GM Dumps Saab In The Garbage Bin

GM is still in remarkably deep trouble. It is still facing the prospects that the domestic car market will only produce sales of 10 million units this year, and that 2010 may not be better. Americans may have developed the habit of hanging onto their cars longer than they have in the past. The car market will never entirely rebound to the sales levels of four years ago if that is true.

GM may have been restructured, but it cannot remain viable if industry revenue remains low and the competition from Japanese and Korean manufacturers gets fiercer.

GM has begun to dump the baggage of small brands that it started or bought over the years. Saab, Hummer, and Saturn are in the process of being auctioned off. GM appears to have found a greater fool to take on Saab and that fool is Koenigsegg Automotive. That means that Saab will operate out of its home market which is Sweden. According to Bloomberg, “The sale is tied to a $600 million loan by the European Investment Bank that’s backed by the Swedish government.”

That loan will never be repaid.

Saab’s sold 783 vehicles in the U.S. in May. America is the largest car market in the world, followed by China, where Saab has no major presence. Europe, where Saab may have some chance of selling cars, has become more intensely competitive as auto firms jockey for position in a market where profits are nearly impossible to come by.

Saab may have a new owner, but it has no future.

Douglas A. McIntyre