General Motors is close to selling its loss-making Saab unit after tiny Koenigsegg agreed to ride to the rescue of its fellow Swedish carmaker, said a source familiar with the talks.

Such an agreement would put a company that has less than 50 employees and turns out only a handful of $1 million (Dh3.67m) supercars in charge of Saab, which produces that many family cars every hour. Sweden would also probably join other governments around the world backing swift rescues of their biggest car companies with state guarantees to help save jobs and one of the country's biggest brand names.

Koenigsegg, whose slinky supercars can top 400 km/h and rank in Forbes magazine's list of the world's 10 most beautiful cars, is backed by Norwegian investors, a source said.

The two sides have signed a letter of intent and financing has been agreed, leaving only minor issues to be resolved, the source said.

Saab said on its website that new ownership would be finalised in the early summer and Swedish television reported that a preliminary deal was now with the US Treasury Department with further information expected to be released next week.

In Washington, GM Chief Executive Fritz Henderson declined to comment on progress in the effort to find a buyer for Saab.

"Any material transaction we're involved in… we would review what's gong on," Henderson told reporters. "We don't have anything to add."

Tough times are producing some surprising partnerships, including GM's tentative deal this month to sell Hummer, the expensive, gas-guzzling vehicle of choice for musicians and movie stars, to Sichuan Tengzhong, a Chinese company that makes cement mixers.

Italian maker Fiat, which quit the US market in 1983, is set to return under a new partnership with Chrysler while parts maker Magna International is in talks to buy GM's European operations centred on Germany's Opel.

"I'm concerned it doesn't have the scale or expertise to exist as a stand-alone business," said Nomura analyst Michael Tyndall regarding Koenigsegg.

Saab has not posted a profit in a decade. "I struggle to see how smaller brands can exist as stand-alone operations – the industry doesn't have a great track record on this," said Tyndall.

The global recession has slashed demand for cars and sent US giants GM and Chrysler into bankruptcy, leaving Ford as the only one of the so-called Big Three not needing government aid.

Koenigsegg hails from the other end of the automotive spectrum, a tiny firm operating out of an aircraft hangar set up in 1994 by young entrepreneur Christian von Koenigsegg, who pocketed some of his fortune selling frozen chickens.

Saab's future could see it turn into a much smaller, niche player, said Mikael Wickelgren, a vehicle expert lecturer at the University of Skovde, Sweden.

"Saab probably would move towards more specialised, niche cars for a smaller customer base," he said.


GM to cut pension plans

General Motors Corp will cut its senior executive pension plans by up to two-thirds as part of its bankruptcy restructuring, the company's chief executive told a US House Energy and Commerce subcommittee.

Fritz Henderson told reporters after the hearing that the reductions apply to certain plans for executive retirees making more than $100,000 (Dh367,200) annually. He said there was no resolution yet on the pension for former CEO Rick Wagoner, ousted by the Obama administration which is overseeing GM's Chapter 11 restructuring.

"That issue is still being reviewed by the board of directors and the compensation committee," Henderson said. "I'm not involved in this."

Wagoner worked for GM for 31 years and accumulated more than $20m in benefits.

 

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