Saab Finally Dies

It took the better part of a year. The owners of Saab sought capital all over the world, and the search ended in China. But a deal with local manufacturers and a government bank could not be sealed. Saab has filed for bankruptcy. One of the most famous brands in the auto industry will join Pontiac and Oldsmobile on the scrap heap. Saab is not the last car brand that will disappear this decade. The period of brand consolidation in the industry is not over.

Saab’s sales fell apart a decade ago after General Motors (NYSE: GM) bought the company and then found that the management costs of the firm were not worthwhile compared to its sales.

Saab was close to a deal with Zhejiang Youngman Lotus Automobile and a state-controlled Chinese bank. The new financing would have given Saab’s parent $782 million in loans. GM retained the right to block a deal to sell Saab. The U.S. car firm vetoed the Chinese loans, although it is not clear why. It probably does not matter. Saab sold only 36,696 cars last year. Its production has been shut down so far this year because of a lack of funds.

Saab began in 1937. However, longevity no longer guarantees a brand’s survival. Pontiac was nearly eight decades old when GM closed it. Oldsmobile was even older. Fiat says it probably will shut down the Dodge brand. Its sales are too modest to support manufacturing and marketing costs, according to Chrysler owner Fiat.

Saab was always a niche brand. It makes sense the it should disappear. Pontiac, Olds and Dodge are another matter. They were mainstream brands for years. That does not matter, though, in a car industry in which two huge U.S. companies were close to liquidation. Saab will not be the last brand to be abandoned by a big automobile manufacturer.

Douglas A. McIntyre