to borrow more next year. "This is a precious second chance," he said. "There are no third chances." Even if there were, who could afford them? GM has lost $88 billion since 2005 while its debt rose to $54 billion, CNN said. Bondholders who loaned money to GM before the bankruptcy will end up with around 10 percent of the new company, CNN said, but shares will not traded until next year at the earliest.