GM's Saab and Opel Future Looks Bleak

In what appears to be a double blow to GM's fight out of bankruptcy, the US automaker saw the deal to sell Saab to the niche Swedish firm Koenigsegg Group AB collapse as the buyer walked away. GM simultaneously failed to sell its restructuring plan to labor leaders, where it was trying to cut 20% of the labor force at Opel and at its sister brand Vauxhall.

Saab, which GM bought in 1990 and currently has a 50% stake in, has never made money for its U.S. parent. Sales of the brand have nose-dived and GM, which itself emerged from bankruptcy in July, had said it would sever its ties with the Swedish firm at the end of this year.

The Swedish government ruled out a bailout for Saab, which is expected to lose $433 million this year. It seems GM will either have to start the sale process afresh or close down Saab in an effort to avoid bankruptcy. GM may have no option but to sell or close down its two units in the face of over-production in the European markets and a lack of liquidity and certainty.