The end of the road for Saab?
Monday, November 30, 2009 at 10:46AM With no state-guaranteed loans or private buyers to save it, it appears that Sweden's Saab will disappear. Negotiations between a consortium led by luxury Swedish carmaker Keonigsegg and General Motors, Saab's owner, which had been ongoing since last June, have collapsed.
About 8,000 jobs in Sweden are at stake, but the Swedish government appears to have ruled out investing public money in the company. The deal with Koenigsegg is said to have depended on US$600 million in financing in the form of loans from the European Investment Bank, with guarantees from Stockholm.
Though the future is uncertain, there are glimmers of hope for Saab, which has been owned by GM for twenty years and never made money: worldwide sales of the car were a mere 100,000 last year. The Chinese partner in the Koenigsegg consortium, the Beijing Automotive Industry Holding Corporation, has said it might be interested in making a bid. Another Chinese auto company, Geely, is set to buy Volvo, also based in Sweden but now owned by Ford Motor Company, and has ruled out any bid for Saab. Merbanco, a group of private investors based in the US, had earlier expressed interest in Saab and has said that they are "very interested in Saab" again.
This is the second time in recent months that a deal to buy a troubled GM brand has collapsed with the withdrawal of the bidder. In September, Penske Automotive Group walked away from talks to buy Saturn. GM is now terminating that brand. And in late October, GM made a surprise decision to back out of a deal with Magna International of Canada to buy German-based Opel.
GM plans to focus on its core brands: Cadillac, Chevrolet, GMC and Buick. Meanwhile, the company must restructure its Opel division which it has determined to be key to GM's strategic development going forward. It is not clear whether GM would be willing—or able— to keep funding Saab for the duration of another long period of negotiations with a potential buyer, should one emerge with a credible bid at this time. In the meantime, Saab's 218 dealerships in the US are hoping for a miracle.
GM's board is to meet tomorrow, December 1, to discuss the Saab situation with representatives of the Swedish government.
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