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GM to close Saab after sale talks fail

Negotiations with the Dutch company Spyker Cars break down over due diligence issues. General Motors says it will immediately begin to wind down the business.

December 19, 2009|Ken Bensinger
  • The 2010 Saab 9-5 Aero on display at the Los Angeles Auto Show Press Days this month. GM said Saab owners will still be able to get warranty service and parts.
The 2010 Saab 9-5 Aero on display at the Los Angeles Auto Show Press Days this… (Allen J. Schaben / Los Angeles…)

General Motors Co.'s plans to save Saab by selling it have failed, and the storied Swedish brand will be the latest to hit the scrap pile.

The troubled Detroit automaker said Friday that its last-minute negotiations to sell Saab to a Dutch supercar maker, Spyker Cars, fell through because of due diligence issues that could not be resolved.

Those talks followed the collapse of a deal to sell Saab to another maker of high-performance cars, Sweden-based Koenigsegg, late last month.

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

Separate talks with a Chinese automaker have resulted in the sale of some powertrain technology owned by Saab but will not save the brand, which GM has had a stake in since 1990 and fully owned since 2000.

As a result, the company will begin closing Saab completely, a process it has been undergoing with the Pontiac and Saturn brands as well.

GM's restructuring plans included just four of the eight brands in its portfolio: Chevrolet, GMC, Buick and Cadillac. Before filing for Chapter 11 bankruptcy protection this year, GM said it would kill off Pontiac and try to find buyers for Saab, Saturn and Hummer, which it had been attempting to sell since at least late 2008.

A deal to sell Saturn to car distributor Penske Automotive ran aground in late September, leaving only Hummer still in play. That sale, to a Chinese heavy manufacturer, Sichuan Tengzhong, is still being finalized.

The wind-down of Saab will commence immediately, the company said. Drivers of the vehicles will still be able to get warranty service, and parts for the vehicles will continue to be made available.

"We expect Saab to satisfy debts including supplier payments, and to wind down production and the distribution channel in an orderly manner while looking after our customers," Reilly said.

Last week, Saab said it had sold powertrain technology associated with the 9-3 and new 9-5 models to Beijing Automotive Industry Holdings Co., known as BAIC. GM said the latest news would not affect that sale.

BAIC had been thought to be bidding on the entire Saab brand when it approached GM early this fall, but as negotiations progressed, its interests narrowed.

Although the government of Sweden has offered to make loan guarantees to a potential Saab buyer, it has refused to bail out the brand directly. Saab has 3,400 employees worldwide and 1,100 dealers.

Saab was founded in 1937 to make airplanes. It made its first car in 1946. Through the first 11 months of this year, GM sold 7,812 Saab cars and sport utility vehicles in the U.S., a 61% decline compared with a year earlier. The brand's worldwide sales are expected to come in under 50,000 units this year.

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