DealZone

News that Ford expects to finalize the sale of Volvo to China’s Geely in the first half of 2010 caps a year that saw China overtake the United States as the world’s biggest auto market, something that would have been unthinkable only a few years ago. With Geely rival BAIC announcing its intention to harvest intellectual property from Saab, Chinese automakers are going into high gear in both their short-term goal of serving the high-octane domestic market and their longer-term ambition of retooling their manufacturing base to better serve the global automotive market.

Geely is China’s largest private automaker. Its charismatic founder, Li Shu Fu, is known as the Chinese Henry Ford. He has shown global ambitions and has pushed for Geely to become a global brand.

It’s a road well traveled, the highway from Asia’s industrial heartlands to the world’s garages. Japan and South Korea have blazed the trail thoroughly. Rather than ponder the significance for lumbering Western automakers who are shedding assets to stay alive, it’s worth wondering what Toyota and Hyundai make of their Chinese cousins.

It’s official. General Motors will wind down operations at its loss-making Swedish unit Saab after an attempt to sell it to small Dutch luxury carmaker Spyker Cars failed. Things were already looking dire for a deal weeks ago. GM said early in the month it would consider offers for Saab until the end of the month and move to close the Swedish unit then if it appeared that it couldn’t be sold. Given it couldn’t save Saturn or Pontiac, Saab’s prospects for a GM-engineered solution had been slim at best.

GM said the move was not a bankruptcy or forced liquidation process. Saab will satisfy debts, it said, including supplier payments, and Saab operations will be wound down in an orderly fashion.

Niche luxury carmaker Koenigsegg was another last-ditch possibility that fell through for the Swedish automaker, which did manage to sell some assets to China’s BAIC. Saab has around 3,000 staff, and about the same number in other businesses are going to find the Scandinavian winter particularly cold this year.

Chinese carmakers are seeking to step into the gaps left by U.S. companies in Europe -- but while acquisitions may give them access to badly-needed technical know-how, global brands and exposure to new markets, the question is whether they have learnt from past failures.

With China now the world's largest car market, it's no surprise that Chinese carmakers -- which have few if any really solid brands within their home market -- want to start making more of a mark.

In theory, foreign acquisitions offer a quick way to do so. Meanwhile the credit crunch has thrown world-renowned but now distressed car marques such as Volvo, Opel or Saab onto the block at what look like rock-bottom prices.

Was there ever any doubt that China, having donned the overalls of the world’s manufacturer, would ultimately emerge as a top bidder in the race for sputtering global auto assets? Not only does the country have the labor force to build the automobile of tomorrow, but increasingly it has the consumer class to buy it.

So it would seem natural for Swedish luxury sports car maker Koenigsegg to tie up with China’s BAIC to help finance its purchase of Saab from General Motors. And news that the parent of China’s Geely Automotive wants to bid for Ford’s Swedish brand, Volvo, is as much a confirmation of a trend as it is evidence of a tectonic shift in the industry.

Like its neighbors Japan and South Korea before it, China has the tools to revitalize the auto industry by applying its low-cost muscle. The trick will be to nurture these imported brands and their technological expertise so they can survive the transition. China has never been known as a paradigm of consumer safety – at least not in a way befitting Volvo.

A U.S. federal judge has authrorized the sale of General Motors’ most profitable assets to a “new GM,” backed by the government, in a move seen as crucial for the automaker to exit bankruptcy protection.

The decision by Judge Robert Gerber of the U.S. bankruptcy court in Manhattan came after three days of hearings to address the 850 objections to the restructuring plan. In his 95-page opinion, Judge Gerber wrote that the sale would “prevent the death of the patient on the operating table.”

Under the terms of the revised deal, G.M. would sell its best assets, including the Chevrolet, Cadillac, Buick and GMC brands, to a new company owned largely by the American and Canadian governments and a health care trust for the United Automobile Workers union.

What’s surprising: Talks for General Motors Corp’s Opel failed to yield a deal.

What’s not-so-surprising: GM needs cash. Again.

Talks that ran all through Wednesday night to sell Opel to one of four final bidders narrowed the race to two but failed in sealing a deal. German ministers, emerging in the early hours of Thursday morning after more than 12 hours of talks, blamed GM and the U.S. Treasury for the failure.

Why? Because GM, the ministers say, shocked participants by announcing it needed 300 million euros ($415 million) more in short-term cash from the German government to  keep Opel operating.