Ford Motor Co. says it expects to sign a definitive agreement for the sale of its Volvo Cars unit to China’s Zhejiang Geely Holding Group Co. in the first quarter of this year, now that it has resolved “all substantial commercial terms” for the deal.

The two companies aim to wrap up the sale during the second quarter. Neither has disclosed the price, but news reports place it at about $2 billion-less than one-third of what Ford paid for it in 1999. Ford put the Swedish brand up for sale in December 2008 and named Geely as the preferred bidder in October.

Geely still needs to line up financing for the deal and must obtain the Chinese government’s approval for the purchase. News reports say Geely expects to finance the deal with a combination of cash, bank loans and investor capital. The company plans to build a new Volvo assembly plant in China with capacity to produce 300,000 vehicles per year.

The U.S. Dept. of the Treasury says it will provide GMAC Financial Services LLC with an additional $3.8 billion in capital to shore up the financial company’s foundering Residential Capital home lending unit.

GMAC figures the fresh capital will allow it to return to profitability in the first quarter of this year.
The latest aid raises the government’s stake in GMAC to 56% from 35%. The U.S. plans to appoint four of GMAC’s nine directors, up from two now. The Treasury Dept. had already injected $12.5 billion since December 2008 to prop up the key lender to customers and dealers of General Motors Co. and Chrysler Group LLC.

The government estimated earlier this year it might need to pump as much as $5.6 billion into GMAC to meet the capital needs identified in a stress test in May. The Treasury Dept. said less was needed because losses from the bankruptcies of GM and Chrysler were smaller than expected.

GMAC also injected $2.7 billion of capital in ResCap late last month. The company wrote down $1.3 billion and $2 billion of mortgage assets at its Ally Bank retail unit and ResCap, respectively.
GMAC says the capital infusion will boost ResCap’s net worth above the minimum required by its loan covenants. The company predicts no further “substantial losses” at ResCap. GMAC, which said in November it would decide that unit’s fate by year-end, now plans to explore “strategic alternatives,” which could include a sale.

Separately, the Treasury Dept. authorized GMAC to pay new CEO Michael Carpenter a $950,000 annual salary, $5.4 million of stock and as much as $3.1 million of restricted stock grants. Carpenter’s salary is an exception to the government’s $500,000 salary cap for executives at bailed-out companies. Carpenter, a Wall Street veteran who joined GMAC’s board in May, became CEO in mid-November when Alvaro de Molina left.

General Motors Co. paid back $1 billion of $6.7 billion in loans from the U.S. Dept. of the Treasury late last month. GM also repaid US$192 million of the $1.1 billion of loans it received from the governments of Canada and Ontario.

GM plans to repay the remaining U.S. and Canadian loans, which are due by July 2015, by the end of this June, as long as the economy and the auto business don’t decline.

GM said in November it would begin making quarterly payments on the loans from an escrow account that contains $13.6 billion of unused U.S. loans. The bulk of GM’s government borrowing has been converted into common and preferred stock. The U.S. and Canada can cash in those investments only after GM stock goes public, which could happen as early as the second half of this year.

The U.S. Dept. of the Treasury says it has approved Chrysler Group LLC’s proposal to pay CEO Sergio Marchionne $600,000 per year in restricted company stock for his work on Chrysler’s board, beginning with 2009.

Fiat SpA acquired 20% of Chrysler in June and pays Marchionne’s salary for his work at the U.S. company, as well as for his efforts as Fiat CEO.

The Treasury Dept., which loaned Chrysler $14.3 billion and owns a 9.9% stake in the company, must authorize the salaries for its top 100 executives. Chrysler wanted to allow Marchionne to sell one-third of the shares after each year of service. But the government ruled he can’t sell the stock for at least three years and only after the company has repaid all of its government debt.

General Motors Co. has begun winding down its Saab Automobile unit, even as the company entertains last-ditch bids for the Swedish brand.

News reports say GM has extended the deadline for reviewing proposals from year-end to Thursday. The company has yet to receive a bid that has financing secured, says Bloomberg News.

GM ended sale talks with Dutch exotic carmaker Spyker Cars NV on Dec. 18, saying there wasn’t enough time to work out the remaining issues by year-end. A few days later Spyker submitted a new bid it says is backed by Saab management and eliminates the need for a Û400 million ($582 million) loan from the European Investment Bank. But Bloomberg says GM remains uneasy about the participation of Vladimir and Alexander Antonov, who own 30% of Spyker and control RMC Convers Group, the Russian bank participating in the bid.

Spyker says talks continue with GM, which says it has received several new inquiries about Saab.

Bloomberg reports that Wyoming-based investor Merbanco Inc. has made a fresh offer. Other bidders are reportedly interested in buying Saab technology, tooling and other assets piecemeal. An earlier deal to sell Saab to a group led by Swedish supercar maker Koenigsegg AB collapsed in November.

Unless a new deal comes together soon, GM says Saab expects to pay suppliers and other creditors in full and wind down factories and dealerships.

Beijing Automotive Industry Holding Co. says it will invest $4.8 billion over three years to integrate the Saab technology it is buying into its own vehicles.

BAIC confirms that under the deal it reached with GM in mid-December, it will pay $200 million for the rights and tooling for Saab’s 9-3 and 9-5 sedans and some engine technologies. The company also plans to open a new assembly plant in China next year to produce its own “Beijing” brand cars. BAIC currently makes vehicles in joint ventures with Daimler AG and Hyundai Motor Co.

Shares of Ford Motor Co. touched $10.37 on Dec. 28, the highest price since August 2005, as optimism grew about the company’s turnaround.

Ford stock quadrupled from the start of 2009 to end the year at $10 as the company boosted U.S. market share, reduced incentive spending and posted a $1 billion third-quarter profit. The company was the only domestic automaker to avoid Chapter 11 last year.

The soaring share price made Ford the biggest gainer for the year among companies with market capitalization of at least $5 billion. The surge followed a plunge of more than 60% in 2008 when Ford shares traded as low as $1.26.

Crude oil futures advanced 18 cents per barrel on the New York Mercantile Exchange on Dec. 30 to settle at a six-week high of $79.54, up $35, or 78%, from a year earlier. Oil futures ended 2009 near the year’s peak of $81.37, which was reached on Oct. 21.

Analysts attribute rising oil prices in recent months to the weak dollar and expectations that a recovering global economy will lift energy demand.

The average U.S. price for gasoline nationwide is $2.66 per gallon, down 2 cents from a month ago but $1.02 higher than a year ago, according to the AAA Daily Fuel Gauge Report.

The Federal Highway Administration’s final tally is expected to show that Americans drove fewer miles in 2009, marking the second consecutive year-over-year decline, The Wall Street Journal reports. Passenger and commercial vehicles traveled 2.92 trillion miles in 2008-the first decline in 25 years-vs. a record 3 trillion miles in 2007. Miles driven in the 12 months ended Oct. 31 fell 0.4% year over year.

Analysts had predicted that vehicle travel would increase last year as gasoline prices eased from their record high of $4.11 per gallon in July 2008. But the recession and job losses more than offset lower fuel costs, the Journal says.

Wheelmaker Hayes Lemmerz International Inc. emerged from Chapter 11 on Dec. 21 after shrinking its debt by two-thirds to $240 million and reducing retiree healthcare and pension obligations to $75 million from more than $250 million.

The Northville, Mich.-based supplier’s reorganization distributed 84.5% of the equity in the post-bankruptcy company to the lenders who provided debtor-in-possession financing. The balance went to secured lenders, bondholders and the Pension Benefit Guaranty Corp., which assumed responsibility for $94 million of pensions at Hayes Lemmerz in late November. The company secured exit financing that includes a $200 million term loan.

Hayes Lemmerz says it plans to slash costs and diversify its operations globally. The company, which filed for bankruptcy in May, previously filed for Chapter 11 in 2001 and exited in 2003.

Worldwide car sales will reach a record 52.7 million units this year, thanks to booming sales in Asia and Brazil, says Toronto-based Scotia Economics.

Demand last year slipped 4% to about 50 million units from 2008’s total, according to the group’s latest Global Auto Report. The forecast predicts sales this year will rise 10% to 13.9 million in North America, surge more than 12% to nearly 19 million units in Asia and grow 9% to 4.3 million vehicles in Brazil.
The analysis says demand will drop 8% to 12.3 million in western Europe but grow by 6% in eastern Europe in 2010.

General Motors Co. has hired Microsoft Corp.’s outgoing CFO Christopher Liddell as its vice chairman and CFO after a much-publicized search for an outside executive.

Liddell, who announced in November he would leave the software giant on Dec. 31, joined GM on Jan. 1. He reports to Chairman and CEO Ed Whitacre. Liddell replaces Ray Young, who is moving to Shanghai to oversee GM’s international finance, starting on Feb. 1.

The New Zealand-born Liddell must head an overhaul of GM’s finance and auditing staff, which has been criticized for sloppy accounting and poor financial discipline. He also will oversee repayment of $6.6 billion of outstanding Canadian and U.S. government loans by June and the company’s subsequent initial public offering.

Liddell joined Microsoft in 2005 as the company’s first CFO hired from outside in more than 20 years. Last year he spearheaded a $3 billion cost-cutting effort and oversaw Microsoft’s first debt offering. Liddell previously served as CEO of New Zealand-based paper company Carter-Holt Harvey, CFO of Memphis, Tenn.-based International Paper Co. and an investment banker with CS First Boston.
Analysts say that if Liddell delivers, he could be a strong candidate to eventually become GM’s CEO. Whitacre assumed that job early last month and launched a search for a replacement amid industry speculation he might decide to keep the CEO post for several years.

The U.S. government, which owns 60.8% of GM, approved a $750,000 annual salary for the new CFO-an exception to its $500,000 salary cap for executives of bailed out companies. According to a filing with the U.S. Securities and Exchange Commission, GM also will pay Liddell $3.5 million in stock and $2 million of restricted stock grants, beginning in 2012.

Microsoft paid Liddell $1.2 million in salary and bonus and $2.4 million of stock in the fiscal year ended June 30, 2009, according to the company’s proxy statement. His total compensation was $4.8 million the year before.

General Motors Co. has recruited a pair of former AT&T Inc. executives to head government relations, effective Jan. 1. Their appointments mark the latest management shakeup by Chairman and CEO Ed Whitacre, AT&T’s former CEO.

John Montford, who was heading the telecommunications giant’s state legislative affairs, will act as a senior adviser to Whitacre with overall responsibility for government relations and global public policy. He replaces Ken Cole, who will remain as an adviser until his retirement later this year. Montford is a former Texas state senator and chancellor of Texas Tech University, whose engineering school is named after Whitacre.

Robert Ferguson, a senior strategist for Austin, Tex.-based advisory firm Public Strategies Inc., has been named vice president of government relations. He previously oversaw AT&T’s state legislative and regulator affairs.

GM’s lobbying efforts in Washington, D.C., are likely to be complicated by the federal government’s 60.8% stake in the company, which it received after lending GM $50 billion between December 2008 and July 2009.

The works council of General Motors Co.’s Opel unit has refused to accept a restructuring plan that would eliminate 8,300 jobs in Europe, according to the Frankfurter Rundschau.

The newspaper quotes Opel labor chief Klaus Franz, who calls the job cuts “economic nonsense.” He contends the unit would shed 10,500 jobs by 2013 through attrition. Franz indicated earlier last month that unions were willing to help GM trim Opel’s costs by $400 million per year.

The company has promised to present a detailed restructuring plan by mid-month.

GM said late last month it was considering giving workers an equity stake of undetermined size in Opel. Under terms of a scuttled deal to sell Opel to Canada’s Magna International Inc. and Russia’s OAO Sberbank, workers would have gotten a 10% stake.

To facilitate that deal, workers had agreed to €265 million ($378 million) of concessions, including the elimination of about 10,000 jobs. The union withdrew the agreement in November when GM canceled the sale.

Daimler AG has been looking for another carmaker with which to collaborate on small-car development for months.

CEO Dieter Zetsche confirms the company is in discussions with Renault SA and others about a partnership. He tells Germany’s Handelsblatt that he expects to reach a deal with someone by mid-2010 but adds that a pact could be arranged much sooner.

Daimler wants a partner to help it expand its Smart minicar brand and develop small engines for its B-Class Mercedes-Benz models. Zetsche says such a collaboration will not involve any equity swaps.

General Motors Co. is offering hefty incentives to dealers and customers in an effort to quickly clear out the remaining inventories of Pontiac and Saturn vehicles, which are being discontinued.

GM previously said it aims to extinguish both brands no later than this fall, but it indicated more recently that it hopes to wind them down much sooner. The company has been offering consumers $6,500 rebates or interest-free loans for as long as six years on those vehicles.

GM also launched a plan late last month to pay dealers $7,000 to buy Pontiac and Saturn models for their own fleets of service loaners or rental vehicles. The program, which expires today, would have the effect of boosting December sales of new vehicles. Dealers could then sell those vehicles as low-mileage used models.

The company says dealers had 8,500 Pontiacs and 5,700 Saturns in stock on Nov. 30. GM stopped producing models for both brands several months ago.

Ford Motor is offering yet another round of buyout and early retirement incentives to all its remaining 41,000 hourly workers in the U.S.

The offers, which expire after Jan. 22, include a retirement package of $40,000 for skilled trades workers and $20,000 for production workers. Buyout offers include $50,000 in cash, plus the choice of a $25,000 vehicle voucher or an additional $20,000 in cash. Workers who take buyouts qualify for six months of basic healthcare coverage.