China has taken its first major step into the U.S. car market as General Motors announced it had finalized a deal to sell off its Hummer truck brand to Chinese auto manufacturer Sichuan Tengzhong Heavy Industrial Machinery.

Under the deal, GM will continue to make the trucks no later than 2010. While a deal has been reached, it is still going to be up to Chinese regulators to approve the deal and decide if the brand can be profitable and fit into the country's overall national strategy to improve energy efficiency.

While M&A is making a comeback, deal-making can still be tough. Just look at General Motors. By all accounts, it looked like its proposed deal to sell Saturn to Penske Automotive Group (NYSE: PAG) was all but done.

Not so. Yesterday, Penske backed out. The reason: the company thought it would not be able to supply cars after 2011 (when GM would stop production). As a result, Saturn plans to shutdown operations.

Back in the 1950s, Roger Penske not only raced cars, but he also sold them. And, when he retired in 1965, he focused on his business interests, creating an empire. Now, there is Penske Auto (NYSE: PAG), which operates a chain of auto dealers, a truck leasing operation, and a high-performance car operation.

Well, this week the empire got even bigger; that is, Penske agreed to purchase the Saturn unit from General Motors. Terms of the deal were not disclosed.

This morning, The Wall Street Journal (subscription required) reported that General Motors (OTC: GMGMQ) has reached a preliminary deal to sell its Saturn distribution network to Penske Automotive Group. Penske is the second-ranked U.S. dealership group.

The Journal says that Penske will take over the brands, trademarks, service and parts operations, as well as the distribution operations related to the Saturn brand. The report also notes that Penske will make deals with other auto makers (one possibility is Renault SA) to purchase vehicles that will fill out the Saturn portfolio.

General Motors (NYSE: GM) has already said that it plans to discontinue its Pontiac brand and that it's looking for buyers for its underperforming Saturn and Hummer brands as it scrambles to meet its June 1 deadline to restructure as mandated by the Obama administration.

Among the bidders for Saturn is an investor group made up of Saturn dealers and Oklahoma City private equity firm Black Oak Partners LLC. Last month, the group said it had approached GM about buying the assets of the Saturn brand and the distribution network. GM confirmed it had been in discussions with Black Oak but said that other investment groups were also interested in taking over Saturn.

You may have seen the General Motors'(NYSE:GM) new Saturn commercials offering to help people who buy a car and then lose their jobs make car payments. An earnest dealer says "I've seen some car ads. If you lose your job, they'll take your car back. That sounds like the worst day ever. Honey, I'm home! Lost my job, don't have a car. What's for dinner?"

A very funny person has made a YouTube video that begins with the real ad and ends with the catchy slogan: "Saturn. We can do more. We have bailout money."

Today's late-day rally had a common theme throughout the day: less-bad economic data. This went from better housing data and CPI not showing any deflation fears. The Beige Book was also showing that some of the 12 Fed regions are seeing a decline in the slowdown. Here are today's unofficial closing levels, which were essentially around the highs of the day:

Dow 8,029.62 +109.44 (1.38%)
S&P 500 852.06 +10.56 (1.25%)
Nasdaq 1,626.80 +1.08 (0.07%)

Top 10 Analyst Calls

Here's a predicament: How do you sell Saturns when General Motors (NYSE: GM) has already announced that the nameplate is headed for the graveyard? Saturn dealers have begun running ads and television commercials with the pretty pathetic tag line: "We're still here."

Saturn sales plunged another 51% in the first two months of 2009. The Saturn brand isn't scheduled to be eliminated until 2012, and GM has said it will consider the possibility of a spin-off of the brand to its dealers.

The company's new ad campaign takes on directly all the headlines about GM's problems and its precarious future. Saturn realizes that it runs the risk of terrifying consumers who aren't aware of its problems but has essentially decided that it's a risk worth taking, given that the population of Americans who aren't aware that GM is in some serious trouble consists of three people, two of whom are less than a week old.

Check out the video below to see one of Saturn's new commercials emphasizing its recent introductions of new models and its focus on being a "different kind of car company."

General Motors (NYSE: GM) is considering dumping Saturn, Pontiac, and Saab in an attempt to cut costs as it looks at a restructuring and government bailout. According to Bloomberg, "General Motors Corp., working to cut costs to win $12 billion in government loans, is studying whether to shed its Saturn, Saab and Pontiac brands in addition to Hummer, people familiar with the matter said."

It may appear to be a good idea, but it is not.

While there would be some short-term savings in production and labor costs it misses some potential problems. That analysis leaves aside legal agreements GM has with dealers. It also fails to look at what the hundreds of thousand of people who own cars from the three nameplates would do. While GM can provide them service and honor warranties, most of these customers bought cars from the brands because they liked them. The cars were their "first choice."

There is no guarantee that these consumers will stick with another GM brand; they could move to any of the firm's competitors to find autos that are more like the ones they bought from the shuttered GM operations. Or, they could simply be so unhappy with GM for the decision that they would walk away from doing business with the big car company.

Closing brands won't fix GM. Getting a new union contract and cutting debt are the only options.

Douglas A. McIntyre is an editor at 247wallst.com.

GM (NYSE: GM) now has eight car brands. Since some models are built off similar platforms, a sedan from Saturn may not be much different from one sold by Chevy. The problem is GM may not be taking sales from Toyota (NYSE: TM). It may be taking sales from itself.

Last year, GM introduced three crossovers, according to The Wall Street Journal-- the Saturn Outlook and GMC Acadia, which are all but identical, and the more luxurious Buick Enclave. There are, of course, only a limited number of crossover buyers. Strong sales for the GMC crossover may hurt Buick.

GM thinks it can manage all of its brands but in a falling domestic car market there is little evidence to show that the company's plan will work.

It is time to kill some of GM's brands, save marketing money, and stop most of the competition among cars built by the same parent company. The firm's weakest brands by sales and falling units are Buick and Saturn. Most of their models are matched by cars in the Chevy, GMC, and Pontiac lines.

Shutting down brands is hard, an admission of defeat. But it is time for GM to let some of its model lines go.

Douglas A. McIntyre is an editor at 247wallst.com.

Oil recently climbed up to that magic number: $100 a barrel. Along with it, Toyota Motor Corporation (ADR) (NYSE: TM) has risen to new heights, getting ready to possibly take #1 car manufacturer here in the USA.

Here's an interesting little tidbit I recently culled from United Press International last week: It seems that a firm in Cincinnati is planning to market some snazzy electric retrofit cars.

The strategy is to take General Motors (NYSE: GM) Saturn vehicles, including four-door sedans and SUVs, rip the internal combustion engines out of them, and replace those engines with plug-in electric power plants, batteries, and some computer stuff. The company is called Advanced Mechanical Products Inc. and is reportedly headed up by partners Jack Kuntz and Steve Burns. The claims are that the cars will accelerate from 0 to 60 in about 6 seconds, run about 150 miles between charges, and will sell for under $50,000.

I'm wondering what the company will do with those left over Saturn engines. I'm also wondering why the choice of Saturns to retrofit. And I'm wondering where I put that ten-foot pole I had. No matter, I wouldn't touch this scenario with one anyway. Perhaps when those guys drive one from Cincinnati to my house, I might think about it, but until then my opinion is: Beware in Ohio.

Is Saturn rising? That question is easier to answer for astronomers than for General Motors Corporation (NYSE:GM), whose Saturn auto division has struggled as of late due to image and quality problems.

When Saturn launched in 1990, GM hoped it could win back small-car buyers from the like of Honda and Toyota, which were then taking lots of business away from Pontiac and Chevy, the two brands GM counted on for car sales in the compact and subcompact marketplace.

In a perfectly foolish move, GM shuttled Saturn out the back door as soon as the SUV market exploded, and GM all but forgot about its division made to sell small cars. I guess GM thought it would never need to sell smaller cars again. But hey, times never change, right?

SUVs are now on the decline due to energy prices as car buyers increasingly look for fuel-efficient family cars and other similar vehicles. Once again, GM's focus is years behind as it tries to change its ways to meet consumer needs -- but turning around GM and Saturn is not an overnight affair.

Saturn was based on the "no haggle" dealer principle. No car salesman, no "I'll be right back" nonsense that most car buyers have to endure. Yet the brand was down to two models recently and almost bit the dust due to poor sales. Is it back? If GM wants to actually respond to customer needs, it better be.

Google's new-style advertising takes a back seat -- at least temporarily -- to assist GM's Saturn division in a new advertising campaign. In other words Google is trying with small baby steps to jump out of the shadow it has as an advertiser whose sole window to the world are those small text ads next to Internet searches. With Google trying to crack the television and radio worlds it's quite apparent that the Internet search leader wants to conquer advertising outside of the web browser.

Google is partnering with General Motors so that visitors to a variety of Saturn-based websites in six cities around the U.S. will be able to click on a typical-looking banner ad that will, when clicked, produce a view of the earth that zooms in on one of the 22 Saturn dealerships nearest to the computer user. That is a pretty good example of interactive advertising, yes?

Google, whose aim I've said is to become the world's largest advertising network, is going after traditional marketers who see Google as an Internet search company that makes money from ads, but not as a full-service advertising agency able to reach potential customers using multiple venues. Will Google be able to convince large-scale advertisers to use its services to reach consumers? How about Procter & Gamble? Pepsi? Frito-Lay? Only time will tell, but with Google's runaway success in the Internet search arena in the last four years or so, it stands to gain handsomely if it can reach customers for ad clients in unobtrusive and relevant ways.