A Farewell to Saab

Moneybox
A blog about business and economics.
Dec. 19 2011 10:03 AM

End Of The Road For Saab Automotive

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A Saab logo is pictured on a car at a Saab shop in Nieuwegein on December 19, 2011 .

Photo by ROBIN UTRECHT/AFP/Getty Images

Long-troubled Swedish automaker Saab looks set to throw in the towel with a bankruptcy filing announced today after General Motors vetoed a sale of the firm to Chinese investors.

For some time, Saab had been owned and operated as a money-losing subsidiary of General Motors. Then when the global automobile industry went into a tailspin in 2008-2009, GM sought to divest itself of the company. There was a push in Sweden at the time for some form of bailout, but none was forthcoming from a Swedish government which (wisely in my view) embarked on a massive campaign of monetary, fiscal, and credit expansion rather than focusing on specific firms. That left Saab in the hands of Swedish Automobile which, somewhat confusingly, is actually Dutch company primarily known for producing the Spyker Squadron race car. Swedish Automobile couldn't make money building Saabs either, and was in the middle of an effort to sell the brand to some Chinese autoparts makers eager to move up-market. But GM retained veto power over any such move, in part because key Saab vehicles contained GM-owned intellectual property. GM is concerned that if the IP shifts to Chinese control it'll spread unabated and, I think, simply has no desire to face additional competition in the China market.

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The fact that a company is filing for bankruptcy doesn't mean it'll never be heard from again, but in this case that seems to be the most likely outcome—there are simply no options left for an automaker that's far too small to survive in the contemporary global market. Note, however, that Saab Automobile hasn't been owned by its original parent company Saab A.B. for over twenty years. That firm, which is primarily involvedin aerospace and related military applications (this popular light anti-tank missile, for example) is still very much alive and well.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.