Saab deal falls apart as the brand nears extinction

Posted by: David Welch on November 24, 2009

saab.jpgSwedish sports car maker Koenigsegg Group AB has come to its senses. The company decided to pull out of its earlier agreement to buy Saab from General Motors. Barring some new edict from GM’s board, the auto maker will likely just wind the brand down. Management doesn’t want to keep it, say two GM executives familiar with the company’s planning. So unless the board overturns their wishes, Saab will join Pontiac and Saturn on their way to the auto industry’s Boot Hill.

For GM CEO Fritz Henderson, this is the third attempted deal that has fallen apart. His own board decided to keep Opel rather than sell it to a consortium of parts maker Magna International and Russia’s OAO Sberbank. Renault-Nissan wouldn’t provide the new cars to fill Saturn showrooms once dealer chain Penske Automotive Group took it over. So the deal died. And now the Saab deal has fallen apart.

Of the three failed deals, only the Opel sale effort puts heat on Henderson. Two sources inside GM say he never liked the deal. But the German government wouldn’t fund a GM-led restructuring or a sale to another bidder. The German government would only fund the sale of a controlling stake to Magna and Sberbank. But several board members thought that GM could have used its leverage to get the German government to bend, say two sources who are familiar with the discussions. Eventually, the board’s stubbornness succeeded in getting the German government to bend. GM will keep Opel and the German government appears more willing to help with financing.

As for Saab, collapsing the brand really is the best thing for GM. The last thing the company needs as it is trying to find profits in North America, get attention for its besmirched brands and restructure Opel in Europe is wrestle with Saab. GM has never been able to adequately fund it ever since buying 50% of it back in 1990. The brand commands a niche in the northeastern U.S. quite nicely. But that only gets GM 7,441 sales in the U.S. this year. That’s off 62%. Sales in Europe are off just as much.

We’re talking about a brand that struggles to sell 100,000 cars a year globally. It only really sells two models, the 9-3 and 9-5 sedans. Even sharing parts and platforms with Opel, it’s tough to make a profit. “I don’t know that you can make a business case for it,” says IHS Global Insight analyst John Wolkonowicz. That’s especially true for GM.

Reader Comments

74stingray

November 24, 2009 4:58 PM

Yeah.... I guess the author of this is a standard run of the mill BMW or Japanese car driver....

Koenigsegg was nothing more than a playboy looking to play with the big boys and could not.... he ordered a super sized big mac when in reality von Koenigsegg is happy meal material.

Funny how you lay the blame on Saab, and not on GM... where the blame belongs.

You ignore Saabs rich heritage... and simply go "with the flow" to toss them on the scrap heap.

What about the workers in Trollhattan, or are they expendible as well?

Jeff

November 24, 2009 5:02 PM

Another Great Car Company ruined by GM..

Asela

November 24, 2009 5:20 PM

SAAB's were always for peculiar people. I remember trying to find the ignition on an old Saab 900 and eventually finding it between the front passenger seats. And the quality was just terrible. And the designs even worse. Good riddance. Even all the peculiar people have migrated to Subaru or is that it Saabaru? Sorry guys I could not pass that up. :-)

LAO

November 24, 2009 5:42 PM

GM's real goal was probably to kill Saab all along. My early GM Saab 900S didn't even qualify for cash for clunkers -- because its gas mileage is too good. I didn't care because it is still running great -- just a couple of reasons that it was more appealing than anything GM was willing to offer. It's a bitter pill. Thanks, Saab folks, for the great ride.

thomas

November 24, 2009 5:50 PM

sad.
they're such well-made cars.
it seems it's almost impossible for an auto manufacturer
to make a profit in this economy, i suppose, and this brand has been holding on by a thread for some time.

thomas

TomV

November 24, 2009 6:44 PM

This comment is un-related to this article, and I will apologize for that up front. But I'm getting tired of BW's policy of not allowing comments on AP articles. If BW puts an article off of the AP on this website, allow comments. In this case, the NBA uniforms made outside the US article deserved comment. When you have a senator asking for Addidas to reverse this decision, while the Senate continually votes on legislation that is anti-business, hypocricy does not even begin to describe what our elected officials on Capitol Hill are doing these days.

charles taylor

November 24, 2009 7:33 PM

GM is still the old GM. This will have the world think twice of doing business with America.

Trust me, the germans and the swedes will not forgive or forget from "mistakes" of selling their auto industry in 1980s to american big business.

Robin P

November 24, 2009 7:53 PM

What a difference how GM crashed Saab compared on how Volvo is doing today under Ford.
I know Ford is considering the sale of Volvo; still, the Volvo line-up has grown and they currently boast the most stylish Volvos ever.

BTW, what will happen to the new 9-5? ...RIP?


Robin P.

Daniel

November 24, 2009 9:25 PM

Nooooooooo ! I like Saab, they are just cool, fast and unreliable cars. I have one.

Steve

November 24, 2009 10:04 PM

Unless you have ever owned a Saab or even driven one, you will never know why this is so sad. I currently own 5 Saabs. From a 1988 900 Turbo to a 2003 9-5 Aero. These cars are special. The brand is special.
My family and I will keep our fingers crossed hoping GM keeps it or sells it to someone who will keep it going. GM - please don't kill Saab like you did the others!
PLEASE!

norman ravitch

November 24, 2009 10:34 PM

I had a Saab once; it was the worst car I ever had and the most expensive one to keep up. Everything always went wrong. Even the heated seats had a drawback: the heat destroyed the belts holding up the seats. Good riddance!

Phil

November 25, 2009 10:41 AM

OK. GM bares some responsibility for the CURRENT problems with Saab. However, you've got your history all wrong to say GM wrecked Saab. GM got into Saab cheep both when they bought their original interest and when they bought the rest.

Why? Because Saab (the jet and industrials company) WAS LOOSING LOTS OF MONEY on their cars! If GM had not bought into Saab in '90, the company would have stopped selling cars many years ago.

Should GM have played into this niche market to begin with? That is an open debate seeing how many car companies struggle. (Yes. Ford has never made a profit on Volvo and Volvo cars are worse, not better, as a result of their ownership.) However, Saab's unit sales improved each year during the late '90s and early this decade. And, based on how they have faired with critics over the years, they have gotten better on the whole.

Bottom line, GM is very hit and miss when it comes to being successful in niche markets and Saab has been hit and miss for them.

Who knows. Maybe the board will decide to take a different approach with them as well...It wouldn't hurt for Saab to stay around, even if those of those who don't live on the coasts or in Chicago can't get one...

saabinjake

November 25, 2009 11:24 AM

Perhaps the real Saab would like to buy back control and make decent cars again instead of the crap GM put out after taking over.

victor

November 25, 2009 12:27 PM

I owned 81,85 and 89 SAAB turbos ,also 2002 9-3 SE.Pre GM cars: great handlig and ride,a pleasure to drive them . Thank you SAAB !!.GM owned SAABs ,with parts from Opel etc are not nearly as good and practical. Basically GM destroyed a very good car. I doubt they
ever understood the SAAB philosophy. Pity .Sorry to see it go!!

Leslie in Canada

November 25, 2009 12:30 PM

On auto company stories, everyone feels inclined to relate their personal experience. Not having ever owned a SAAB myself, I think that the fact that GM paid $600 million for the first 50 percent of the company and then only $125 million for the remainder indicates it is not worth much from a commercial standpoint. SAAB, with its rich heritage, as one poster calls it, has never in its entire history had a profitable year. It is unlikely to have survived without GM up to this point anyway. Even companies better-managed than GM, like BMW, can't turn a sow's ear (Rover) into a silk purse.

raj

November 25, 2009 12:59 PM

TATA will buy SAAB soon.....

cheap microwave

November 25, 2009 3:51 PM

I think saab are not only relaible but great value for money.

Chris

November 25, 2009 10:45 PM

We own 4 saabs and love them. They are very safe, fun to drive and comfortable. We don't want them to go out of business. No other cars compare. We have tried other brands and always go back to Saab. I hope someone buys them.

Arn

November 25, 2009 10:49 PM

Ask any SAAB dealer: GM ruined SAAB. The new SAAB needed to be a hybrid, return to the hatchback, green car. I've owned three SAABS. All have been wonderful. I drive a 2000 5 door hatchback. Great turbo, great road car, safe, well-built and that hatchback trunk is amazing- no one can believe the furniture, etc. I've successfully loaded into my SAAB. SAAB's became too expensive, too much emphasis on luxury. I swear you could have made that brand profitable. I feel sorry for the workers, of course.

Kris

November 26, 2009 3:35 AM

@Steve, You said it perfectly, you have to own a Saab to understand how sad this is. 2 of my first cars were Saabs, Im from New England so I think everyones first car was a Saab. Its a car that taught you lessons, take care of it and it will take care of you. They broke, they stalled, they looked like tear drops, they cost you every penny you earned, but they were a blast to drive. They were the crazy aunt or hippy uncles grown-up VW. I've owned Jags, Audi's, VW's, Infinitis and Saabs and my favorite cars will always be Saabs. Everything about Saab is hit or miss, but its always been a more personable and affordable alternative to the BMW's and Mercs. Maybe they would have failed before GM, but GM didnt help either, it was like hip surgery on a 12 year old dog. They could've spent the money and made it a whole new dog or let it go and saved it the pain. Anyways, I just wish companies would realize the country isnt just divided up between the rich and the poor, but sometimes between the 'main stream' and the 'off the beaten path'. Saab was never going to be the Euro Cadillac, it was always a niche car and will always be if it sticks around.

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Want the straight scoop on the auto industry? Our man in Detroit David Welch, brings keen observations and provocative perspective on the auto business.

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