Thanks to a niche car builder, Sweden's Saab story will continue.
Koenigsegg Group, a Swedish maker of so-called super-cars that can top 200 mph, said Tuesday that it had agreed to buy the Saab brand from automaker General Motors Corp., which is in bankruptcy.
With the preliminary agreement, GM looks to have succeeded in unloading yet another piece of its crumbling empire as it endeavors to downsize and return to profitability. In just a few weeks, the automaker has sold off five brands representing nearly a quarter of its global sales. "This is yet another significant step in the reinvention of GM and its European operations," said Carl-Peter Forster, president of GM Europe. "Closing this deal represents the best chance for Saab to emerge a stronger company."
Earlier this month, GM announced plans to sell Hummer to a Chinese manufacturer and Saturn to Michigan-based dealership chain Penske Automotive Group Inc.
In addition, GM in May reached a deal to sell its European Adam Opel unit, which makes the Opel and Vauxhall brands, to a consortium of buyers led by Canadian parts maker Magna International Inc.
All the deals hammered out by GM are expected to close by the end of the third quarter, roughly the same time GM hopes to emerge from Chapter 11 bankruptcy protection.
Saab's new owner, Koenigsegg, founded in 1994 by Christian von Koenigsegg, makes the CCXR, a $1.2-million car that produces 1,018 horsepower, as well as the CCX, which has topped 240 mph. Together, the carmaker and its founder will control nearly two-thirds of Saab, with the rest held by Norwegian and U.S. investors.
The purchase is something of a David and Golaith story: Koenigsegg has just 45 employees, compared with 3,400 at Saab, and Von Koenigsegg, at 37 years old, has no experience running an international manufacturing, marking and distribution business.
A price was not disclosed, although GM said the acquisition would be bolstered by $600 million in financing from the European Investment Bank, backed by the government of Sweden. GM said it would provide additional support to help Koenigsegg take over Saab and complete work on vehicles in development.
The sale of Saab reduces GM's presence in Europe to the Chevrolet brand, which represents less than 5% of all sales in the region and is in fact run by GM's Korean subsidiary, Daewoo Auto & Technology.
As a result, GM's prominent role in Europe, the world's largest car marketplace, has all but disappeared as the automaker tries to reverse years of losses.
GM announced its intentions to sell or shut down Saab in December, and spent the first months of this year shopping it, along with its Saturn and Hummer brands, to a variety of bidders.
With cash growing extremely short, Saab filed for bankruptcy protection under Swedish law in February, after that government declined to provide direct operational support or other financing.
GM acquired a 50% stake in Saab in 1989, buying up the remaining shares in 2000. Attempts to make it into a profitable niche luxury brand proved out of reach.
"We have been consistently unprofitable with the Saab brand since our acquisition," GM Chief Executive Fritz Henderson said Tuesday. "The brand has outstanding appeal, incredibly loyal customers and dealers, and we ran out of money just on the eve of launching the newest generation of Saabs."
Through the first five months of the year, only 4,607 Saabs have sold in the U.S., according to Autodata Corp., a 55% decline compared with the same period last year. GM's overall sales decline for that period was 37%.
GM has about 220 Saab dealers in the U.S. By unloading the brand, GM is expected to spare them the ax that has fallen on about 1,350 other GM dealers this year.
Worldwide in 2008, Saab sold just shy of 94,000 cars, about a fifth of them in the U.S. The automaker employs 3,400 people, largely at its factory in Trollhattan, Sweden.
In agreeing to provide support, GM is expected to help complete the relaunch of the brand's 9-5 model, which starts at nearly $42,000 in the U.S.
The 9-5, along with the 9-3, are built in Trollhattan. The other major Saab model, the 9-7X, a sport utility vehicle, was built in Moraine, Ohio, but production was halted this year and that plant is slated to be closed by 2010.
Henderson said GM expects to produce the new 9-4X, a crossover, for Saab on a contract basis.
"The proposed agreement will enable us to maximize the brand's potential through an exciting new product lineup with a distinctly Swedish character," said Jan Ake Jonsson, managing director of Saab.