Saab slid back to the brink today after its deal for a cash infusion from China's Hawtai Motor Group fell apart. Saab hasn't made a car since April 6 because it is out of cash to pay suppliers.

Owner Spyker Cars said Hawtai could not get the approvals needed for the $223 million deal. Hawtai said in a statement that the "strategic cooperation agreement" with Spyker and Saab "has been terminated through mutual agreement." Hawtai said the "current situation is complex and it was not possible to reach agreed documentation in the timeframe contemplated."

The Chinese company said, however, that talks with Spyker continue to try to reach a new deal. Saab spokeswoman Gunilla Gustavs told the Associated Press that the company hasn't given up trying to find investment and is in talks with other possible Chinese partners, but gave no names. Before the Hawtai deal, Saab was also talking with BAIC, Great Wall Motors and Youngman.

Saab earlier had said it would restart production this week with a six-month loan from one of its shareholder and by tapping its loan facility with the European Investment Bank. The EIB has yet to OK that, however, and Saab remains shut down.

Besides looking to the Chinese, Saab also has proposed a plan for a Russian rescue by selling its factory to Russian businessman Vladimir Antonov in exchange for 30% of Saab, but that plan has not gotten Swedish government approval.

Antonov's representative in Sweden, Lars Carlstrom, told Reuters today that the Russian is "still very interested and eager to get into Saab, to invest in Saab." despite the loss of the Hawtai deal and remains "optimistic" about investment from China.

PARIS — In the latest twist to its frantic struggle for survival, the troubled Swedish company Saab Automobile signed a tentative financing and import deal Monday with the largest publicly traded car distributor in China.

Saab’s parent, the Dutch sports car maker Spyker Cars, and Pang Da Automobile Trade, which operates more than 1,100 dealerships across China, signed the memorandum of understanding in Beijing. It comes a week after a tie-up between Saab and another potential Chinese partner collapsed.

Under the terms of the new deal, Pang Da would pay €30 million, or $42 million, for an unspecified number of Saab cars, and €15 million for additional Saab cars within 30 days, “subject to certain circumstances.” Pang Da would also pay €65 million for a 24 percent equity stake in Spyker, gaining the right to a voice in Spyker and Saab management.

The €65 million would “secure Saab Automobile’s medium-term funding,” the companies said in a statement.

The deal also calls for the companies to create joint ventures to make and distribute cars in China, both under the Saab brand and a new brand to be announced.

“This is a tremendous boost for Saab, because it means we can sell imported Saabs into China,” Victor Muller, who is chief executive of both Spyker and Saab, said in a conference call.

Saab, which Spyker bought from General Motors in 2010, has so far lost six weeks of production after suppliers stopped extending credit in early April amid a funding crunch. Even with the new arrangement, Mr. Muller said, Saab cannot be certain when work at its factory in Trollhattan, Sweden, will resume.

The emergence of another Chinese company to try to take a stake in Saab underlines the intense interest among many Chinese companies in acquiring global automotive brands, even as the government tries to force a consolidation of the industry into six to 10 large manufacturers.

Early this month, Saab announced a deal with Hawtai Motor Group that would have provided €120 million in new financing. But that deal collapsed last week after it became clear the Chinese company would be unable to obtain official authorization in time to help Saab, Mr. Muller said.

Richard Zhang, a vice president of Hawtai, last week disputed that account in a statement, saying with little elaboration that it was “commercial and economic realities, not lack of government approval, which forced the termination” of the arrangement with Saab.

Hawtai had no immediate response on Monday to the Pang Da announcement.

Mr. Muller said Pang Da could provide financing in the normal course of business and would not need regulatory approval. He said Pang Da, which sold 470,000 cars in China last year, was actually a better partner because of its distribution might.

However, Michael Dunne, the president of Dunne & Co., a Hong Kong auto consulting firm, expressed surprise that Pang Da was moving so quickly after an initial public offering last month. The gross proceeds of the offering before fees totaled 6.3 billion renminbi, or $970 million, which shrank to 6.04 billion renminbi, or $930 million, after expenses.

“This all looks so sudden — and highly ambitious,” he wrote in an e-mail. “Pang Da, a distribution company, went public and raised $1 billion just three weeks ago. Now, it’s preparing to form not one but two manufacturing joint ventures, one of which will be an indigenous brand venture.”

Under China’s foreign exchange rules, the government must approve any large conversion of renminbi to foreign currency for an overseas corporate acquisition.

The deal also remains subject to the approval of the European Investment Bank and the Swedish authorities. General Motors, which holds Saab preference shares, also has a vote on the plans.

Another would-be Saab investor, the Russian financier Vladimir Antonov, is still waiting for the approval of the Swedish government and the E.I.B., Mr. Muller said.

Japanese automaker Mazda reportedly plans to end its joint venture with Ford(F_) and stop making cars in the U.S.

Mazda and Ford operate the AutoAlliance International plant in Flat Rock, Mich. as an equal partnership. Mazda is considering selling its stake to Ford and switching production of cars it makes in the U.S. to Japan starting in 2013, according to Nikkei, a Japanese financial daily.

Mazda said it wouldn't comment on speculation.
"Mazda and Ford are jointly studying various possibilities for AAI, and we have nothing to announce at this time," Mazda said.

When a company can't even afford to pay its employees, you know it's in big trouble.

Staff wages are invariably the last thing to go before any company has to give up and call it a day.

This is precisely the situation in which Swedish carmaker Saab finds itself, having already suspended production after failing to pay suppliers.

The reason could not be simpler - Saab does not sell enough cars.

Under investment

It sold just 30,000 last year, with analysts suggesting it needs to sell 120,000 just to break even. No business can sustain such losses for long, let alone a relatively small company with very little cash in the bank.

And here lies the problem. Under the ownership of US car giant General Motors (GM), Saab was able to sustain losses. Following the sale to Spyker, now called Swedish Automobile, it cannot.

Under GM's stewardship, which lasted for 20 years, Saab suffered from chronic under-investment, analysts say.

It makes just two cars - the 9-3, the current model of which is a decade old and won't be replaced for another two years, and the 9-5, which was replaced 18 months ago after 12 years.

Such long model cycles are "unheard of" in the automotive industry, says Tim Urquhart, analyst at IHS Automotive.

The new Saab 9-5 replaced a model that was 12 years old The fact it operates in one of the most competitive sectors within the industry, with rivals such as Audi, BMW and Mercedes churning out critically-acclaimed and top-selling models, does not help.

Nor does the fact that domestic rival Volvo, producing a similar brand of Swedish quirkiness, has stolen a march on Saab following its tie-up with China's Geely.

"It is extremely difficult to be a small player in the car business," says Professor Baback Yazdani, dean of the Nottingham Business School.

"You have to be niche and really high end."

Saab no longer has a clearly identifiable niche, and it certainly is not high end.

Cash shortfall

A partnership appears to be Saab's only hope for survival.

Spyker's takeover of Saab last year was backed by a 400 million euro ($570m; £356m) loan from the European Investment Bank (EIB) in a move that analysts felt was a long shot at best.

But much of that money was earmarked for 80 pre-determined engineering projects, including developing the new 9-3.

The amount left over has now clearly run out, not helped of course by the interest payments on debts that amount to about 40 million euros a year.

The only way forward is to find a lot of cash, and fast. The Swedish government has indicated it is unwilling to help, while the EIB cannot agree on any further assistance, analysts say.

Production at Saab's factory in Trollhattan has been suspended That leaves just one option - finding a rich partner willing not only to provide short-term cash to pay staff and suppliers, but also much-needed investment in new models and marketing.

There is some hope. Earlier this month, Saab announced it had reached a deal with two Chinese firms - Zhejian Youngman Lotus Automobile and Pang Da Automobile - to invest a total of 245 million euros in the company.

However, the deal needs approval from Chinese and European regulators and the EIB. And besides, a similar deal with China's Hawtai Motor Group fell through last month.

Analysts are not convinced.

Zhejian and Pang Da are not big players in the Chinese car market, and one is just a distributor, says Mr Urquhart. If the deal does go through, short-term cash flow problems might be solved, but longer-term under investment will still need to be addressed.

Instead, Saab really needs a big, established carmaker on board, Mr Urquhart says. Without one, "closure seems the most likely option".

Simon Dorris, partner at Lansdowne Consultancy, is equally downbeat, believing Saab may have missed the boat.

"[Spyker] was always expected to find another partner, but it hasn't been able to. It had 18 months, but it didn't do it," he says.

That leaves just two realistic options - a distressed sale or a wind-up, he argues.

Such long model cycles are "unheard of" in the automotive industry, says Tim Urquhart, analyst at IHS Automotive.

The owner of Saab filed for bankruptcy reorganization today in a last-ditch attempt to save the brand. Saab has been virtually shut down since April and wasn't able to pay its employees their August wages last week.

Swedish Automobile, formerly Spyker Cars, said Saab and its subsidiaries applied for "self-managed" reorganization in Sweden. Overseas units were excluded.

If approved by the court and Saab's creditors, an initial three-month court-administered reorganization phase would halt any debt collection processes by creditors or a forced liquidation. The Associated Press reported.

Netherlands-based Spyker, now SA and led by Dutch businessman Victor Muller, has failed to revive the brand since taking it over in 2010 from General Motors.

Failure to pay suppliers for parts forced it to suspend production at its plant in Trollhattan, Sweden. Salary payments for Saab's 3,700 workers have been postponed in recent months as the liquidity crisis worsened. These salaries will be sought from the government under Sweden's state wage guarantees.

The application for creditor protection calls for cutting costs and "creating a viable, competitive and independent organization," SA said. "The eventual purpose of the proposed voluntary reorganization process is to secure short-term stability while simultaneously attracting additional funding," the company said.

Saab is hoping for cash injections from Chinese investors Zhejiang Youngman Lotus Automobile and Pang Da Automobile Trade. The deals include the manufacturing and distribution of Saab cars in China, but have been delayed because of pending approvals from authorities.

Muller said he believes Saab will exit the bankruptcy process as a stronger and leaner car brand, putting much faith on the future cash expected from Pang Da and Youngman.

Darko Davidovic, union legal adviser for IF Metall which represents around 1,500 Saab workers, welcomed the move. "It is the fastest way for our members to get their money unless the company pays up itself," he told the AP.

Swedish court rejects Saab creditor-protection plea; Saab will appeal

A Swedish court on Thursday rejected an application by ailing carmaker Saab for protection from creditors to give it breathing space to solve a cash crisis and get funds from Chinese investors.

The Vanersborg district court in western Sweden said in a statement on its Web site that there was no reason to believe a new creditor protection process, known as a reconstruction, would work. Saab said in a statement that it is disappointed with the ruling and will appeal the decision.

Saab went through the process in 2009-2010 when it was owned by General Motors Co. Saab owner Swedish Automobile NV said it wanted the court's protection to stop creditors' payment demands from pushing the carmaker into bankruptcy and allow it to work on securing its future.

The company filed for bankruptcy protection on Wednesday through a voluntary reorganization process which would have involved the court appointing an administrator with whom management would have worked to reorganize the company. Saab had said it would present the reorganization plan to creditors within three weeks of filing the reorganization plan.

Chinese funding

Saab has struggled for several months while it seeks funding from an assortment of Chinese and other investors. Production at its Swedish plant has been at an almost continuous standstill since April as suppliers refused to provide parts until they received payment. The company also failed to pay salaries in August.

At a press conference on Wednesday, Saab CEO Victor Muller said that the automaker currently owes 150 million euros ($210 million) to suppliers.

In June, Saab said two Chinese car companies, Pang Da Automobile Trade Co. and Zhejiang Youngman Lotus Automobile, had agreed to take a combined majority stake in the firm for a total of 245 million euros.

The deals are still awaiting approval from the Chinese authorities -- but the collapse in Swedish Automobile's share price this year has seen the value of Saab's listed parent plummet from 66.7 million euros, when the China rescue was announced, to Tuesday's closing market cap of 14.8 million euros.

Chinese authorities have halted planned investments in the past, such as Saab's failed deal with Hawtai Motor Group in May and Sichuan Tengzhong Heavy Industrial machinery's bid for GM's Hummer, which collapsed in 2010.

Swedish business daily Dagens Industri said late on Tuesday that Youngman would not get the necessary Chinese official approval to take part in the deal, citing several sources.

Instead, state-owned Beijing Automotive Industry Holdings Co. (BAIC) or SUV maker Great Wall Motor were seen by Chinese officials as being more suitable partners, the newspaper added.

A source told Reuters in May that Great Wall had been talking with Saab's owner about a possible tie-up.

Two of Saab's white-collar unions today filed petitions to push the automaker into bankruptcy.

The actions will lead to a bankruptcy hearing in three weeks, giving Saab owner Swedish Automobile, formerly Spyker, little time to find new cash to survive.

Unions representing Saab's 3,700 employees can file the petitions as unpaid creditors because Saab was not able to give them their paychecks for August.

Vanersborg District Court spokeswoman Elisabeth Lindstrom told the Associated Press that white-collar unions Unionen and Ledarna took bankruptcy action and that it will require Saab to show, at a hearing within three weeks, that it has enough funds to pay the bills -- or can ask for a two-week extension if it proves there's money on the way, Lindstrom said.

...

Unionen leader Cecilia Fahlberg said the union regretted having to take this step but said it was the only way for its members to get paid. They will receive their pay from the government under its salary guarantee if their employer is declared bankrupt.

A Swedish appeals court today overruled a lower court and approved Saab's application for bankruptcy protection -- buying the on-the-ropes brand a little more time to wait for the Chinese cavalry to arrive..

The court said addition investigation might show the company could reorganize and survive, something the lower court doubted, according to an Associated Press report.

Saab was bought in 2010 from General Motors by Spyker Cars, now renamed Swedish Automobile. Car production has been virtually shut down since April by lack of money to pay bills. Saab employees still have not been paid for August.

CEO Victor Muller continues to insist Saab can survive after it closes two deals giving a majority stake to China's Zhejiang Youngman Lotus Automobile and Pang Da Automobile Trade. But Chinese officials continue to delay approval of the deals, cut in June.

The ruling today gives Saab three months to try to reorganize while being protected from creditors, some of whom already have filed petitions for bankruptcy liquidation of the company. The ruling also means the Swedish government will pick up the tab for Saab workers' paychecks.

Car production has been virtually shut down since April by lack of money to pay bills. Saab employees still have not been paid for August.

Saab Automobile will likely change owners for the second time in as many years as the Swedish automaker seeks to restart production and stave off bankruptcy.

Zhejiang Youngman Lotus Automobile Co. and Pang Da Automobile Trade Co. reached a tentative deal today to purchase Saab for 100 million euros ($142 million), parent Swedish Automobile NV said in a statement today. The memorandum of understanding is valid until Nov. 15.

Saab, which has produced few cars since first halting production in March because of a lack of money, avoided bankruptcy last month after a Swedish court granted the carmaker protection from creditors. General Motors Co. sold Saab in February 2010 for $400 million in cash and preferred shares.

“They have to rebuild the image of the brand,” said Martin Crum, an analyst at Amsterdams Effectenkantoor BV. “It’s been quite damaged by all that’s happened.”

Swedish Automobile surged as much as 36 cents, or 46 percent, to 1.14 euros and was up 27 percent as of 12:54 p.m. in Amsterdam trading. The stock has fallen 72 percent in 2011, valuing the Zeewolde, Netherlands-based company at 27.2 million euros.

Youngman will buy 60 percent of Saab and Pang Da will purchase 40 percent, Saab spokesman Eric Geers said by phone today. The two had originally agreed to take a majority stake in Swedish Automobile before that agreement fell apart this month.

Downward Trajectory

Saab, whose global sales peaked in 2006 at 133,000 cars, has been on a downward trajectory in recent years. The automaker sold just 31,700 vehicles in 2010, with deliveries suffering after it took months to restore the production flow because GM had emptied the factory as part of a planned closure.

The brand has hovered near bankruptcy several times, including in 1989, the year before GM bought half of it. In December 2009, crisis-hit GM announced it would kill Saab as it did with Saturn, Hummer and Pontiac -- before Victor Muller, now Saab’s CEO and chairman, persuaded GM to change its mind.

The Swedish carmaker began making cars in 1947 had gained a reputation for being offbeat, practical and safe. Innovations that defined the brand included headlight wipers, self-repairing bumpers and side-impact door beams.

Saab filed for protection from creditors in September, three months after Pang Da and Youngman agreed to buy a combined 53.9 percent stake in Swedish Automobile for 245 million euros.

Attorney Guy Lofalk, Saab’s court-appointed administrator, had applied to the Vaenersborg District Court in Sweden to terminate the restructuring of the carmaker. Lofalk has now withdrawn that request pending a final sale of the automaker, the court said today.

“This is fantastic news,” Geers said. “Now we’re hoping for a stable period where we can start thinking about making cars again.”

Saab will discuss payment and delivery terms with suppliers with the aim to restart production “as soon as possible,” Geers said.

The agreement still faces handle hurdles and must be approved by Chinese regulators, the Swedish government, the European Investment Bank and GM.

STOCKHOLM (Dow Jones)--Two Chinese companies planning to buy Saab Automobile aim to return the troubled car maker to profit in 2014, investing some 20 billion Chinese yuan renminbi (EUR2.2 billion) over the next five to six years while slashing costs by 1 billion Swedish kronor ($156.7 million) and shedding 500 jobs, corresponding to 15% of its workforce.

The chief executive of Pang Da Automobile Trade Co. (601258.SH), Pang Qinhua, told reporters Monday that the vehicle dealer, together with auto firm Zhejiang Youngman Lotus Automobile Co., plan to invest around EUR2.2 billion in Saab Auto over five to six years, including EUR610 million for the 2012-2013 period.

Pang Da and Youngman Friday signed a memorandum of understanding valid until Nov. 15 to buy Saab Automobile from Swedish Automobile NV (SWAN.AE) for EUR100 million. The companies are aiming for a modest 35,000-55,000 in vehicle sales next year, gradually increasing to 185,000-205,000 in 2016, about 50% more than Saab Automobile's highest ever sales volume at about 130,000 in the mid-2000s.

The plan to turn a profit and deliver positive cash flow in 2014 follows decades of losses, first under General Motors Co. (GM) and later under the leadership of Swedish Automobile, formerly Spykers Cars NV.

Liquidity dried up earlier this year after the company missed its sales targets, prompting Saab Automobile to shut down production, delay salary payments and eventually seek court protection from its creditors to avoid being forced into bankruptcy.

The court-appointed administrator, Guy Lofalk, Monday said that Pang Da and Youngman have a long-term strategy for Saab to move part of the vehicle assembly to China and to use Pang Da's distribution network to boost sales in the fast growing Chinese car market.

The Chinese companies will supply a EUR50 million bridging loan to pay wages and complete the reorganization. They will then invest EUR610 million, or RMB5.5 billion, to restart production, settle debts and fund operations for 2012-2013, Swedish Automobile said. In addition, a EUR63 million installment of Saab's existing loan from the European Investment Bank should be released, Lofalk said.

The Chinese investors will fund the expansion of new car models, including the 9-5 SportCombi and the 9-4X due to be launched in 2012, as well as additional operations to be set up in China, Swedish Automobile said. Pang Da's CEO said these investments combined would total EUR2.2 billion.

The restructuring plan includes continued vehicle design and development in Trollhattan, Sweden, and new distributorship agreements in emerging markets such as Russia.

Stefan Lofven, head of the union IF Metall, said he expected production and development to continue in Trollhattan and that re-hirings should be possible once sales pick up, even though he regretted the 500 job cuts.

The Chinese investors intend to pay all creditors in full, Pang Da's CEO said at a meeting in Vanersborg, where a Swedish district court Monday decided that Saab Automobile's reorganization would continue as no creditors had asked for the process to end.

Supplier reactions were mixed, with the CEO of IAC Sweden, Marcus Nyman, calling it a "solid plan" while Premier CEO, Kjell-Gunnar Granaas, said he wanted to see the money before trusting any more promises.

"It would have been nice to hear that they will start to pay for deliveries in advance once the production starts up, until the trust can be rebuilt," Granaas said.

The takeover, if successful, would be only the second by a Chinese buyer of a foreign car brand, after Zhejiang Geely Holding Group Co. acquired Volvo Cars from Ford Motor Co. (F) last year. Chinese auto makers have enjoyed strong growth at home but have been eyeing Western markets, where they hope to sell premium vehicles at higher margins, gain access to more advanced technology and broaden their portfolios.

General Motors is taking a stance that could derail the sale of its former Saab unit, which is hanging by a thread, to a pair of Chinese companies.

GM said it won't allow the two companies to use its technology if Saab gets sold. GM infused Saab with a lot of its technology in the years leading up to its bankruptcy proceedings in 2009. It sold Saab the following year just when it looked like it might get closed down like Saturn, Hummer and Pontiac.

GM's position, announced yesterday, raises doubts about a rescue plan for ailing Saab, which is being reorganized under bankruptcy protection after running out of cash to pay suppliers and staff, the Associated Press reports.

Zhejiang Youngman Lotus Automobile and Pang Da Automobile Trade agreed last month to buy Saab from current owner Swedish Automobile for $140 million, the AP says.

GM would not only block existing technology licenses, but it would stop supplying the GM-built Saab 9-4X crossover. China is one of GM's biggest markets, and it may be fear that it could end up competing against itself if Saab were to be controled by the Chinese.

Saab Automobile, the Swedish auto maker which filed for bankruptcy Monday after a desperate three-year fight for survival, will be missed as a once-innovative manufacturer of turbo-charged cars.

The company's demise, barring a last-gasp salvage of Saab's operating assets as they are liquidated, underscores how tough it is for niche auto makers to survive in the increasingly competitive global industry when development and manufacturing costs are so high. Marrying originality with mass production has proved too difficult for Saab's different owners.

Svenska Aeroplan Aktie Bologet started out as an aircraft manufacturer in 1937, building planes for the Swedish Air Force during World War II. The company branched out in to car manufacturing as the war ended. The first Saab model hit the road in 1949.

Saab soon developed a reputation for streamlined styling under designer Sixten Sason as well as innovation, particularly of new safety features. The car maker had factory-fitted safety belts as early as 1958. Crumple zones, self-repairing bumpers, and headlights with wipers and washers followed in the 1960s and 1970s. Building cars adapted to the cold Scandinavian climate led to novelties like pre-heating air-intakes to prevent engine icing and electric heating for the driver's seat.

Other touches, like putting the starter switch on the floor between the front seats, earned the company a reputation of being quirky, helping earn Saab a loyal international customer base. In Sweden, there are about 10,000 members of owner clubs which exist across Europe, the U.S. and as far afield as Malaysia and Australia.

Saab is most famous for introducing turbo-charged engines across its model range in the late 1970s and 1980s under then-Chief Executive Sten Wennlo. Super-charging Saabs, using exhaust fumes to drive a compressor to inject more air into the cylinders, enhanced the performance of small engines at a fraction of the cost of designing new ones. The Saab 99 was the company's first turbo-charged model. The Saab 900 turbo, launched in 1979, became the company's biggest hit with sales of nearly a million units.

After prospering in the late 1970s and early 1980s, Saab came unstuck when Sweden was caught up in the global economic downturn later in the decade, having expanded capacity as sales growth reversed. The company lost two billion Swedish kronor in 1989 ($289 million). Saab had merged with truck maker Scania-VABIS to form Saab-Scania in 1969.

Short of funds to invest in new models, Saab-Scania sold a 50% holding in the car business to U.S. auto giant General Motors Co. in 1990 for $600 million. GM injected $100 million in additional capital before buying the rest of the company for $125 million in 2000.

Saab struggled under the GM umbrella. Whatever the gains from sharing technology with GM's other brands, principally Germany's Opel, the company lost some of its old character without attracting a new owner in Europe's oversupplied car market. Facing stiff competition from the likes of Volkswagen AG and its Audi unit, BMW AG and Volvo AB, the rival Swedish manufacturer owned by Ford in the period, Saab never hit GM's 150,000 annual sales target. Sales peaked at nearly 133,000 in 2006 before falling to 93,000 in 2008 when GM put Saab up for sale. After GM entered Chapter 11 bankruptcy protection in the U.S. to prevent its own collapse, Saab sought protection from its creditors in Sweden. GM took a $824-million loss on its Saab investment in 2009.

Finding new owners for Saab proved difficult. The Swedish government refused to inject taxpayers' money. In the fall of 2009, GM decided to liquidate the company. At the last minute, a privately held Dutch sports car maker, Spyker Cars NV, raised its hand. In February 2010, shortly after thousands of Saab employees and fans took part in a "Save Saab" demonstration outside the company's factory in Trollhattan, Spyker bought Saab Automobile for $74 million.

Spyker, later renamed Swedish Automobile, aimed to make the company profitable by 2012. But despite a Swedish-backed loan from the European Investment Bank, Saab ran out of cash in less than a year. Jan-Ake Jonsson, Saab's CEO since 2005, resigned in May 2011 after 40 years at the company. Suppliers withheld component deliveries. Production stopped, forcing the car maker to seek protection from its creditors for a second time.

With Saab's 3,400 workers' wages unpaid, Chinese investors stepped forward to rescue the company. But GM refused to license the technology which provides the basis for Saab's existing models to any purchaser likely to compete head-to-head with it in China where the group is a major player.

That proved the final straw. With no alternative to liquidation to pay its creditors, Saab filed for bankruptcy Monday, bringing a 64-year-long chapter in Swedish industrial history to an end.

Saab Cars North America has suspended paying for warranty coverage for all its vehicles in the U.S. and Canada, says Michele Tinson, spokeswoman for SCNA, the Swedish carmaker's sales unit here.

However, General Motors says it will cover any warranty remaining on vehicles sold under its ownership of Saab, which ended in February 2010.

"If Saab is unable or unwilling to service the warranties in (North America), then General Motors is going to step in and take care of it" for cars sold before GM sold Saab to Spyker Cars, GM spokesman Jim Cain said this afternoon. "We're in the process of rolling that (information about warranty reimbursement) out to Saab dealers right now."

By GM's estimate that will cover a majority of the about 48,000 Saabs still under warranty in the U.S. and 9,000 in Canada. Under GM's deal with Spyker (since renamed Swedish Automobile), GM had already been paying for warranty work on those "legacy" cars. But it had been running the payments through Saab in Sweden, which then paid dealers. Now, GM will pay directly in North America.

But that all still leaves out owners of more recent of Saabs still under warranty, nor will it cover the about 3,000 new vehicles sitting unsold on dealer lots, says SCNA. Those new cars must be sold "as is" -- like used cars.

"What (SCNA has) done is suspended warranty reimbursement temporarily until we have further direction," Tinson says. "We need to understand the rules and legalities in Sweden and how they affect the warranties. In the U.S. we have not made a determination of our next steps."

The North American unit is in limbo, not in bankruptcy court here, nor is it part of the petition for bankruptcy liquidation filed by parent Saab Automobile in Sweden on Monday (post earlier in Drive On). "We haven't announced bankruptcy, haven't announced liquidation," says Tinson. "We are on our own financial books, a separate entity."

The warranty coverage is suspended indefinitely, though Tinson says it could resume at a future time. In the unlikely event, for example, a white knight swoops in and buys Saab Automobile intact, warranties theoretically could be reinstated. It seems more likely to be broken up and sold in parts to repay creditors, however.

Dealers could still do work on owners cars, hoping to get paid by SCNA later, but they don't have to. For unsold new cars, dealers also could try to obtain warranty coverage through a third party.

New Saabs had carried a 4-year, 50,000-mile warranty with roadside assistance and service loaners, as well as free scheduled maintenance for three years or 36,000 miles.

nor will it cover the about 3,000 new vehicles sitting unsold on dealer lots, says SCNA. Those new cars must be sold "as is" -- like used cars.

The sale of bankrupt Saab Automobile has come down its proud name.

Assets of the Swedish company are being sold to a group led by a Japanese investment firm and a Chinese energy company, two people familiar with the situation tell Bloomberg News. But before the deal can close, two other healthy entities that use the Saab name have to agree on the deal and must be satisfied that the new owners won't tarnish the moniker.

The two are Saab AB, the 75-year-old Swedish aircraft and defense company that originally spawned the car company, and Scania, a Swedish truck maker now controlled by Volkswagen. The truck company was owned by Saab from the 1960s through 1990s and known then as Saab-Scania.

"Regardless of who buys Saab Automobile, we need significant information about the plans that any potential new owner may have, as it's crucial that the brand name is taken care of properly," Erik Ljungberg, Scania's spokesman, is quoted by Bloomberg as saying. "We've gotten some information, but some is still lacking."

At least Saab is likely to go on in some form. It was looking like curtains during the brand's prolonged death march last year under control of Dutch sports car maker Spyker. Saab's downward spiral began when it was jettisoned as part of General Motors' bankruptcy reorganization.