Saab is to be closed down by General Motors, after no new buyer for the troubled Swedish firm could be found. Some 3400 people employed directly by Saab are expected to lose their jobs, and 1100 dealers worldwide will have to find new franchises.
GM’s European president Nick Reilly said no deal could be reached with the sole remaining bidder, Spyker Cars.
“Despite the best efforts of all involved, it has become very clear that the due diligence required to complete this complex transaction could not be executed in a reasonable time. In order to maintain operations, Saab needed a quick resolution,” he said.
In a press conference shortly after the announcement was made, GM Vice President of Corporate Planning John Smith said that “during the course of the negotiations with Spyker, unresolvable issues arose on both sides.” He declined to explain the exact nature of the particular issues, but added that “there comes a time in these kind of discussions when it’s clear that no further progress can be made. At that point, the best course for everyone is just to move on.”
Smith did confirm that the failure of Spyker’s bid wasn’t due to lack of support from either the European Investment Bank or the Swedish government. “The EIB supported our negotiations right until they ended this morning.”
“The Swedish government also worked particularly hard to secure a future for Saab,” Smith continued “and was disappointed with our decision to wind down.” Smith went on to suggest, however, that the Swedish government’s refusal to act as an investor in Saab, but only as a potential guarantor of a loan to a separate bidder, made GM’s task to save Saab considerably more difficult.
Economies of scale
Summing up GM’s ownership of the troubled car-maker, Smith said that there had been “no shortage of effort on behalf of GM, over 20 years, to put Saab on a good footing. It was always difficult to integrate the company into GM,” Smith went on, “and to find the bigger economies of scale that would make its business more profitable.”
“We do take responsibility for what’s happened to Saab over those 20 years,” Smith admitted, “but in the end, there was really no more that we could do."
Spyker boss Victor Muller was disapointed a deal couldn't be reached.
Victor Muller: “We sincerely regret that we are not able to complete this transaction with GM. We worked 24/7 for three weeks, but the complexity of the transaction, in combination with the strict deadline, simply did not allow us to complete the transaction in time. Our thoughts are with the wonderful management and employees of Saab in these challenging times.”
The next step for GM is for the Saab business to be wound down, its production and distribution facilities to stop and its employees to be made redundant – a process that’s expected to begin in January and take months.
However, General Motors will not put a timescale on the winding up of the company or say how much it will cost. GM Vice President John Smith said, “there’s no definite plan of how long it might take.”
Smith also said that GM had an idea of how much the closure would cost, but wouldn’t disclose the amount. However, it is likely to be considerably more than the short-term cost of keeping Saab open.
It only has one manufacturing site, at the firm’s Trollhatten base, but the 9-5 and 9-4X were due to be made in Germany and Mexico respectively. Both of these cars would have been factored into the factory’s profit forecasts – pulling them out will affect the future of the plants.
Smith suggested that many of Saab’s assets would be sold off piecemeal. In that vein, GM has already agreed a deal with Chinese firm BAIC for the rights to the current 9-3 and old 9-5. The new 9-5 was due to reach UK showrooms early next year, and alongside the 9-4X, is expected to look like a particularly attractive asset to other car-makers seeking to profit from Saab’s demise. However, Smith said that no plans had been made to sell either of these unreleased models.
GM's troubled year
Pontiac and Saturn suffered similar fates to Saab's in the US when GM failed to find a buyer for the firms. GM's remaining European brands are Opel and Vauxhall.
“We will work closely with the Saab organisation to wind down the business in an orderly and responsible manner,” said Reilly. “This is not a bankruptcy or forced liquidation process.”
"Consequently, we expect Saab to satisfy debts including supplier payments, and to wind down production and the distribution channel in an orderly manner while looking after our customers.”
GM also said it will honour all existing warranties for Saab owners.