6 Jun 2009

GM to sell Saturn brand

8:04 am on 6 June 2009

General Motors has reached a deal to sell its Saturn brand to former race car driver Roger Penske.

Penske Automotive Group will take over the brand, service operations and dealership network.

The troubled US carmaker filed for bankrupcy protection under Chapter 11 on Monday.

However, court papers showed on Friday that GM hopes to return to profitability in 2011 after emerging from bankruptcy protection.

The company's financial adviser, Evercore Partners, estimates that GM will lose $US17.5 billion this year before making a profit of $US3 billion in 2011.

The estimate is based on US auto sales of 16 million vehicles per year - up from current levels of less than 10 million.

GM is in the process of cutting costs and selling a number of its brands.

The BBC reports the deal for Saturn should secure the immediate future of the brand's 350 dealerships and 13,000 employees.

The carmaker also announced this week that it has agreed to sell its Hummer brand of sports utility vehicles by the end of September, to Sichuan Tengzhong Heavy Industrial Machinery of China.

GM's move into bankruptcy protection is backed by the US government, which is expected to take a 60% stake in a new company to be formed by the auto maker.

The federal government is also putting another $US30 billion into GM on top of the $US20 billion it has already given the company.

It is expected that GM may be able to exit bankruptcy protection within the next 60-90 days.

Chapter 11 bankruptcy protection gives an American company time to restructure its finances while being protected from its creditors.