A power struggle between Volkswagen chairman Ferdinand Piëch and Porsche’s management continued to intensify on Friday, just as the company announced that sales had crashed 15 percent.

Image Courtesy: Apture

Sales Tsunami

Friday’s numbers are creating a Tsunami of sorts at the German automaker. Bloomberg reports that Porsche SE’s sales for the period through April 30 declined to 4.64 billion euros ($6.46 billion) from 5.46 billion euros a year earlier, Stuttgart, Germany-based Porsche said today in a statement. The company reiterated that revenue and earnings will fall this fiscal year, based on “extremely poor business” in the first three months of 2009. Porsche’s nine-month vehicle deliveries fell 28 percent to 53,635 cars and SUVs, as Cayenne sales dropped 25 percent to 24,689 units. Deliveries of the 911 fell 18 percent to 20,254 cars. Sales of the less-costly Boxster model, including the Cayman version, fell 47 percent to 8,692 cars.

Changing Partners

The drop in sales will reduce Porsche’s options for paying back more than 9 billion euros of debt stemming from its purchase of a majority stake in Volkswagen AG, Europe’s biggest carmaker.   The sports car maker has entered exclusive talks with the Qatar Investment Authority, the sovereign wealth fund of the energy-rich Persian Gulf emirate. It could acquire as much as 25 percent of Porsche’s voting shares, which have long kept the Porsche family firmly in charge. The Qataris, who would get a seat on Porsche’s supervisory board, may also purchase the options Porsche has on VW shares.  Qatar could bring as much as €5 billion into the company, analysts estimate, helping to relieve the €9 billion debt load that Porsche incurred to acquire 50.76 percent of Volkswagen.

To tide it over, Porsche has applied for a loan of €1.75 billion from a fund the German government set up in March to help companies through the financial crisis. The request is being reviewed in Berlin, with a response expected in the coming days or weeks.

Dream Turned NightMare

Interestingly, the New York Times has a wonderful article explaining how Porsche’s top enchilada reacted to this reversal of fortunes.  When Wolfgang Porsche learned that his family’s sports-car maker, once bent on taking over Volkswagen, now had to beg its giant rival for money, he looked as if he were going to faint.  “He went absolutely white,” said one person briefed on that secret meeting, which involved executives from both companies. “It was as though he’d heard someone died.” A day later, on March 23, fax machines around Germany spit out a piece of paper for Volkswagen’s board members to sign: an emergency loan of €700 million, or $977 million, for Porsche from its former prey — Volkswagen.

Mr. Porsche is now on the verge of accepting Porsche’s integration into Volkswagen, rather than the hoped-for David-versus-Goliath takeover. On top of that embarrassment, Porsche also is seeking outside investors and a government bailout.

“This is becoming a reverse takeover on a financial level,” said Arndt Ellinghorst, head of automotive research at Credit Suisse in London. “Porsche has debt and VW has the luxury of cash.”

The company has responded to the sales drop by periodically suspending production. Porsche will halt work for two days between now and the end of July for a total cutback of 21 days for the fiscal year, Albrecht Bamler, a spokesman, said today.

Controlled by the Porsche and Piech families, the sports- car maker dropped its Volkswagen takeover plans on May 6, saying it will seek talks on creating an “integrated” company that would put Porsche alongside Volkswagen’s nine brands, which also include luxury unit Audi and mass-market manufacturer Skoda. Porsche said today that “there is a consensus” among family members to continue with creating an integrated group.

Arrival of Mr. McNasty & Blame Game

This change in fortunes has brewed a nastiness at the top levels of Porsche’s management that’s unseen in the history of the carmarker.  Controlled by the Porsche and Piech families, the sports- car maker dropped its Volkswagen takeover plans on May 6, saying it will seek talks on creating an “integrated” company that would put Porsche alongside Volkswagen’s nine brands, which also include luxury unit Audi and mass-market manufacturer Skoda. Porsche said today that “there is a consensus” among family members to continue with creating an integrated group.

Porsche CEO Wendelin Wiedeking and Piëch have been exchanging increasingly nasty words in recent days, the daily Süddeutsche Zeitung reported Friday. Piëch blames Wiedeking for increasing the company’s mountain of debt, now around €9 billion, in a failed attempt to take over Volkswagen.

Wiedeking, in turn, has said Piëch has harmed the company with his public criticisms at a sensitive time when the two companies are discussing a merger. Piëch is the grandson of Porsche founder Ferdinand Porsche and left a career at the company to work for Volkswagen in the 1990s.

In a letter to Piëch dated May 13, cited by the newspaper, Wiedeking warned Piëch that he would be help “personally responsible” if Porsche were harmed by Piëch’s verbal assaults. In the rarified world of German boardrooms, such strong language is almost unheard of and reflects the complex pressures brought on by rivalries between the Piëch and Porsche clans, collapsing car sales, industry consolidation and a credit crunch brought on by the financial crisis.

If this is not enough drama wait till you see what happens in the months ahead.  Looking ahead, the company declined to give a precise forecast but said sales were likely to fall below the level in its previous fiscal year.

(Source: The Local, New York Times, Bloomberg)

(Source: Detroit Free Press, The Detroit News, The Auto Channel, The Examiner, EEtimes.com)

Cash for Clunkers hit a speed bump Tuesday, June 16, 2009, in the U.S. Senate. It appears some Senators have “bailout fatigue” in general and “auto industry bailout fatigue” in particular. According to The Detroit News, Republican Senators are pushing back, citing the $85 billion in aid already provided to prop up ailing and bankrupt GM and Chrysler.

Image Courtesy: Apture

Some Democrats, including Diane Feinstien (D-California) also oppose the bill in its current form because they think it does not go far enough to improve fuel economy of vehicles on American Roads (there are, of course, Republicans in the opposition, but they oppose the measure because they think we’ve already spent too much money on the auto industry). As reported earlier, a Cash for Clunkers provision was added last week to a $106 billion bill to fund the wars in Iraq and Afghanistan. The idea was to attach a Cash for Clunkers provision to an existing bill already moving through the Senate so quick passage could be assured. Wrong.

Senators who support Cash for Clunkers need 60 votes to keep the Cash for Clunkers provision from being removed from the wartime funding bill. That could prove to be a problem.

Just hours after Sen. Judd Gregg, a New Hampshire Republican, denounced the inclusion of the cash-for-clunkers amendment as “unfunded baggage” on the war spending bill this evening, Senate Majority Leader Harry Reid delayed a vote until Thursday.

“It passes on new debt. Why would we do that?” Gregg asked in a floor speech. He said he would challenge the measure “at the appropriate time.” Senate Majority Leader Harry Reid delayed voting on the bill until Thursday.

Democrats control 58 seats in the Senate. But two — Edward Kennedy of Massachusetts and Robert Byrd of West Virginia — are ill. And Democrats led by Diane Feinstein of California have opposed the legislation as it stands, saying it does not do enough to boost fuel efficiency.

The legislation narrowly survived in the House, but for reasons mostly unrelated to the car-sales measure. Republicans were near unanimous in opposing the spending bill, objecting mostly to a provision that would boost International Monetary Fund lending.

“This bad legislation runs a con game on the American taxpayers and America’s military men and women,” said Rep. Mike Rogers, R-Brighton. He and five other Michigan Republicans voted no.

Michigan Democrat Debbie Stabenow urged quick passage of the stimulus.

“It will not help as a stimulus if it is done six months or a year from now,” she said.

If the Senate approves it, the measure will go to President Barack Obama for his signature. Then the National Highway Traffic Safety Administration will have 30 days to put regulations in place for the program which – under the war spending provision – will expire on Nov. 1.

In a related news item from across the Atlantic, Phakamisa Ndzamela writing for Reuters reported that South Korea’s Hyundai Motor Company has so far received the lion’s share of new car orders under the British government’s vehicle scrappage scheme, with sales boosted by an interest in smaller cars, according to figures obtained by Reuters.

The 300 million-pound ($491.9 million) scheme invites motorists to trade in cars more than 10 years old in return for a 2,000 pound subsidy to buy a new vehicle, in an effort to help an industry which has been severely dented by the recession.

The government earlier in the week said the scrappage scheme had resulted in 60,000 new orders in the period from April 22 to June 7.  Out of the 15 car companies in the UK that Reuters contacted, Hyundai was in pole position, stating that its latest figures, which covered the period from April 23 to June 7, amounted to 8,246 new orders

Ford came second in the number of car orders at 8,050 followed by Toyota at about 7,800 vehicles.  Following are company estimates of scrappage scheme new car orders covering the period April 22 to June 17:

• Hyundai 8,246
• Ford Motor Company 8,050
• Toyota Motor Corp 7,800
• Kia Motors UK 7,300
• Volkswagen 4,591
• Vauxhall 3,909
• Nissan 3,202
• Renault 2,600
• Peugeot 2,500
• Citroen 2,500
• Honda 2,335
• BMW and MINI 1,722
• Mazda 1,355
• Volvo 1,161
• Chevrolet 950

EETimes.com reports thatcrisis in the global automotive market is far from over. In May, the European market fell by 5 percent against the same month last year. Nevertheless, within the region, local markets developed extremely different, with Germany adding 40 percent (in terms of units) and Russia declining 57 percent. The reason for the hefty differences were the public incentives for buyers who scrapped their old car and bought a new one in some countries.  The US market has declined by 37 percent over the first five months this year. In may, sales for light vehicles declined by almost 34 percent to 923.000 units.  In contrast to other countries, the incentives in the United States will be connected to the fuel efficiency difference between old and new car.  Japan also fared weak, with sales declining 17 percent in May and 22 percent for the first five months.  the emerging markets, the crisis was far less pronounced. Brazil added 3 percent, boosted by an incentive program. India declined 1 percent in May, but over the first five months the market developed slightly positive with a plus of 2 percent. In China, the economic stimulus package and the reduction of sales tax on cars led to an increase by 55 percent in May. In that month, in China 728.000 light vehicles were sold. Thus, the Chinese market has become extremely relevant for European and Japanese car exporters. As a comparison: The entire European market (not restricted to EC countries) had a volume of 1.3 million units.

In light of all that’s reported, it seems the U.S. politicans needs to do everything to promote Automobile sales, including the passage of this Cash for Clunkers bill.  Wrangling over the details of a bill that can spur auto sales could have some severe consequences on the economy.  Will they do it?  Let’s hope so!

(Source: Wall Street Journal, T4America@twitter)

Sec. LaHood proposes 18-month extension for SAFEAT-LU  and shortly thereafter Rep. Oberstar says delay is unacceptable (via T4America@Twitter & WSJ)

Image Courtesy: Apture - Transportation Secretary Ray LaHood

USDOT published a news release this afternoon offering Sec. Ray LaHood’s proposed extension:

“This morning, I went to Capitol Hill to brief members of Congress on the situation with the Highway Trust Fund. I am proposing an immediate 18-month highway reauthorization that will replenish the Highway Trust Fund. If this step is not taken the trust fund will run out of money as soon as late August and states will be in danger of losing the vital transportation funding they need and expect.

“As part of this, I am proposing that we enact critical reforms to help us make better investment decisions with cost-benefit analysis, focus on more investments in metropolitan areas and promote the concept of livability to more closely link home and work. The Administration opposes a gas tax increase during this challenging, recessionary period, which has hit consumers and businesses hard across our country.

“I recognize that there will be concerns raised about this approach. However, with the reality of our fiscal environment and the critical demand to address our infrastructure investments in a smarter, more focused approach, we should not rush legislation. We should work together on a full reauthorization that best meets the demands of the country. The first step is making sure that the Highway Trust Fund is solvent. The next step is addressing our transportation priorities over the long term.”

Shortwhile ago, WSJ published an article covering today’s development, which featured Secrtary’s proposal to delay the reauthorization.  This aricle also captured an interesting response from Rep. Oberstar, delivered his press conference Wednesday.  It notes that Rep. Oberstar was adamant that Congress must pass a new law before the current one expires.

“Extension of current law is unacceptable,” Mr. Oberstar said. “Now is the time to move.”

Bill in the Works at Congress (via WSJ)

House Democrats are busy crafting a transportation spending bill that would cost roughly $450 billion over six years, but no consensus has emerged on how to fund it, reports WSJ citing familiar sources.

The bill for the first time would establish standards — like reducing oil consumption and spurring economic growth — that would influence which highway and transit projects get federal funding. It would also consolidate to six or fewer the number of Transportation Department programs used to channel money to states, giving local officials more flexibility to combat their transportation challenges.

Image Courtesy: Apture

The legislation is being drafted by House Transportation and Infrastructure Committee Chairman James Oberstar (D., Minn.), who plans to release a blueprint of his bill tomorrow at a press conference starting at 11:00AM.  Since this is the internet age, there will be a live webcast of the news conference (an invitation-only press conference). Transportation for America informs that Chairman Oberstar is releasing a 12-page paper and a 100-page outline of the bill and it’s likely that at least one of those — probably the shorter white paper — will be released the first press conference.

The current system relies heavily on taxes from gasoline and vehicle purchases. Revenue from these sources is dropping as Americans drive less and opt for more fuel-efficient cars and trucks. Meanwhile, states are encountering similar funding problems due to declines in tax revenue. The result is a growing gap between the nation’s infrastructure needs and what is being spent to maintain and upgrade it.

The Obama administration has opposed any gas-tax increase. The White House also opposes any quick transition to a new system, which has been tested in Oregon, where drivers are taxed based on the miles they drive rather than the number of gallons they pump into their gas tanks.

People familiar with the matter say Mr. Oberstar hasn’t come up with a funding solution, and the task of writing the bill’s funding component will fall to the Ways and Means Committee. Things may proceed even slower in the Senate. That makes it unlikely Congress will pass a new bill by the time the old one expires at the end of September.

Meanwhile, states may be forced to further curb their transportation spending if Congress doesn’t come up with more money soon. Last year, Congress opted to transfer $8 billion from the Treasury’s general fund into the Highway Trust Fund to prevent last-minute cutbacks.   Click here to read the entire article.

Grading the Transportation Bill (via T4America)

To help us all judge whether the bill delivers the promised transformation, Transportation for America has developed this scorecard (see below) laying out the changes that must be included to clear the bar. When the bill is released, we can begin using this as our measuring stick. Click here to download the PDF version of this awesome scorecard.

(Source: Autoblog & Consumer Reports)

With Congress on the verge of passing some kind of ‘cash-for-clunkers’ legislation, it’s time to take a look at what cars are worth trading in for the scrappage credit and what models would be better to sell by other means. To help the average Joe Sixpack on the street, Consumer Reports has compiled a list that outlines the Make, model EPA combined mpg rating, etc.  The used cars listed are the newest vehicles likely to be available for less than $3,500, the minimum voucher value. For this to be worthwhile to the consumer, the vehicle’s trade-in value would need to be less than the voucher. Older versions of these vehicles are likely to be worth less, making the vouchers even more appealing. Many of the models have mechanical twins sold by another brand that may qualify, but we have not listed them here. The CR staff has examined the prices and concluded that pre-1993-94 Cadillac DeVilles, Eldorados and Sevilles are all solid candidates.

Click here to read the entire article. In a related news, US Senator Robert P. Casey Jr. (D-PA) has introduced legislation into the Senate that would add motorcycles to the controversial Cash for Clunkers program that was recently passed by both the US House and Senate, though with significantly reduced funding of $1 billion. If passed, the new amended bill would offer a $2,500 rebate for the purchase of a new motorcycle when an older trade-in is scrapped. FYI, Pennsylvania is the home for Harley Davidson, the renowned American motorcycle maker.

(Source: AP via Google,  Fox Toledo, CSM & Toledo On the Move)

Image Courtesy: Auto Insane - Mayor Carty Finkbeiner

Often we have come across stories that involve strange politicians and sometimes even the stupidest one who make dumb decisions that will make you wonder what on earth was he/she thinking to do something like this.   We have one such pol from Ohio that beats everyone of them dumb politicians out there.

Some residents of Toledo, Ohio, are complaining that they received $25 tickets for parking their vehicles in their own driveways. Residents along North Holland-Sylvania Road were ticketed for parking in the gravel part of their driveways.   Toledo, Ohio Mayor Carty Finkbeiner (FINK’-by-ner), who is already up for a recall vote says he stands by the citations handed out last week by the Division of Streets, Bridges and Harbor. He says the tickets were issued under a city law against parking on unpaved surfaces, including gravel driveways. How can they do that? They just found an old law prohibiting drivers from parking on “unpaved” surfaces.. and technically gravel is unpaved.

During a news conference Monday, Finkbeiner ignored a reporter’s question of whether the crackdown and fines were related to the city’s budget crisis.

Although not outlined in the city charter, a city memo has allowed workers with the city of Toledo’s Division of Streets, Bridges and Harbor to issue parking citations to citizens.

It’s not as though Toledoans are hell-bent against paved driveways. It’s just that the decision to enforce a little known regulation is taking them by surprise. Take Charles Robertson, for example. He’s lived in the same house (with the same gravel driveway) for 43 years. He got his first ticket last week.

“I just can’t reach into my magic box of tricks and get 5 or 6 grand to pave my driveway,” he said.

Thankfully City Councilman Michael Collins disagrees with the tickets, calling them “Micky Mouse nonsense”. He has promised residents he’ll try to have the tickets recinded.

In a move that will make some of his residents happy, Collins has taken the tickets from residents and says he will pay for them. He also referred to the Finkbeiner administration as a psych ward. Collins says the city itself is in violation of the law because the city tow lot is only gravel.

After his fiasco, Mayor Finkbeiner can be assured that he wrote his own ticket for his recall vote. (Note the cars parked on gravel in the background of this story’s image).

(Source: NY Times – Green Inc.)

Having shipped hundreds of electric vehicle charging stations, and with repeat orders now coming in from Europe, Coulomb Technologies, a privately-held Silicon Valley company, expects to be profitable by the 2010 introduction of the Chevy Volt, according to its chief executive, Richard Lowenthal.

(Mr. Lowenthal appears in the video above, explaining the company’s ChargePoint Network.)

“Our plan was to sell a thousand stations, but we will probably double that,” he told NY Times’ Green Inc. last week after the company secured its third Bay Area order this year. “Our company is structured to be profitable based on early adapters.”

Image Courtesy: Coulomb technologies

Founded in 2007, Coulomb is looking to crack the chicken-and-egg riddle that bedeviled the hydrogen fuel cell industry. Without a refueling infrastructure, consumers won’t buy vehicles. But no one invested in refueling stations without potential customers on the road.

“It is a very fundamental issue for the business,” Mr. Lowenthal said. “What do you do about the road trip?”

With electric vehicles, the additional problem is that in cities like San Francisco, where almost half of all vehicles park on the city’s streets, many potential buyers couldn’t recharge their cars overnight.

Mr. Lowenthal, a Cisco veteran who served as mayor of Cupertino, said that municipalities, parking companies and condo developers represent the first tranche of customers for charge points that will be deployed on city streets and in garages. They sell for $2,500 to $4,000 and can recharge an electric vehicle battery in four to ten hours.

In what might shape up to be the VHS/Betamax duel of the industry, a Coulomb rival, Better Place of Palo Alto, is looking to develop refueling stations where consumers on road trips can swap batteries in a matter of minutes. Still other companies are building rapid recharge points.

Mr. Lowenthal predicted the next three years would define the nascent charging station industry. By 2012, he said, the car industry will have an understanding of the early adoption rate for electric vehicles and plug-in hybrid electric vehicles.

Click here to read the entire article.

(Source: Daily Mail Online, Economic Times & Business Week)

Image Courtesy: Wall Street Journal

The crumbling economy has left many industries in dire straits and probably the hardest hit was dealt on the aviation industry.  Amidst rising oil prices and the chaotic economic climate, the airlines around the world are battling to stay alive.  The story has become gone from bad to worse for two national carriers – Britain and India, the colonial cousins. While India’s national carrier- Air India has decided to delay the monthly salary for its employees by 15 days, the British Airways has gone tothe extreme of asking its staff to work for free for a month.   The paragraphs below offer a glimpse of the airlines’ struggle.

Pathetic State of British Airways

British Airways boss Willie Walsh is asking his 40,000 staff to work for nothing to save the airline.

The astonishing plea comes as BA faces what Mr Walsh says is a ‘fight for survival’.

The company has written directly to its 40,000 employees asking them to volunteer for up to four weeks of unpaid work.

Mr Walsh announced last week that he would work unpaid for the month of July – forgoing £61,000 in salary. His chief financial officer Keith Williams is also working unpaid for the month.

The appeal to staff goes much further than earlier requests for a pay freeze or unpaid leave.

But it infuriated cabin crew. One said: ‘BA now stands for “B***** all” because that’s what they want to now pay us. That’s the calibre of management we have at British Airways.’

Passengers face the threat of a summer of strikes as the airline goes into battle with unions this week for a deal to slash costs and sweep away what it sees as

restrictive practices. BA is understood to be seeking up to 4,000 job cuts – one in ten of the workforce – including 2,000 voluntary redundancies among the 14,000 cabin crew.

BA adds that the action ‘will help minimise the financial impact on individuals, while helping to immediately save cash for the business’.

It denied that those who volunteer-for unpaid work will be given preference when any subsequent redundancies are considered.

The company is also asking staff to consider temporary or permanent part-time work, short-term unpaid leave of up to four weeks, or long-term unpaid leave of between one and 12 months.

Mr Walsh has set a deadline of June 24 for employees to volunteer for unpaid work of one to four weeks. He has also set a deadline of June 30 for a deal with unions, who say he will impose terms if he cannot get prior agreement.

Leaders of all the main BA unions are meeting management this week for talks on permanent cuts on pay, conditions and the loss of up to 4,000 jobs.

The biggest conflict is with 14,000 cabin crew who are gearing up for a major showdown with Mr Walsh which – if it leads to industrial action and strikes – will mean chaos for tens of thousands of holidaymakers.

The Daily Mail has learned that BA ground staff have already rejected the company’s proposals by six to one. Insiders say 2,987 voted No while only 487 backed the measures. One said: ‘Even the groundstaff are squaring up to Willie for a strike.’

BA has frozen pay and axed more than 2,500 jobs since last summer – including 780 management posts. It has revealed a record annual loss of £ 401million, which it blamed on rising oil prices adding almost £1billion to last year’s fuel bill, and a major fall in passenger numbers.

Pathetic State of Air India

The National Aviation Company of India (Nacil), the company that operates Air India, has decided to defer the payment of June salary to its 31,000 employees by 15 days due to severe liquidity crunch.

Air India top officials—general manager levels and department heads—have got an email, stating that the salary will be delayed by 15 days. The e-mail will be forwarded by department heads to their colleagues this week, said a senior official.

Last week, Air India, had tabled a blueprint to the aviation ministry on how it will utilise the Rs 14,000-crore bailout package, if it’s granted.

Another senior AI official said that Rs 14,000 crore package is necessary for the national carrier to run operations smoothly.

In May, the country’s second-largest private carrier Jet Airways had sacked around 50 employees and referred them to an in-house out placement cell, which will help them find jobs with other airlines.

On the other hand, the fully government-owned company Nacil, covering the combined operations of Air India and Indian Airlines, has nearly doubled its losses to Rs 4,000 crore in FY09.

Industry trackers say AI has not been in the best of health and the government bailout is critical. The cost of acquiring 144 aircraft has shot up from Rs 45,000 crore to Rs 50,000 crore on account of currency fluctuations.

As Air India’s decision was made public, employees of the carrier have threatened to go on an indefinite strike from July 1 if the management delays their salaries next month, a workers’  union leader said Tuesday. “We have decided to go on an indefinite strike from July 1 if the Air India management refuses to pay our salaries on time. We are chalking out strategies for our further course of action,” J.B. Kadian, general secretary of the Air Corporation Employees‘ Union (ACEU), told IANS.

The decision was taken in a meeting of ACEU, the largest union among the Air India employees, here Tuesday. The union has already submitted a memorandum to NACIL chairman and managing director Arvind Jadhav, requesting him to roll back the management decision to delay the salaries.

International Air Transport Association revised its airline financial forecast for 2009 to a global loss of $9 billion, nearly double the March estimate of a $4.7-billion loss.

(Source: AP via Yahoo, Forbes & Autoblog)

TransportGooru was one of the earliest portals that notified about the Swedish love affair that originally reported by the Swedish National Television.  Though it was not officially confirmed by the companies involved (GM & Koenigsegg), pretty much everyone knew what is coming.  General Motors made it official this morning, Saab will soon be back in Swedish hands. In many respects, this is the most fitting result for quirky brand. Koenigsegg is an oddball itself, building insanely fast supercars in a Scandinavian country where you can’t legally drive over about 60 mph.

GM said in a memorandum of understanding that the sale would include an expected $600 million funding commitment from theEuropean Investment Bank, guaranteed by the Swedish government. Additional funding for Saab’s operations and investments would be provided by GM and Koenigsegg Group AB, it said.The sale is expected to be completed by the end of the third quarter and is subject to regulatory approvals by authorities.

Image Courtesy: Autoblog

“This is yet another significant step in the reinvention of GM and its European operations,” GM Europe President, Carl-Peter Forster, said in a statement. “Closing this deal represents the best chance for Saab to emerge a stronger company,” he said, adding “Koenigsegg Group’s unique combination of innovation, entrepreneurial spirit and financial strength, combined with Koenigsegg’s proven ability to create world-class Swedish performance cars in a highly efficient manner, made it the right choice for Saab as well as for General Motors.”

The company behind the consortium, Koenigsegg Automotive, was founded in 1994 by Christian von Koenigsegg, a Swedish sports carfanatic and entrepreneur, who remains the chief executive. It makesluxury sports cars at its headquarters, a former air force base near Angelholm, in southern Sweden.

With a full-time staff of 45, Koenigsegg makes around a dozen cars a year, customized for every buyer. The company doesn’t advertise prices for its models, but they are believed to range between 8 million and 18 million kronor ($1 million-$2.3 million) each.  Saab, on the other hand, has more than 4,000 staff worldwide, is represented in some 50 countries, and typically produces more than 100,000 cars a year.

One of the key details about the deal is the now obligatory government backing, this time in the form of a $600 million loan from the European Investment Bank, guaranteed of course by the Swedish government. That explains why minuscule Koenigsegg picked up Saab for free. It’s all about being Swedish.

“‘Saab needs to be left alone to proceed with its strategy,” says Matts Carlsson, an analyst of Goteborg Management Institute, noting that any tampering with its five-year plan to produce premium cars that are not aimed at competing with luxury brands such as BMW or Lexus ‘could destroy it.’

Crucially GM is pledging Koenigsegg its “platform and powertrain technology.” It’s very likely to include the “Epsilon 2” platform — the model (metal frame, geer box, technology) on which the latest GM European cars are based, such as the Opel and Vauxhall Insignias, says Tim Urquhart, an analyst at IHS Global Insight in London. That’s hugely significant for Koenigsegg as research and development of these platforms are a massive expenditure for automakers, he added.

Koeningsegg’s technology could prove valuable to Saab too. Koeningsegg has made a big push into green technology, making low emission, high-efficiency cars such as a flex fuel super car operating on both ethanol and petrol. It’s an area where Saab has been lagging behind its competitors, and could eventually help the company sell more cars.

It should help it increase sales volumes at Saab, which have fallen off sharply in recent years. Having access to GM’s technology will give the Swedish car maker several years to come up with a model for the future.

Koeningsegg also appears to have trumped other suitors, including Italy’s Fiat ( FIATY.PK – news – people ), which was interested in buying Saab after losing out in the race for Opel to Canada’s Magna International ( MGA – news – people ). (See “Fiat Keeps An Eye On Saab.”)

The sale of Saab to Koeningsegg marks a return to Swedish ownership after nine years in GM hands. Last year Saab posted a loss of 3 billion Swedish kronors ($384 million). It says it needs $1 billion to overhaul its business.

(Source: Autoblog & Motor Age via Search Auo Parts)

According to a recent Kelley Blue Book study, 87-percent of new-car shoppers said they thought gas prices would go much higher. Seems like the obvious choice to us, too.

Curious what those expectations for rising fuel costs are having on new-car purchasing decisions? KBB’s got a statistic on that, too. More than 60 percent of in-market new-car shoppers said that rising gas prices have either caused them to change their minds completely or at least made them think about vehicles they normally wouldn’t have considered. For instance, consumers may opt for a four-cylinder or V6 engine instead of a more powerful and furl-thirsty V8.

When asked in May 2009 what they think will happen with gas prices in the next 30 days, 87 percent of new-car shoppers said they thought gas prices would go much higher, a significant jump from the 66 percent who thought gas prices would increase just a month earlier.

In both April and May, more than 60 percent of in-market new-car shoppers said that rising gas prices have either caused them to change their minds or made them think about vehicles they normally wouldn’t have considered. When asked what they would be most likely to compromise in their next new-vehicle purchase in order to save money they might need to spend on fuel, shoppers cited engine size (for example, a four-cylinder versus a V6 or V8) as the top item likely to be sacrificed, followed closely by vehicle size (for example, a mid-size sedan versus a large sedan).

In addition, Kelley Blue Book reports that 73 percent of those who saw gas prices increasing in May said they plan to change their spending habits if gas prices were to go much higher.

KBB’s data further indicates that $3 gallons of gas may be the new tipping point that will get consumers to alter their spending habits. See more in the official press release after the break.

Click here to read the press realse from KBB.