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Saab's Bankruptcy Surprise: GM Scrambles


2009 Saab 9-3 Convertible 2.0T

2009 Saab 9-3 Convertible 2.0T

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GM received another shock to its shaky operations last week when Saab suddenly and decisively filed for bankruptcy. Dealers were quickly invited to a phone-in conference, but reported that GM had only "sketchy" details and seemed to be working through the options and details - awkwardly - in real time. Potential scenarios discussed include buying back Saab inventory.

Dealers were assured that GM will continue to support warranties on Saab products, provide parts, and uphold all prepaid maintenance contracts. Yet more incentives will be used to coax languishing inventory off dealers' lots.

Sweden rejected GM's request for financial assistance last week, driving the swift bankruptcy declaration. The process under the country's rules is termed bankruptcy re-organization "under a self-managed Swedish court process." Saab will maintain normal operations during the three-month re-organization, after which time the company will either become viable or move into liquidation proceedings.

Initial cost to GM: $127 million in parts shipped as of today, February 23.

[source: Automotive News]

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Comments (7)
  1. "No scrambling here"

    SAAB Automobile AB's filing for Reorganisation last week was no sudden response. GM's 'viability plan' stated that the Swedish company could file for reorganisation with 10 days of the 'plan' being submitted. Saab under the name of General Motors were forced to make the decision after the Swedish government refused to offer support to their 2nd largest Automotive manufacturer, citing that they are not willing to take responsibility for GM's mess. Stepping in under such terms would alleviate GM for their moral obligation to set SAAB Automobile AB up for autonomy. After years of cancelled products, non-convincing 'stop-gap' models, and pushed many R&D costs onto their Swedish subsidiary, GM has ultimately squandered their investment over the past 10 years. Mr Lutz's alleged negative comments of the brand at the NAIAS haven't helped secure a new investor for SAAB either. This now leaves the company in a precarious position which without a new owner will likely result in insolvency. Not only will the 4,500 workers lose their jobs but it is expected that the demise of the company will impact a further 25,000 jobs with direct suppliers and that is not including the knock effect to other automotive industries. SAAB only requires approximately 100,000 units p a. to turn a profit, so with 3 all new products in the pipeline with an estimated production exceeding 175,000 units p a. by the end of 2011, SAAB has a good opportunity to become a viable niche player in a rapidly changing market.
     
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  2. "Bye Bye"

    Bye Bye SAAB going the way of many a once fine automobile name. Rust in Pieces
     
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  3. "Amazing irony..."

    That a socialist country acts more capitalistically and refuses to bail out a failing firm and a "capitalist" country bails out so many
     
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  4. "Mr"

    I write to clarify: SAAB HAS NOT FILED FOR BANKRUPTCY - it has filed for reorganization. The reorganization is a self-managed, Swedish legal process headed by an independent administrator appointed by the court who will work closely with the Saab management team. As part of the process, Saab will formulate its proposal for reorganization, which will include the concentration of design, engineering and manufacturing in Sweden. This proposal will be presented to creditors within three weeks of the filing. Pending court approval, the reorganization will be executed over a three-month period. Saab will continue to operate as usual an in accordance with the formal reorganization process.
     
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  5. "Swedish company reorganisation procedure"

    I have started a series of blog posts on the Swedish company reorganisation procedure, which may be of interest. The first post gives an outline of the procedure.
     
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  6. "semantics"

    ...sounds like bankruptcy, except for the part about lasting three months. But what's good for the goose should be good for GM, too.
     
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  7. "consumer"

    i just purchased a 2009 awd aero. i love it. drives great and one of the only manual transmission cars that is a 6 cylinder. i hope the swedes are only playing hardball. its a shame to let a good product go. i guess i will be left with a collectors item....remnant of a good product of the past.
     
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