GOTHENBURG, Sweden—General Motors Co.’s preliminary agreement to sell its Saab brand to Swedish sports car maker Koenigsegg Group AB has collapsed, the parties said on Tuesday, leaving the future of Saab in jeopardy.
"The time factor has always been critical to our strategy to reinvigorate the company,” CEO Christian von Koenigsegg said in a statement. “Unfortunately, delays and the closure of the affair resulted in risks and uncertainties, which prevent us from successfully implementing the business plan for the new Saab Automobile."
According to Göteborgs Posten (a newspaper near Saab headquarters in Trollhättan) the deal was dead after Koenigsegg’s negotiations with its Chinese partner did not pan out. But Koenigsegg officials said that the pullout was due to timing of the closure of the deal.
“And as long as we cannot see a precise deadline then the deal can be finalized, we do not want to risk Saab´s, GM's, or anyone else's time or money,” he continued.
Koenigsegg is a small maker of exotic luxury vehicles. The company employs 45 people, and made just 18 cars last year. Saab, on the other hand, is one of the biggest automakers in Northern Europe and employs more than 3,000 people, and supports countless more at Swedish suppliers.
"We're obviously very disappointed with the decision to pull out of the Saab purchase," said GM CEO Fritz Henderson in a statement. "Many have worked tirelessly over the past several months to create a sustainable plan for the future of Saab by selling the brand and its manufacturing interests to Koenigsegg Group AB."
Koenigsegg had been working with the Swedish National Debt Office about a government loan and guarantee, and it recently signed an agreement with a Chinese automotive firm about possibly exporting Saab vehicles to the Chinese market.
Saab’s main market is in Europe. Last year, it sold only 7,400 vehicles in the United States, where it is a niche luxury player that competes with the likes of BMW, Mercedes-Benz, Audi, and Swedish rival Volvo.
The collapse leaves the future of Saab in doubt. GM, through its restructuring, planned to shed Pontiac, Saturn, Hummer, Saab, and the rest of its European businesses. To GM, Saab’s revenues are miniscule—its 2008 sales volume represented only 1 percent of GM’s global revenue. But to Sweden and the country’s auto industry, Saab is seen as a vital part of its manufacturing base.
Earlier in the year, Saab estimated that it would lose up to 6 billion Swedish kronor ($860 million) this fiscal year.
“It's a very complex situation and to make it successful, all players have to play in the same direction with the same timetable, as the company has in terms of their need to close the transaction. Koenigsegg has not managed to get all the players in time to synchronize. It is their assessment that it is then too large a risk to move forward,” Saab Group CEO Jan-Ake Jonsson told Swedish Radio.
Running Out of Options
The Swedish government on Tuesday ruled out a state bailout of the struggling Saab. Any chance of survival for the automaker rests in finding another buyer.
“You can't, by state aid, keep a company ongoing, if you don't have any chance for a competitive company," Secretary of Industry Ministry Joran Hagglund told reporters at a televised news conference.
GM is expected to announce contingency plans next week following a board meeting, but its options are few. GM can try to keep the automaker, much like how it decided to keep its Opel business in Germany, or attempt to find a new buyer. If all else fails, it would have to wind down its business.
One difference between Opel and Saab is that GM has owned Opel since 1929, and Opel models share an extensive set of parts and components with other GM vehicles such as Chevrolet and Australia’s Holden. GM bought Saab in 1995, and the company has operated independently.