Swedish Automobile N.V., the owner of Saab Automobile AB, asked a Swedish court to protect the automaker from its creditors last week as it awaits new Chinese investors.
On Thursday, the court denied the struggling automaker's request noting Saab also filed for bankruptcy two years ago when General Motors severed corporate ties after 20 years of losses. Is it the end of the road for the quirky, once seemingly indestructible Scandinavian motor car?
The ruling indicates the district judge in western Sweden thinks there's not much future for the independent automaker whose cheapest cars run $30,000 to $40,000.
Made famous in ads comparing its cars to the advanced jet fighters its aerospace division built for the Swedish military, the 64-year-old Saab parlayed its aircraft maker origins into designing and marketing modern premium cars before the Japanese successfully emulated the automotive prowess of the Germans.
Innovations included aerodynamic bodies, side door crash protection and windshield wipers for headlights on the classic Saab 900.
Saab, which was sold by GM to the former Spyker Cars NV in January 2010, needed new investment or a bridge loan just to pay its 3,700 workers and some 800 suppliers who are owed $210 million. The company sold 31,696 cars in 2010 when it hoped to sell 50,000 to 60,000 vehicles and uncertainty over its future made a hard sell for dealers even tougher.
"In this highly competitive business it is being outperformed by more capable rivals such as Germany's Audi, BMW and Mercedes, and even local rival Volvo Cars, all of which have seen demand surge of late after the collapse in 2009," IHS Automotive analyst Ian Fletcher wrote recently.
In April, Saab suspended production when a supplier cut off credit after refusing to unload a truck at the factory in Trollhattan last March. At that time, Saab Chairman and Chief Executive Officer Victor Muller told The New York Times the Swedish carmaker could turn a profit selling 80,000 vehicles a year as he touted the relaunch of the 9-5 and 9-4x crossover.
Saab secured a 499 million euro loan from the European Investment Bank guaranteed by the Swedish government's debt office by putting up assets as collateral, but the BBC said most of the funding remains frozen because the company didn't meet performance targets.
In a sign of hope, The Wall Street Journal said Saab had advance orders for 11,000 cars and promises of more than $355 million long-term funding from two Chinese automakers -- Zhejiang Youngman Lotus Automobile Co. Ltd and Pang Da Automobile Trade Co. Ltd. -- who sought a combined 54 percent stake in the company in July and planned to shift some production to China.
However, no money can come in from those investors until the deals are approved by regulators in Sweden and China.
Thursday's court rejection of the petition for voluntary reorganization -- similar to a Chapter 11 filing in the United States -- indicates the court has little confidence in the company.
"The court has concluded that there is not enough reason to believe that a company reorganization would be successful," wrote Judge Gunnar Krantz.
"The court did not see sufficient reason to believe that the chances were any better today than they were then," a court spokeswoman said.
Saab said it was "disappointed with the ruling," and planned to appeal the decision.
Had the reorganization been granted, Saab would have had three months -- unless extensions were granted -- to present a detailed plan.
"Questions are being asked about the deals struck in China, given the regulatory hurdles erected by the Chinese government ...," Fletcher wrote. "Even if these deals are approved it could take months or even years before a final decision is reached, time that Saab does not have."
Now Saab's labor unions, whose members weren't paid in August, may force the company into liquidation so workers can collect jobless benefits.
"We regret that Saab Automobile is not going to get the time it needs until the funding from Pang Da and Youngman arrives," Leif Hakansson, a spokesman for the IF Metall North Alvsborg union, said in a statement.
A spokeswoman for the Swedish Association of Graduate Engineers told The Wall Street Journal union members were waiting to see whether Saab would file for bankruptcy.
"It's not appropriate to discuss bankruptcy," Chairman and CEO Muller told reporters in Trollhattan Wednesday.
On Thursday, he asked all stakeholders to "hold off" until a ruling on Saab's appeal from the court.
"We're not dead yet," he told the Swedish news agency TT. "We were not dead yesterday. We are definitely not dead today."
"Car Guy" Lutz returns to GM
Former General Motors "Car Guy" Bob Lutz has returned to the Detroit automaker as a part-time adviser.
Lutz, 79, retired last year after more than 40 years at GM, Ford, Chrysler and BMW, and has informally offered free advice to GM's senior management since the company's reorganization. He will now be paid for his opinions.
"I think (GM Co. CEO) Dan Akerson argued effectively that there is value in having me on board and that it didn't diminish any of the current management … It's just making my broad experience and, arguably, my skills in leadership and general automobile business available to the company," Lutz told the Detroit Free Press.
The former U.S. Marine Corps aviator was head of global production development for the iconic Chrysler Viper sports car and was a strong proponent for production of Chevrolet's Volt hybrid.
Ford cuts deal with Zipcar
After generations of providing vehicles from Taurus to Explorer for traditional auto rental fleets, Ford has reached out to a new generation with a two-year deal to supply as many as 1,000 cars to Zipcar.
Zipcar is a round-the clock hourly rate car-sharing service that has more than 605,000 members who pay an annual membership fee to reserve a vehicle. Zipcars are available in several major U.S. cities and on more than 250 college campuses.
"The future of transportation will be a blend of things like Zipcar, public transportation and private car ownership," Ford Motor Co. Executive Chairman Bill Ford said. "This program enables today's new drivers to experience our latest fuel-efficient vehicles while helping them reduce their cost of living and help relieve congestion on campus. We're looking forward to making Ford a staple of their college experience."
The Detroit Free Press said Ford will provide primarily fuel-efficient Focus compacts to Zipcar as well as Escape SUVs. The idea is to expose younger consumers to Ford products even though they might not be economically ready to buy a new car.
The 2012 Focus gets an estimated 40 mpg.