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Bankruptcy looks to be end of the road for Saab

The Swedish automaker is expected to be liquidated, ending a two-year effort to revive the business after it was spun off by General Motors.

December 19, 2011|By Jerry Hirsch, Los Angeles Times
  • Workers at Swedish carmaker Saab leave the factory in Trollhattan, Sweden, after being informed that the administrator in charge of reconstruction has given up efforts to save the struggling company.
Workers at Swedish carmaker Saab leave the factory in Trollhattan, Sweden,… (Bjorn Larsson Rosvall,…)

Saab no more.

Saab Automobile, the quirky Swedish automaker that liked to advertise its heritage as a fighter jet producer, filed for bankruptcy Monday, ending a two-year effort to revive the business after it was spun off by General Motors Co.

"Some enthusiasts in the U.S. will lament its end," said Aaron Bragman, an analyst with IHS Automotive. "Back in the 1970s and 1980s it was an innovative brand with some unusual power trains. They did turbocharging of small engines long before others did. The cars also had all-weather, good-handling capability."

A segment of auto buyers also gravitated to Saab because it was so different from U.S. carmakers, and even from other European brands, Bragman said.

But there weren't enough buyers of the distinctive nameplate. Saab has sold just 5,305 vehicles in the U.S. so far this year, down sharply from a peak of 48,250 in 1986.

Saab Chief Executive Victor Muller personally handed in the bankruptcy application to a court in southwest Sweden, according to the Associated Press.

His efforts to rebuild the company were stymied by GM. The U.S. automaker refused to allow Saab to transfer technology that the Swedish business had licensed from GM to Chinese investors who had planned to rescue the firm.

Muller, a Dutch entrepreneur who owns the luxury sports car maker Spyker Cars, bought Saab in 2010, pledging to restore the automaker to prominence and preserving about 3,000 jobs, mostly at the Saab plant in Trollhattan, Sweden.

Now the company is expected to be liquidated.

"Saab's bankruptcy is a sad ending for a once-proud brand," said Anthony Michael Sabino, a professor at St. John's University's Peter J. Tobin College of Business. "Saab was simply caught in the middle between a still reorganizing General Motors, which could not afford to compromise its Asian business, and its potential Chinese acquirers."

The bankruptcy won't cause much of a ripple in the auto market because Saab was such a small company, analysts said.

Saab started out as an airplane company in 1937. Originally called Svenska Aeroplan Aktiebolaget, the name morphed into Saab.

Its best-known aircraft was the Viggen, or Thunderbolt, a single-seat, single-engine fighter jet built between 1970 and 1990.

Saab's car division liked to tout its jet-precision roots and even now pitches a "tradition of aircraft-inspired design, independent thinking and innovation that continues to this day."

Its bestselling vehicle was the 1980s-era Saab 900, which among other things was known for its strong performance in snow and foul-weather driving conditions.

Saab's aerospace company parent sold a controlling stake in the business to GM in 1990, and the Detroit automaker eventually acquired the rest of Saab. But GM was unable to make Saab work with the rest of its brand lineup and sold off the business as it worked to recover from its 2009 bankruptcy restructuring.

"A little brand like Saab in such need was not going to make it even with the Chinese loans, which didn't add up to even $1 billion," said Edmunds.com Senior Analyst Michelle Krebs.

Saab said it sells cars in 51 countries through a network of about 900 dealerships. Its models include the Saab 9-3 Sport Sedan, Saab 9-3 SportCombi, Saab 9-3 Convertible, Saab 9-3X and Saab 9-5.

"While Saab will be liquidated under the laws of its native land, expect GM to pick up its patent rights and put them to use in its own line of vehicles, possibly as a new model or two of its established brands," Sabino of St. John's University said.

jerry.hirsch@latimes.com

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