It's Over for Saab: GM to Possibly Sell the Pieces

They were holding their breath in Sweden as negotiations continued with a possible savior for one of the country's national treasures, Saab. But it will be a sad Christmas in Trollhättan, where 3,400 employees face layoffs. The talks aimed at selling Saab to small-scale Dutch carmaker Spyker Cars have collapsed, and General Motors now says it will "wind down" the venerable carmaker. The process starts in earnest next month.

A very short history of Saab: The company was opened in 1938, initially producing aircraft for the Royal Swedish Air Force. The first car was the 92, launched in 1947. The idea that this was an automaker with aircraft-derived quality and safety standards helped Saab grow quickly. The 50s and 60s saw the singularly quirky 93, 94, 95 (I had one of those) and the first really modern Saab. The company was a turbocharging pioneer, beginning in 1969.

Early Saab ads capitalized on the company's aircraft connection. Tony Scott was hired to direct Top Gun largely because he directed this commercial: Saab sales reached one million by 1976. GM bought a 50 percent stake in Saab in 1989, then the whole thing in 2000. GM thought it had an agreement to sell Saab to tiny Sweden-based Koenigsegg, but that deal fell through and GM said the decision to close would be made by Christmas. Now, after talks with Spyker have fallen through, Christmas is coming early. Other potential suitors included Renco Group and Merbanco Inc. Spyker said this morning, "We sincerely regret that we are not able to complete this transaction with GM. We worked 24/7 for three weeks, but the complexity of the transaction in combination with the strict deadline simply did not allow us to complete the transaction timely (sic). Our thoughts are with the wonderful management and employees of Saab in these challenging times."

In a conference call, also this morning, John Smith, a GM vice president of corporate planning and alliances, was repeatedly asked by the Swedish media to offer some thoughts on the gloomy prospects for the 3,400 employees and 1,100 Saab dealers. But Smith was fairly vague. "We were left with no other prospect but winding down Saab," he said. At this point, the best thing is to move on."

Smith said an "impasse" had been reached, with unspecified issues that "couldn't be resolved. And we didn't think additional time would change that." Smith said that Saab owners should feel confident that their warranties will continue to be honored, and cars serviced at GM facilities.

Nick Reilly, president of GM Europe, said in a statement, "We regret that were not able to complete this transaction with Spyker Cars. We will work closely with the Saab organization to wind down the business in an orderly and responsible manner."

Smith did hold out a thin hope that an 11th hour buyer would emerge as the clock starts on the wind-down process. More likely is that Saab's intellectual property will get sold off piece by piece. Beijing Automotive Industry Holdings (BAIC) has already made a deal to buy the tooling for the current 9-3 and 9-5 and some powertrain technology.

Selling the company piecemeal "has not been our focus," Smith said, "because we wanted to find a buyer for the whole business. But the clock starts now on those kinds of expressions of interest." One idea is that someone could buy the rights to the Saab name, which GM owns.

Saab has lost money for a long time, and filed for bankruptcy protection in Sweden in February. It sold 93,000 cars worldwide in 2008 (down from a peak around 2004 of more than 130,000), but this year is far off from those figures--less than 10,000 are expected to change hands in the U.S. in 2009.

Some observers, including me, feel that GM could have done more to reinvigorate the Saab brand over the two decades of its involvement. Saab displays at auto shows became increasingly forlorn, with no new models on display. After a while, Saab seemed to become an outlet for the GM parts bin.

Given the resurgence in interest in all things green, Saab could have been a centerpiece for environmentally friendly technology--including both hybrids and electric cars. As it was, Saab developed considerable expertise in biofuels, but that did little for the company's export markets.

Still on the table is GM's sell-off of Hummer to a Chinese company. Smith said he didn't think the Saab debacle would affect the Hummer sale. Plans to sell Saturn to entrepreneur Roger Penske fell through, and the company took its intended sale of Opel (to Magna International and others) off the table.