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Koenigsegg pulls out of SAAB consortium

Editorial Staff

Saying that it could not reach agreement with its consortium partners over a strategy to move SAAB from mass market to premium brand, Koenigsegg has told both GM and the consortium that it's not going ahead with the deal announced in June.

GM, which itself did an about-turn on the sale of Vauxhall-Opel after getting an insolvency arrangement approved which included the disposal of the European operations, says it is "disappointed" that the deal now appears dead.

Consortium member BeijingAutos described the collapse of the deal as "regrettable" and says that it will now consider its options. In theory, that would include seeking Chinese government money to complete the deal.

Koenigsegg was certainly looking to punch above its weight: SAAB's terrible 2008 still produced more than 90,000 cars; its proposed saviour made under 20. SAAB employs around 4,000 people; Koenigsegg employs 45. And Koenigsegg did not have the money to make the deal stick: it applied for bank guarantees for some GBP375 million (in euro, of course) : its plan was to borrow the money from the European Investment Bank which was given a huge amount to aid stimulation across Europe - but it would need Swedish government guarantees: five months on, they are still waiting.

GM may decide to keep SAAB. But it's GM's fault that the once premium brand had slipped to "mass market" as Koenigsegg described it.

Earlier this month, when GM reversed its decision to sell Vauxhaull-Opel, it announced, days later, 5,000 job cuts. That led to immediate hostility from both the German government and unions.

For SAAB, it has announced the first "proper" SAAB for several years: it's been a hotch-podge of bits from the GM parts bin for more than a decade, losing its once loyal customer base in the process. If GM was prepared to let SAAB build its own cars, then it may consider that it should follow that path.

The other European brands are producing a range that is raising the bar in the mass market; indeed, GM could do worse that convert its Daewoo plants to production of the EU product and throw away the vehicles it is making there now. Asian markets crave the quality of the EU product but don't get it.

That's a strategic error. Even if Vauxhall-Opel-SAAB are produced in Europe and screwdrivered in Korea or other Asian markets such as Thailand or Malaysia, their cars would find a ready market with quality that is now approaching leading Japanese brands.