Business

GM to end Saab brand

For the third time this year, a Wichita car dealer is being stripped of his franchise.

General Motors said on Friday it couldn't complete its sale of Swedish automaker Saab and that it plans to begin unwinding the brand.

For Ron Fortune, owner of Euro-Tech Saab at 1122 E. Central, it was a surprising announcement.

"I was convinced somebody was going to step up and buy it," Fortune said. "I'm still kind of struggling with the fact that supposedly they are not selling it."

Fortune becomes the third Wichita dealer to lose his new car franchise. In May, Mike Steven Auto Group lost its Chrysler, Dodge and Jeep franchise as part of Chrysler's bankruptcy and reorganization. And last month Saturn of Wichita owner Scott Davies closed his two stores when GM said it would end the brand after Penske Automotive retracted its bid to buy Saturn.

GM said Friday it had a small window of time to complete a sale of Saab and issues arose during the sale talks with Dutch automaker Spyker Cars that could not be resolved. GM vice president John Smith said representatives from GM, Spyker and the Swedish government were still in discussions Friday morning when talks fell apart. Smith declined to elaborate on the reasons.

"We've been trying to restart, if you will, an investment process without a great deal of time," said Smith, who is in charge of GM's corporate planning and alliances. "Like everybody, we would have preferred a different outcome, and we all worked very hard for that different outcome and we've come up short."

Niche brands like Saab have been hit especially hard by the drop in auto sales as the few customers in the market are looking for more mainstream models, said Rebecca Lindland, auto industry analyst for the consulting firm IHS Global Insight.

"This market is incredibly challenging right now because these are capital-intensive purchases," Lindland said.

Saab employs about 3,400 people worldwide, most of whom work at its main plant in Trollhattan, Sweden. It also has a parts distribution center and a design center in separate locations in Sweden and an engine plant in Finland.

Sales of Saab cars reached their all-time high in 2006, when GM sold 133,000 cars globally. Since then sales dwindled to 125,000 in 2007 and 93,000 in 2008.

The brand has 1,100 dealers, whom GM said will continue to honor warranties as the brand winds down.

Euro-Tech's Fortune said he hadn't received any official notice from GM about whether his dealership would continue to provide warranty service after Saab was shut down.

"Logic would dictate we would take care of (them)," Fortune said, adding that he has the tooling and technicians with the expertise to work on Saabs.

He said he will also continue to provide service for Saabs that are out of warranty.

"I'm going to be here to take care of customers no matter what," Fortune said. "They're not just customers, they're friends."

Fortune also said his dealership will not disappear along with Saab.

"We're going to go back to a fully independent store," he said.

That means, he'll return to selling used cars, as he did before he became a Saab dealer in 2003. Before Saab, his dealership, which was founded in 1973, was called Euro-Tech Motor Werks.

He said the dealership will again specialize in selling used imports. But he may also add domestic used cars and trucks to his inventory.

"We may step closer to the domestic market," Fortune said.

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