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New Owner of Saab to Close 81 Dealerships
Koenigsegg, the prospective new owner of Saab is closing 81 Saab dealerships in the U.S. That is more than one third of the dealerships the company has in the U.S. Koenigseeg is purchasing Saab from General Motors as part of its bankruptcy proceedings. Saab will keep and operate 137 dealers when the purchase is completed on November 30.
GM notified the terminated dealerships of the decision on Thursday, GM spokeswoman Ryndee Carney said.
All Saab dealers signed a termination agreement in June when GM filed for Chapter 11 bankruptcy protection. The terms of those termination agreements will go into effect for rejected dealerships, Carney said.
Koenigsegg will operate the brand through a new entity, Saab Cars North America Inc.
GM signed a deal to sell Saab to the small Swedish luxury carmaker in August, but the closing of the deal is contingent on Saab receiving loans from the European Investment Bank that are guaranteed by the Swedish government.
In October, the EIB granted Saab a 400 million euro ($600 million) loan -- a key component in the planned sale -- but the Swedish government must step in with a guarantee if the funds are to be paid out.
If for some reason the Saab sale fall through, GM will close Saab and all dealerships in the U.S.
Posted on November 15, 2009
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GM Ends Ebay Experiment After Just 45 Days
The Wall Street Journal reports that General Motors is ending its short experiment to sell new cars in California through eBay. The experiment generated lots of traffic but it didn't help sell many new vehicles.
The companies declined to say how many cars were sold under the heavily advertised program, although GM said the number of sales directly connected to the effort was small. "We thought the program was successful but that this was not the right time," GM sales chief Mark LaNeve said.
Mr. LaNeve said the program did generate customer interest, including 1.5 million visits to a special section of eBay's Web site, and 15,000 customer leads for California dealers. He said GM hopes to try again with eBay next year.
When the program launched Aug. 11, GM Chief Executive Frederick "Fritz" Henderson said it was part of an effort to make car shopping more convenient.
Rob Chesney, vice president of eBay Motors, said he was "really pleased" with the results and would use lessons from the program to develop future programs for selling new cars on the site. He declined to say when or how that might happen. "We had no expectations in terms of what the measured result would be," Mr. Chesney said. The test was to see "if we offer consumers a new way to interact with the purchase of a car, would they engage?" The traffic to the site, he said, proves "there is a real proposition that we can build upon there."
The article said the GM car listings on eBay generated some low-ball offers from customers that dealers had to waste time sifting through. GM allowed the experiment to run for just 45 days.
Posted on October 2, 2009
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Toyota Considering Closing California Plant
In yet another ominous sign from the auto industry, Toyota is considering closing its California vehicle assembly plant which it jointly operates with General Motors Co. GM has now decided to pull out of the deal and Toyota isn't sure it wants to go it alone.
The joint venture is called New United Motor Manufacturing Inc. or Nummi for short.
Nummi has mostly been a money-losing operation since GM and Toyota established the partnership in 1984. GM announced last month that it was going to pull out of the plant, where the auto maker produces the Pontiac Vibe. Toyota said GM's decision to end its involvement has "prompted a set of difficult and complex decisions for Toyota."
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The decision on what to do with Nummi involves weighing the political sensitivity surrounding the plant's future against the economic realities of the global auto industry. Because of its location in the San Francisco Bay area, the 4,600-worker Nummi facility is a high-cost plant for the Japanese auto maker.
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Nummi makes the Pontiac Vibe car for GM and the Corolla compact car and Tacoma pickup truck for Toyota. One of the plant's purposes was to have GM and American workers learn Toyota's production methods. For Toyota, Nummi served as a beachhead for it to push deeper into the U.S. market and a learning lab to figure out how to effectively use American labor within the Japanese company's "lean manufacturing" system. Toyota has since built more than a dozen manufacturing facilities in North America, including seven plants that assemble most of the company's U.S.-sold vehicles.
Toyota's chief executive, Akio Toyoda, had earlier pledged not to close any U.S. plants. But the GM bankruptcy has thrown a real monkey wrench into Toyota's plans. In Chapter 11 bankruptcy, the debtor goes through all the contracts and either assumes or rejects each one: one of the upsides of bankruptcy is the ability to get out of burdensome contracts. Based on Toyota's statement, it seems likely that the plant will close unless another joint venture partner can be found.
Posted on July 12, 2009
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GM to Assume Liability For Future Product Liability Claims
General Motors has agreed to shoulder defect liability for product liability of their cars, even after the company emerges from bankruptcy. All claims against the company must be adjudicated in a bankruptcy proceeding, which had all the states' attorneys general worried about GM car owners' rights. Under the settlement, GM will assume legal responsibility for injuries suffered by consumers who are injured by a product defect in GM cars.
The concession means consumers who are injured in car accidents after GM emerges from bankruptcy protection will be able to bring product-liability claims against the government-owned auto maker.
Under GM's original bankruptcy plan, the auto maker planned to leave such liabilities behind after selling its "good" assets to a new GM owned by the government. That meant future car-accident victims who believe that faulty manufacturing by the old GM caused their injuries would be unable to sue the new GM. Instead, they would have been treated as unsecured creditors, fighting over the remains of GM's old bankruptcy estate.
GM's agreement to take responsibility for future product-liability claims, outlined in a court filing late Friday, represents a partial victory for more than a dozen state attorneys general and several consumer-advocacy groups. They had objected to GM's original plan to shed these liabilities, arguing it would rob future car-accident victims of their legal rights because they would have no way of knowing they might be entitled to claims.
GM advisers, members of President Barack Obama's auto task force and the attorneys general negotiated for several days to address concerns about product-liability claims, among other issues. The talks heated up Friday ahead of GM's Tuesday court date, when it will ask a judge to approve the auto maker's plan to create a new GM by selling its desirable assets to the government.
The move is considered a legal victory for consumers. Chrysler, which just emerged from bankruptcy, is not responsible for those types of claims in the future. The assumption of liability only applies to future claims made against the new GM. Current claimants will be treated as unsecured creditors and are likely to get little or nothing.
Posted on June 28, 2009
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GM to Close Most Plants For Up to Nine Weeks This Summer
Week auto sales have General Motors (GM) planning to close most of its plants this summer for nine weeks according to the Associated Press. The exact dates of the closures are not yet known. GM won't comment and says the notify employees before making information about production cuts available to the public.
GM also said earlier today that it will not be able to make its June 1 debt payment on about $1 billion in notes coming due.
"We're not going to make that payment," GM CFO Ray Young told reporters. "That's part of the reason why we're going to get this thing done one way or another in 60 days. That's the deadline."
(via On Deadline)
Posted on April 22, 2009
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Sweden to Saab: You're On Your Own
The Swedish government has told
Saab that it won't help the carmaker financially. Saab was hoping to get financial help from Sweden to become a viable company again. Saab is owned by General Motors, which wants to dump the underperforming brand.
Why is the government apparently dead set against helping Saab, an iconic brand that stands as a global symbol of Sweden, with Ikea, Volvo and Abba?
That is what Paul Akerlund, the local chairman of the automobile workers' union, wonders.
"I'm a little surprised,” he said. "They say the market should help itself, but the market has collapsed around the whole world. It's an extraordinary situation."
He added, with a note of accusation in his voice, "In Germany, France and England, the government is going in to help the car manufacturers."
Swedish officials have condemned what they see as protectionism by other European countries that have pledged to prop up their own failing car industries. They have also been scathing about General Motors, Saab's owner, and the last thing they want is to seem to be bailing out a despised foreign company.
Struggling for its own survival, G.M. has said it will completely pull out of Saab by the end of 2009, a course that Ms. Olofsson, the enterprise minister, described as tantamount to declaring "that they wash their hands of Saab and drop it into the laps of the Swedish taxpayers."
She said: "We are very disappointed in G.M., but we are not prepared to risk taxpayers' money. This is not a game of Monopoly."
It's unfortunate, but the future of Saab does not look promising.
Posted on March 24, 2009
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Saab Files Bankruptcy, Looks to Sweden for Help
Swedish auto maker Saab has filed bankruptcy
with the goal of reorganization. The company is fully owned by General Motors, but has asked the Swedish government for help in becoming an independent company once again.
But it was unclear whether the government would step in to help Saab, in which G.M. bought a half interest two decades ago and assumed full ownership in the 1990s.
Earlier this week, G.M. said that it wanted to cut Saab loose by 2010, as it tries to restructure in order to qualify for more federal assistance. G.M. said in a report to the Treasury Department that it planned to end financial support for Saab by next year.
Saab went to a Swedish court for protection from its creditors, and said the company would — with assistance from the Swedish government — reorganize to pave the way for private investors to buy all or part of the company.
"We explored and will continue to explore all available options for funding and/or selling Saab, and it was determined a formal reorganization would be the best way to create a truly independent entity that is ready for investment," the managing director of Saab, Jan-Ake Jonsson, said in a statement.
Saab also said that the company "would continue to operate as usual."
But government assistance is not a certainty. Swedish officials have repeatedly resisted efforts to nationalize Saab, which came to life as part of the Svenska Aeroplan AB, a company founded in 1937 to build military planes. The first Saab cars were built after World War II. G.M. has used the slogan, "Born From Jets" in its recent advertisements for the Swedish brand, although its most recent ad campaign features the tagline, "Move Your Mind."
GM's Saab investment never paid off: the division struggled with profitability. But will the Swedish government help out? It seems unlikely that Sweden will offer any financial assistance, which is what the company needs to be profitable again. If it cannot find a buyer, 4,000 people will lose their jobs in Sweden.
Posted on February 20, 2009
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