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A Boston-area company plans to begin flight tests this year of a two-seater airplane that moonlights as a car.

The aptly named Transition takes a stab at bridging the gap between automobiles and airplanes. Some people call it a flying car. The company designing and selling the vehicle prefers the term “roadable aircraft.”

Either way, it boils down to this: You sit down behind the steering wheel, drive to the runway, unfold two wings and take off. You can fly 500 miles on a tank of gas — regular unleaded — and when you land, you simply fold up the wings and drive where you want to go. At the end of the day, you fly back, drive home and park inside your garage.

Terrafugia, of Woburn, Mass., is not the first firm to attempt what may be the ultimate hybrid.   “It’s probably a concept that people have been dreaming up since there have been airplanes and cars,” said Dick Knapinski with the Experimental Aircraft Association, a 55-year-old aviation group based in Oshkosh, Wisc.

A company called Aerocar of Longview, Wash., debuted one of the first flying cars in 1949. The company built six prototypes, one of which is sitting in the EAA’s museum, but never went into production.

Terrafugia, founded in 2006 by a group of MIT students, has taken deposits for more than 40 Transitions and plans to begin deliveries in 2010, said Richard Gersh, vice president of business development.

The vehicles sell for $194,000.

Advances in materials and propulsion technologies are among the reasons why Terrafugia is in position for commercial success. But equally important, says Knapinski, is an easing of government regulations on private aircraft and pilot licensing.

In 2004, the Federal Aviation Administration created a new category of aircraft and license for sport aviation, an attempt to re-awaken interest in flying after steady drops in the number of licensed pilots.  In the United States, about 600,000 people are licensed to fly aircraft, a drop of 25 percent since 1980, Knapinski said.

“The FAA and the aviation industry realized there has to be a way to get people interested in flying. Even the airline pilots of today had to start somewhere with basic flying. There had to be an entry point that was practical and affordable,” he said.

Sport pilot licenses don’t require as many hours of training as private and commercial pilot licenses, though sport fliers are not eligible to take off and land at runways with air traffic control towers. The medical requirements for sport pilots also are less stringent than for other types of pilot licenses, matching what is needed for a driver’s license.

“What the FAA and the government say by having that rule is that these vehicles have the same level of complexity as motor vehicles,” Knapinski told Discovery News. “You fly in non-complex airspace at relatively low speed.”  Regulations covering the new category of sport aviation aircraft likewise are reduced.  “It gives us an opportunity,” said Terrafugia’s Gersh. “We could never compete with Cessna or Boeing.”

One of the biggest obstacles facing a company like Terrafugia in launching a personal aircraft is not technical in nature or even cost, added Knapinski. It’s perception.  “The comfort level for a significant percentage of the population is not there,” Knapinski said. “They just don’t believe they can operate this type of machine.”  Perhaps having an airplane under the same roof as the family car will be just the ticket.

Detroit’s struggling brands are going for bargain-bin prices, but no one’s pulling out their wallets.

NEW YORK (Fortune) — Depression-era conditions in the auto industry means lots of assets for sale. More brands may change hands than at any time since the late 1980s. Trouble is, nobody seems to have the interest – or the equity – to make a deal.

Fiat got the closest thing to a free lunch when it grabbed 35% of Chrysler in exchange for its intellectual assets. No cash changed hands.

But other Western automakers are leery of linkups because so many of the past ones have blown up in their faces. That leaves car companies from developing nations like China and India, who haven’t been chastened by experience and presumably still have a few nickels to rub together.

But none of the Chinese manufacturers have shown any interest in growing through acquisition, unless it involves another Chinese company. And among India’s automakers, Tata presumably has its hands full, having taken Jaguar and Land Rover off Ford’s hands.

That leaves local rival Mahindra as the default buyer for all of the West’s devalued automotive assets. That’s a lot for anybody to swallow, especially this former tractor manufacturer.

The brands up for sale, in alphabetical order:

Hummer: General Motors President and Chief Operating Officer Fritz Henderson has said that the sale of the Hummer brand is on an “urgent basis.” He made the statement in India possibly to stir up some interest, though Mahindra has officially denied having any.

When he was in China, Henderson pitched some additional prospective buyers there as well. “If any Chinese companies are interested in buying Hummer, it will be certainly an option for us to look at,” he said. “We need to be open to all ideas.”

If Henderson has been to Russia, his remarks didn’t become public but Russian automakers have also been rumored as Hummer buyers – at least until oil prices tanked and the Russian economy cratered.

Jeep: Chrysler insists that conditions attached to its government-guaranteed loan, as well as the existence of a new shareholder in Fiat, make it impossible for it to sell an individual brand like Jeep. But nobody has stepped forward to test its resolve by making an offer.

Everything, they say, has a price, and given Chrysler’s current predicament, the price for Jeep could be cheap. Among the potential buyers whose names have surfaced in the press: Mahindra.

Saab: GM has been in talks to sell its struggling Swedish brand Saab since it was approached two or three months ago by an investor, GM Europe chief Carl-Peter Forster said in January.

The name of the investor hasn’t surfaced, but the Indians are in the mix again. Forster said the Ford Motor disposal of Jaguar and Land Rover to Tata Motors could serve as a model for a divestiture.

One possible buyer is the Swedish government but GM may wind up paying it to take Saab off its hands. The brand has been losing money since GM bought it.

Saturn: The drama over Saturn’s future intensified in January when dealers at a national convention in New Orleans were left in the dark about what will happen next. The only official statement from GM is that it is going to “explore alternatives for the brand” that has been unprofitable since its inception.

Saturn dealers were quoted in Automotive News as speculating “if an Indian or Chinese automaker might try to take over the brand or if such an option is even realistic.” But perhaps significantly, no buyers’ names have surfaced in the media.

Viper: While Viper is small – only about 1,000 of the V-10 powered sports cars are sold every year – it seems to have attracted the most buyer interest.  Chrysler recently said three buyers had expressed interest, and it was conducting due diligence.

Such a small operation wouldn’t produce much in the way of return for Chrysler but it would relieve its management, which has been thinned by buyouts and layoffs, from an operational responsibility.

Volvo: Ford CEO Alan Mulally, who dithered for more than two years over whether to keep Volvo or sell it, has finally made up his mind.  Ford is reported to have met with representatives from leading investment banks in London to discuss Volvo’s sale for $3 billion to $4 billion. Ford paid $6.45 billion when it bought Volvo in 1989.

Volvo, which has a strong brand, decent sales and often makes money, may actually be worth something. BMW thought long and hard about buying Volvo in 1997 before finally backing away.

BMW should have known better. It suffered mightily during its brief ownership of England’s Rover in the 1990s. Like nearly all acquisitions made in the last 20 years, it blew up in the buyer’s face. The message for anybody considering any one of the brands up for sale today is “caveat emptor.”

January sales tumble more than expected at GM, Ford and Toyota as rental car companies slash purchases.

NEW YORK (CNNMoney.com) — Auto sales tumbled 38% in January, plunging even more than expected to their worst levels since 1982 as a pullback in purchases by rental car companies became the latest problem for the troubled industry.

General Motors (GM, Fortune 500) reported that its sales plunged 49% from a year ago. Ford Motor (F, Fortune 500) said sales fell 39% at its Ford, Lincoln and Mercury brands, and 40% overall when including sales at Volvo, which Ford is trying to sell. Chrysler LLC reported a 55% drop in sales.

But it wasn’t just the U.S. automakers reporting sharply lower sales. Toyota Motor (TM) reported a 32% decrease in its U.S. sales, while sales at Honda Motor (HMC) tumbled 28%. Nissan (NSANY) sales fell 30%.

“We are facing unprecedented times in the industry, and no auto company is immune from current market conditions,” said Dick Colliver, executive vice president of sales for American Honda, in a statement.

The sales results were all worse than forecasts from sales tracker Edmunds.com, which had predicted that GM’s sales would tumble 38%, along with a 30% drop at Ford and a 48% plunge at Chrysler. It had also forecast a 25% decline at Toyota, a 23% drop at Honda and a 28% decrease at Nissan.

Overall, Edmunds.com was expecting a 30% decline in year-over-year sales for the industry

Sales tracker Autodata said the seasonally-adjusted annual sales rate, or SAAR, fell to 9.6 million from 15.4 million a year earlier. That is the first time it has been below the 10 million mark in more than 26 years. GM’s director of sales analysis Mike DiGiovanni said that January will mark the first month on record that auto sales in the United States trailed sales in China.

The dismal January sales, which were down 27% from December, are an indication that the problems that almost drove GM and Chrysler into bankruptcy last month show little signs of letting up.

Executives at all three U.S. automakers said the decline was due primarily to significantly lower fleet sales to large business customers, such as rental car companies.

The plunge in demand for travel and rental cars caused leading companies such as Enterprise and former Ford unit Hertz (HTZ, Fortune 500) to pull back on their purchases last month.

As recently as December, fleet sales made up 22% of total industry sales, said George Pipas, Ford’s director of sales analysis. But he added that industrywide fleet sales plunged 65% to 70% in January from year-ago levels, and that they would account for no more than 12% of total industry sales in January.

GM said its fleet sales fell 80% in the month, and that only 1,000 cars out of 12,000 total fleet sales went to rental companies. Chrysler reported a 81% drop in fleet sales, and Ford’s fleet sales were off 65% in January.

Chrysler Vice Chairman Jim Press said during a conference call that Chrysler deliberately moved away from fleet sales to concentrate on sales to consumers, which is more profitable. He said it is better to shut plant capacity than keep them running to supply the rental industry.

“It’s much healthier to have good, retail sales,” he said.

But Mark LaNeve, vice president of sales for GM North America, said that while GM has also been backing away from fleet sales in recent years, it is looking for any sales in this environment.

“We’ll take all the [fleet] volume we can get,” said LaNeve. “We’re aggressively going after it.”

The pain wasn’t just in fleet sales though. GM reported a 38% drop in retail sales, while Chrysler retail sales fell 35%. Ford reported that retail sales were down 27% from a year earlier. GM’s sales’ woes were widespread; out of nearly 100 models, virtually all posted double-digit percentage declines in sales.

GM said that its former finance arm, GMAC, started making more car loans during January after it was granted bank holding company status and received $6 billion in federal funds directed to helping the nation’s banks. GMAC provided little financing for GM buyers during the fourth quarter.

“We did get GMAC back in the game,” LaNeve said. “We think that bodes well for February and beyond.”

But LaNeve said GMAC still provided financing on only about 5,000 vehicles during the month, or less than 5% of its sales, well off of the more than 50% of GM sales it used to finance.

Beyond the credit squeeze, weak consumer confidence also hit sales in the month, according to Jesse Toprak, executive director of industry analysis for Edmunds.com.

He said he doesn’t expect sales in the coming months to improve significantly as long as there are so many worries about job losses and the overall economy. People are likely to hang on to their older cars instead of buying new ones.

“A lot of consumers are realizing what they have now is good enough until the dust settles,” he said.

Still, Korean automaker Hyundai, which is offering buyers a chance to return a car to the automaker should they lose their jobs, bucked the trend in January. Hyundai sales were up 14% from year ago levels.

“They may have hit a chord,” Toprak said. “That may be the new creative way to go for automakers in terms of promotion.”

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DETROIT – General Motors’ U.S. vehicle sales plunged 49 percent in January while Ford’s sales dropped 40 percent, starting 2009 at an abysmal pace for the auto whole industry as lower sales to fleet buyers like rental car companies weighed down the U.S. automakers’ results.

Japanese rival Toyota’s sales dropped 32 percent for the month, and Honda’s sales fell 28 percent. Subaru bucked the trend of declines for a second month in a row, posting an 8 percent sales increase, but the industry overall was on track for its fourth straight month in which U.S. sales plunged 30 percent or more.

Other automakers are set to release their sales figures later Tuesday.  Chrysler sales chief Steven Landry said Tuesday that U.S. industry sales could drop as much as 35 percent in January. After meeting with Chrysler dealers at a suburban Detroit hotel, he said the annualized sales rate for the month could drop below 10 million for the first time in more than 26 years.

According to Ward’s AutoInfoBank, the last month in which the seasonally adjusted annual sales rate dropped below 10 million was August 1982, when it hit 9.9 million as the nation was mired in a recession.

Domestic and foreign automakers have been struggling as unemployment rises, consumer confidence weakens and many people have a tougher time getting loans. General Motors Corp. and Chrysler LLC have received $13.4 billion in low-interest federal loans to stay afloat, and they hope to get more after they submit a viability plan to the government by Feb. 17. Ford Motor Co. has said it does not plan to use government aid.

GM said earlier this month it is planning its turnaround under the assumption the entire industry will sell 10.5 million new vehicles in the U.S. this year. Chrysler has said it’s planning on 11.1 million units, and Ford last week reduced its forecast to a range between 11.5 million and 12.5 million. But few people were expecting the automakers to start 2009 at such a pace.

January is typically a slow sales month, and many automakers and analysts are expecting the market to rebound in the second half of the year as the economy and access to credit improves.

The automakers have rolled out hefty incentive offers in recent months in an effort to boost sales. Edmunds.com estimated the average automaker incentive at $2,714 per vehicle sold in January, down 5.2 percent from December but up 12.5 percent from January 2008.

Jesse Toprak, the auto Web site’s executive director of industry analysis, attributed the year-over-year increase to a greater number of lingering 2008 model year vehicles. He noted that 27 percent of all new vehicles sold this January were from the 2008 model year, up from 12 percent a year ago.

Analysts had expected high-volume fleet sales to be down sharply in January, as rental car companies hold onto their current cars longer. The companies have taken a big hit as consumers and businesses cut back on travel budget in the economic downturn, with a spokesman for Hertz Global Holdings Inc. saying rental car demand has fallen by double digits.

Compounding that downturn have been the production cuts across the auto industry that have idled many U.S. factories for several weeks. Many fleet customers get their deliveries right after cars roll off the assembly line, so when factories suspend production, those deliveries come to a halt.

Detroit-based GM sold 128,198 light vehicles in January, while Ford’s sales totaled 93,060. Toyota sold 117,287 cars and trucks.

GM said its fleet sales fell 80 percent to just over 13,000 vehicles in January, marking their lowest sales level since 1975. GM’s retail sales fell 38 percent.

Dearborn-based Ford said January’s drop in sales of Ford, Lincoln and Mercury vehicles included a 27 percent drop in retail sales and a 65 percent decline in fleet sales.

U.S. sales at Ford’s Sweden-based Volvo division fell 64 percent to 2,910 vehicles in January, from 8,036 a year earlier. The company is exploring a possible sale of the unit.

Toyota Motor Corp.’s sales of light trucks fell 35 percent on about equal declines in SUV and pickup truck demand, while its car sales dropped 29 percent. Sales of its Prius hybrid slid 29 percent.

Honda Motor Co.’s car sales fell 27 percent and its truck sales dropped 29 percent, but the Japanese automaker saw a 6 percent increase in sales of its Fit subcompact, and sales of the updated Acura TSX sports sedan rose 16 percent.

Ford shares fell 4 cents, or 2.1 percent, to $1.84 in midday trading. GM shares fell 19 cents, or 6.6 percent, to $2.60, and Toyota’s U.S. shares rose 90 cents to $64.78.

The Associated Press reports unadjusted auto sales figures, calculating the percentage change in the total number of vehicles sold in one month compared with the same month a year earlier. Some automakers report percentages adjusted for sales days. There were 26 sales days last month, one more than in January 2008.

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