- The Washington Times - Wednesday, November 25, 2009


A Swedish automaker has backed out of a deal to buy Saab from General Motors Co., casting serious doubt on the future of the troubled brand.

Koenigsegg Group AB said Tuesday that it has decided to scrap the deal, which was announced in June. Financial details of the acquisition were not disclosed by GM.

The collapse of the Saab sale is the third GM deal to fall through this year for a variety of reasons.

GM Chief Executive Officer Frederick A. “Fritz” Henderson said the company is disappointed with the decision and will take the next several days to figure out what to do.

A person briefed on the deal said Tuesday that Saab’s future is now uncertain. GM’s board will have to decide the company’s next move, said the source, who asked not to be identified because the decision has not been made.

Before Koenigsegg emerged as a buyer, GM had contingency plans to shut down Saab’s operations, the person said. Saab went into a court-protected restructuring Feb. 20 after the Swedish government said it wouldn’t buy Saab from GM.

Koenigsegg said in August that it lacked about $417 million to conclude the deal. But in September, a consortium led by the company struck a preliminary agreement with Beijing Automotive Industry Holdings to give the Chinese company a minority stake in an effort to raise more money. The consortium included Norwegian investor Baard Eker and the deal was subject to a funding commitment from the European Investment Bank, to be guaranteed by the Swedish government.

The chairman of Koenigsegg Group, Augie K. Fabela II told the Associated Press that financing had been worked out, but the company was unable to get agreements from its investors on how to move Saab from a high-volume brand to a premium auto seller.

The longer the talks with investors and GM took, the less likely it appeared that Koenigsegg would be able to make money on the deal, he said.

“We extended the timeline on this three times … and unfortunately every time they extended it the recovery potential grew lesser and lesser.”

Mr. Fabela called the decision difficult and painful.

It will be tough for Saab, which has about 4,500 employees, mostly in Sweden, to recover from Koenigsegg’s decision. GM has been selling off existing inventory and preparing to end its role with the company, which would be difficult to reverse.

Through October of this year, GM sold only 7,441 Saabs in the United States, a 62 percent drop from the same period in 2008.

In October, only 513 Saabs were sold nationwide.

Analysts say GM, which bought half of Saab in 1990 for $600 million and the rest for $125 million in 2000, was unable to differentiate the brand from its other products or find a sales niche. GM has conceded that it never made money with Saab.

Koenigsegg, a tiny company that makes only a dozen high-performance luxury cars a year, was founded in 1994 by Christian von Koenigsegg, a Swedish sports car fanatic and entrepreneur who remains chief executive officer. Its headquarters and factory, which produces cars that cost more than a $1 million each, are located at a former air base in southern Sweden.

GM has had trouble shedding its brands as it tries to restructure and focus on Chevrolet, Buick, GMC and Cadillac.

GM’s board decided earlier this month to back out of a deal to sell its European Opel unit to a group led by Canadian auto-parts supplier Magna International Inc. Auto dealership chain owner and former race car driver Roger Penske in September ended plans to buy the Saturn brand after an agreement to get cars from France’s Renault fell through.

The GM board has chosen to phase out Saturn, a possible fate for Saab.

But GM will keep and restructure Opel, which unlike Saab, is considered critical to GM’s international operations. GM was concerned that Opel designs and technology would wind up in the hands of competitors.

A deal for GM to sell its Hummer brand to Chinese manufacturer Sichuan Tengzhong Heavy Industrial Machinery Corp. still must be approved by the U.S. and Chinese governments.

The Koenigsegg decision comes as the fate of another Swedish automaker, Volvo Cars, remains uncertain. Last month, Ford Motor Co. announced that it had picked a consortium led by China’s Geely Group as the preferred bidder to buy Volvo. That deal hasn’t yet been completed.

Copyright © 2018 The Washington Times, LLC. Click here for reprint permission.

The Washington Times Comment Policy

The Washington Times welcomes your comments on Spot.im, our third-party provider. Please read our Comment Policy before commenting.


Click to Read More and View Comments

Click to Hide