Saab Files for Bankruptcy

Break-up of General Motors closer as Saab files for bankruptcy protection

Swedish carmaker Saab today heralded the imminent break-up of its US parent General Motors by filing for bankruptcy protection and applying to be spun off to new investors.

Cash-starved GM, the world's biggest carmaker for 80 years until overtaken by Japan's Toyota last year, is in the throes of a multi-billion dollar bail-out by the Obama administration and sacking another 47,000 staff, including 26,000 outside America.

The Saab move was decided at a secret overnight board meeting. It comes as GM's German subsidiary, Opel, seeks government aid and a new owner.

Saab, which has never made a profit during a decade or more of GM ownership, filed for protection today after the Swedish government turned down a request from GM for fresh capital for the premium brand.

Jan-Ake Jonsson, Saab's managing director, said: "We explored and will continue to explore all available options for funding and/or selling Saab and it was determined a formal restructuring would be the best way to create a truly independent entity that is ready for investment."

Saab said it would continue producing cars and is understood to be seeking an Opel-style rescue from public and private investors.

It employs 4,000 people, makes and sells around 100,000 cars a year, and has around 80 dealerships in the UK. German media speculated on a tie-up with Opel, which is due to submit its own rescue plan to the German government within days.

These moves raise serious questions over the future of Vauxhall, GM's British subsidiary, and the fate of its Ellesmere Port plant on the Wirral. It may be forced to seek rescue with Opel/Saab or another European carmaker.

The break-up of GM is the most dramatic illustration of how the global financial and economic crisis is reshaping the world's auto industry.

Sergio Marchionne, Fiat's chief, has forecast that only six global auto firms will survive within the next five years.