Saab Automobile AB could get $1 billion and a new shot at survival after a Swedish sports-car maker agreed to take over General Motors Corp.'s (GMGMQ) troubled subsidiary.

A consortium led by boutique sports-car maker Koenigsegg Automotive AB hopes to revive a lineup that languished as GM cut off product funding to conserve cash. As part of the plan, Saab vehicles will remain on sale in the U.S. and the company will follow through on key vehicle launches that stalled amid financial turmoil at GM.

Saab said it needed $400 million from GM to pump into Saab, which includes $150 million already given to the company to fund its restructuring. Another $600 million funding commitment is expected from the European Investment Bank to be guaranteed by the Swedish government, the companies said Tuesday.

The deal is a major step toward resolving unknowns facing GM as it navigates through bankruptcy court. Saab's long-term future, however, remains uncertain.

If the deal goes through, Koenigsegg, founded in 1994 by a 22-year-old entrepreneur to make cars for the super-rich, faces the difficult task of reversing years of mounting losses and sales declines at Saab.

Saab has been "consistently unprofitable" since GM acquired the brand in 2000, GM Chief Executive Fritz Henderson said Tuesday in an online question-and-answer session. He said a "myriad of reasons" were responsible for the failure, but expressed confidence that the new owners could turn Saab around.

"We ran out of money just on the eve of launching the newest generation of Saabs, which we think will be outstanding," Henderson said.

Saab was put up for sale earlier this year as part of GM's efforts to return to profitability. Steady sales declines at Saab accelerated dramatically in recent months, with the brand's future in question.

GM would look to recover $150 million given to Saab as part of the reorganization, a person familiar with the deal said.

Saab's May sales in Europe slumped 66% to 2,191 last month from a year ago, according to data released Tuesday. In the U.S., just 783 Saab vehicles were sold in May, a fall of 64% and less than the Hummer truck brand being offloaded to Chinese investors.

"There are enormous obstacles to overcome" in saving Saab, IHS Global Insight analyst Tim Urquhart said in a research note Tuesday. "Not least [is] ensuring that the company can limit its cash burn and buy sufficient time and attract funding to underpin a turnaround."

Shareholders in the new company are Koenigsegg, with a 23.4% stake; its owner and Chief Executive Christian von Koenigsegg's firm Alpraaz AB, with 42.6%; Norwegian holding company Eker Group, with 11.8%; and San Diego-based Mark Bishop, with 22.2%, according to court documents.

Saab was granted creditor protection in Sweden on Feb. 20, and GM said it wanted to offload the unit by the year's end.

GM has agreed to provide powertrains and technology to the new owners for an undefined time, and expects to build the brand's next new release, the Saab 94-X crossover. Saab also plans to launch the long-awaited revamp of its 9-5 model.

The deal comes a day before a Swedish court is expected to approve Saab's proposal to slash its debt to hundreds of creditors.

Meanwhile, haggling continued over GM's Adam Opel GmbH European unit. Fiat SpA (FIATY) is still vying for Opel after the German government chose Magna International Inc.'s (MGA) consortium over Fiat's offer and pledged to provide bridge financing to keep the company afloat.

Also unresolved in Europe is the future of Volvo, the wholly owned Swedish subsidiary of Ford Motor Co. (F). It remains for sale and interested parties include several Chinese companies - Beijing Automotive Industry and investment group led by auto company Geely Holding. The bidding for Volvo, which had been expected to concluded by the end of this month, could now stretch deeper into the summer or longer, according to a person familiar with the matter.

-By Sharon Terlep, Dow Jones Newswires; 248-204-5532; sharon.terlep@dowjones.com

(Ian Edmondson and Matthew Dolan contributed to this report.)