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December 20, 2009

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GM pulls plug on Swedish Saab

GENERAL Motors Co said it would begin shutting down its money-losing Saab brand after last-ditch talks to sell it to a small Dutch sports car builder collapsed on Friday.

The move by GM to abandon the 60-year-old Swedish auto brand would eliminate 3,400 jobs in Sweden and drop 1,100 Saab dealers who have watched with increasing concern as 10 months of talks to sell the brand sputtered out in recent weeks.

Swedish government officials and representatives of GM had been negotiating as late as Friday morning in Stockholm before the auto maker concluded that it was not going to be able to conclude a deal to sell Saab to Spyker Cars.

Swedish Enterprise Minister Maud Olofsson blamed GM for not doing enough to save Saab during the 20 years it controlled the brand and its losses mounted.

"It is ultimately the owner who is responsible for the company," Olofsson said. "It is difficult to see what we could have done differently."

GM had been in exclusive talks with Spyker this month after an earlier deal with Swedish luxury car builder Koenigsegg collapsed.

John Smith, the GM executive who steered Saab negotiations, said trying to complete a deal with Spyker against the month-end deadline for a deal set by the GM board had been a long shot he compared to trying "to make a shoestring catch."

GM said it would shut down Saab operations, including its production hub in Trollhattan, Sweden, starting in January. Saab has been a consistent money-loser for GM. The brand lost about US$340 million in 2008 and had projected a similar loss this year.

GM, which took US$50 billion in US government aid and emerged from a bankruptcy, had been counting on the sale of its laggard brands including Saab as a key element of its restructuring. Under new Chief Executive Ed Whitacre, GM had set a deadline of end-December to find a buyer for Saab.

"In order to maintain operations, Saab needed a quick resolution," Nick Reilly, GM's president for European operations said.

GM and Spyker both declined to detail the issues that had convinced both sides a deal could not be closed against the tight deadline.


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