After six decades of building cars renowned for their teardrop designs and quirky features, cash-strapped Saab Automobile gave up its desperate struggle for a lifeline Monday and filed for bankruptcy.
Saab CEO Victor Muller said "the last nail in the coffin" was previous owner General Motors Co.'s rejection of a Chinese company's attempts to gain control of the ailing Swedish brand. Muller personally handed over the bankruptcy petition to a Swedish court, which approved it late Monday.
Though a theoretical chance remains for a new buyer to step in during the bankruptcy process, analysts said Saab's troubles underline how difficult it is for a small, niche car-maker to survive in today's competitive global market.
"I think it does kind of reflect the situation in the industry that scale is everything," said IHS Automotive analyst Ian Fletcher. "Everyone else have been snapped up ... Saab unfortunately were the last people waiting to dance with someone and they didn't have the right partner."
The move could mean bad news for Saab vehicle owners, who will see their car's resale value drop and could have trouble finding replacement parts if something breaks.
When other car brands have been retired -- like Mercury or Pontiac -- a parent company has remained alive, honoring warranties and continuing to manufacture replacement parts. But Saab is an independent foreign automaker.
"We're in uncharted territory," said Joe Wiesenfelder, Cars.com executive editor and senior analyst.
Saab sales were down to 31,696 globally in 2010.
Saab Cars, according to some industry sources, literally never turned a profit in its entire history. If it made money in Europe, it lost more in the U.S. If it squeaked out a profit in the U.S., it lost money elsewhere to offset it. It was part of Saab-Scania, the Swedish conglomerate that also made airplanes and commercial trucks, until the late 1980s when it sold an interest to GM. Later, GM bought out the car business outright, and merged it with its GM Europe and Opel operations.
GM was trying to build up its luxury offerings, and for a time sold Cadillac, Hummer and Saab at the same dealerships. But recalcitrant Swedish executives who never wanted to be part of GM, and fought cost savings in product development that might have made the car more viable, financially doomed the company and the brand.
The Car for Pipe Smokers
The Car for Pipe Smokers
Saab has long been known for quirky engineering and design, appealing to eccentrics and iconoclasts for the most part. The classic image of the Saab owner is a pipe-smoking college English professor.
The most iconic Saab sold in the U.S. was probably the Saab 99, launched in 1968. A two-door hatchback, the car had the tell-tale (for Saab) ignition in the center console instead of on the steering column. The Saab 900, the 99's successor, was launched in 1978 and was the brand's bread-and-butter in the U.S.
After GM acquired the car company outright in 2000, it gradually tried phasing in vehicles that shared engineering underpinnings with GM cars. The 2003 9-3 shared engineering with GM's Opel Vectra. The 9-7x was essentially a Chevy TrailBlazer SUV with Saab trimmings. The Saab 9-2 was actually a Subaru WRX by way of an alliance relationship GM had with Subaru at the time. The current 9-4x shares its engineering platform and many parts with the Cadillac SRX.
When Muller acquired Saab, it was with an agreement from GM to keep supplying it the engines and components it needed to produce its cars, as well as loan from the European Investment Bank guaranteed by the Swedish government.
Muller, a Dutch entrepreneur, used his luxury sports car maker Spyker Cars to buy Saab from GM in 2010 for $74 million in cash plus $326 million worth of preferred shares. He vowed to gradually increase production while restoring Saab's Swedish identity -- which critics said was diluted under GM ownership. But the company ran out of money just a year later.
As production stopped and salary payments were delayed, Muller fended off bankruptcy by selling Saab's real estate and lining up financing deals with investors in Russia and China. He bought time by placing the company in a reconstruction process under bankruptcy protection.
But the deals fell through, blocked by regulators or by GM, which was concerned that its technology would end up in the hands of Chinese competitors.
The final Chinese suitor, Zhejiang Youngman Lotus Automobile Co., said it was hoping for a deal "to the last moment" but pulled out after the last proposal for a solution was rejected by GM over the weekend.
GM spokesman Jim Cain told The Associated Press Saturday that each new proposal "results either directly or indirectly in the transfer of control and, or ownership of the company in a manner that would be detrimental to GM and its shareholders."
In another email Monday, Cain said he had nothing to add "except to say it is unfortunate."
Bad News For Sweden
The news was grim for Saab's more than 3,000 employees, torn between hope and despair for the past three years.
"This is the most unwelcome Christmas gift I could have imagined," said Fredrik Almqvist, 36, who has worked at Saab's assembly line for nearly 17 years.
While experts say the company is likely to be chopped up and sold in parts, local officials in Saab base Trollhattan -- around 46 miles north of Sweden's second-largest city, Gothenburg -- were hoping a new buyer would emerge to salvage the brand.
Saab's small but loyal following of enthusiasts around the world, enamored with the carmaker's pioneering use of turbocharged engines, heated seats and quirky features -- such as ignition locks between the front seats -- had also not given up hope of the firm's survival.
"Saab drivers don't want to drive run-of-the-mill cars. They want something that is more unique, more individual, but also of a good value," said Mike Philpott, chairman of the Saab Owners Club in Britain. "Very safe, very well-built and also slightly unique and actually a little quirky. And we like those quirky parts of Saab."
Associated Press contributed to this report
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