A deal by General Motors Co
GM had been aiming to close a deal by the end of next month to sell Saab to a partnership led by the Swedish luxury car builder Koenigsegg and backed by China's Beijing Automotive Industrial Holding Ltd.
Koenigsegg said in a statement on Tuesday that it had withdrawn from the sale process, about five months after the two sides had reached a preliminary deal for Saab.
The time factor has always been critical for our strategy to breathe new life into the company, Koenigsegg said.
The development represents a setback for GM, which has been working to shed brands as part of a more narrowly focused sales strategy after emerging from a bankruptcy in July backed by over $50 billion in U.S. government financing.
Closure of Saab and its Trolhattan, Sweden production hub would also threaten over 3,000 jobs and scuttle a plan spearheaded by the Swedish government to help finance a restructuring of the company.
A tentative deal by GM to sell its Saturn brand to Penske Automotive Group
GM Chief Executive Fritz Henderson said the automaker would take the next few days to consider the options for Saab.
We're obviously very disappointed with the decision to pull out of the Saab purchase, Henderson said in a statement. We will take the next several days to assess the situation and will advise on the next steps next week.
GM's 13-member board is scheduled to meet next Tuesday in Detroit for a regular monthly meeting and the question of what to do with Saab will now lead the agenda, said one person with direct knowledge of the situation.
There are no other bidders for the brand, meaning that GM's only options would be to restart the sale process or opt for closure, the person said.
Because of the pressure GM faces to focus on its remaining four core brands -- Chevrolet, Cadillac, Buick and GMC -- a wind-down of Saab operations is likely, the person said.
DWINDLING APPEAL, MOUNTING LOSSES
The collapse of the sale of Saab comes as GM scrambles to restructure its European Opel unit. GM's board decided earlier this month to keep the unit, which includes the Opel and Vauxhall brands, rather than sell it to a group led by Canadian auto parts maker Magna International.
GM said earlier on Tuesday that it had repaid a loan from Germany for Opel and had trimmed its plan for job cuts at the unit to about 9,000 to 9,500, or up to 19 percent of the unit's work force.
GM bought 50 percent of Saab in 1990 for about $700 million. It paid $125 million and assumed debt for the remainder of the unit in 2000.
But GM had never made money on Saab during the nearly two decades it owned the brand. Efforts to use GM platforms to engineer recent Saab models failed to win back buyers and an ad campaign to sell the brand as Born from Jets fizzled.
GM Vice Chairman Bob Lutz described the brand as having been on life support by its Detroit-based owner for years.
Saab sales dropped 35 percent in 2008. U.S. sales this year for the brand are down nearly 62 percent through October at 7,441 vehicles.
Earlier this month, Saab said it would terminate 81 U.S. dealership franchise agreements, cutting its distribution by more than a third from 218 dealerships.
Saab has very well put together cars, design and engineering. But they have not had that one car that was a game-changer, said George Augustaitis, market analyst with CSM Worldwide. Saab never had that one product that people look to and say that defines the brand.
Aaron Bragman, an analyst with IHS Global Insight, said the impact on GM of closing Saab would be limited because of its limited sales.
Saab is a difficult case, Bragman said. It's almost a niche brand now, so its appeal is frankly limited.
Unless they can find a buyer it is the end of another storied brand, Bragman said. It is part of the underlying consolidation of this industry. There really is not the room for as many players as there have been before so we are going to see them continue to close.
Saab has said it lost about $340 million in 2008. GM has not released more recent financial information for the brand.
(Reporting by Kevin Krolicki and David Bailey; Additional reporting by Bernie Woodall and Soyoung Kim; Editing by Dave Zimmerman and Tim Dobbyn)