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Quirky Saab looks headed for brand junkyard

Barring a last-minute reprieve, long-ailing Swedish automaker Saab could be about to follow such brands as Plymouth, Packard, Oldsmobile and Pontiac into oblivion.
Image: Saab
The boxy Saab 900 from the mid-1980s was emblematic of the Swedish automaker's quirky style. General Motors

The year’s big sob story may be coming to a conclusion. Make that a Saab story, for barring a last-minute reprieve, the long-ailing Swedish automaker could be about to follow such brands as Plymouth, Packard, Oldsmobile and Pontiac into oblivion.

Founded in 1937 as Svenska Aeroplan AB, Saab Automobile is one of four General Motors divisions that the U.S. maker decided to abandon as part of its bankruptcy reorganization, earlier this year. The original plan was to shut down Pontiac and sell off the Hummer, Saturn and Saab brands. But while the sale of Hummer has gone ahead, both Saturn and Saab have been unable to find buyers who could pull off a deal.

Earlier this month, the GM board of directors decided to shut down Saab when a bid by pint-sized Koenigsegg, a European maker of elite sports cars, collapsed. But in a move that might have been scripted by Hollywood, another potential buyer raced in. Spyker is another manufacturer of high-performance sports cars, based in the Netherlands, and with the support of a Russian-based investor, it is hoping to rescue Saab.

On Dec. 18 GM officials said that the deal with Spyker had fallen through and that Saab would be shut down. But since then GM has seemed to leave open the possibility of a 13th-hour deal.

GM spokesman Tom Wilkinson said Tuesday, “We are continuing with the wind-down as we sort through the proposals that have come in.” That suggests there may be others in addition to Spyker still hoping to bail the Swedish maker out.

On Wednesday, Saab said GM had dropped a Dec. 31 deadline for bids and it will restart some production lines in January after a shutdown.

"We are preparing the wind-down process. At the same time we are open to options, to bids that come in. Therefore the deadline has also been dropped," Saab spokesman Eric Geers said. A spokesman for GM in Europe said he had no information on the deadline being canceled and could not immediately comment.

Geers said Saab will restart some production lines again in January for its new 9-5 model and Cabrio.

But don’t hold your breath. Coming up with cash is difficult enough. Producing a viable business plan that can transform a perennial money pit into a money maker is far more difficult. Just ask GM, which has struggled to find the right formula ever since it acquired the automotive arm of Saab AB in 1989.

The company has struggled since the day it began producing its first car, the Saab 92, in 1949. The company got into the car business when it realized its core aerospace business might suffer hard times at the end of World War II. The original Saab 92 showed the company’s roots in its aerodynamic design and remains as wind-slick as the best cars of today.

The company had a penchant for the odd and unusual. Its designs were self-consciously quirky, and the company long relied on small, two-stroke engines. They were surprisingly efficient for their day but also required the driver to regularly pour oil into the gas tank to keep the engine lubricated.

Always short of the cash it needed to develop more modern products, Saab turned to a joint venture with Fiat, in 1978 to jointly develop a series of products, starting with the 1978 Saab 600, also sold as the Lancia Delta.

In 1989, GM entered a bidding war and ultimately purchased a 50 percent stake in what would become Saab Automobile AB, in December of that year. Eleven years later, much to the chagrin of shareholders and industry analysts, GM bought the remaining stake for $125 million, while assuming the rest of Saab’s hefty debt.

Over the years, GM has tried all sorts of plans to make Saab pay for itself. But despite the typically quirky ad campaigns — and a brief effort designed to tell the world Saab wasn’t quirky, after all — nothing seemed to work.

In fact, suggests independent auto analyst Dan Gorrell, part of the problem is that Saab products really didn’t have much of an identity, whether quirky or mainstream. After the products developed with Fiat’s help faded away, they were replaced by models all but identical to those sold by other GM brands. About their only distinguishing feature was Saab’s tradition of placing the ignition key over the center transmission hump.

Ironically, critics say the company was getting ready to roll out some products that might finally meet expectations, with unique designs and features that finally seemed in tune with a nameplate that advertised itself as “Born from Jets.” That included the all-new 9-4X crossover and a radical remake of the long-running 9-5 sedan.

The latter model could wind up in showrooms if Saab does restart production in the new year. But few analysts seem ready to bet on that likelihood.

As with Pontiac and Saturn — the latter brand having also failed to find a buyer — GM would halt production and begin selling off the remaining stock in showrooms here and abroad. It would likely mean hefty discounts for remaining inventory — much like the rebates of up to $7,000 it is currently offering Saturn and Pontiac dealers. The challenge will be to convince already skeptical shoppers to plunk down cash for an “orphan brand.” But GM has said it will continue to provides parts and warranty service well into the future.

The death of the Saab brand would be a particularly painful blow for the proud Swedes. But while the country’s other brand is struggling, it seems to have a bit better odds. Last week, Volvo’s U.S. parent, Ford, announced that it had all but completed the sale of the brand to Geely, one of the most aggressive of China’s emerging automotive manufacturers.