Saab files for Bankruptcy in Sweden.

Today Saab becomes the first major auto manufacturer to file for bankruptcy since the 1970’s. The move comes in the wake of GM essentially preparing to sever all ties (outlined in its viability plan) with Saab and the Swedish Government’s decision not to give GM any more money to keep the relationship going. Sweden’s Industry Minister Maud Olofsson has been heavily critical of GM and also no fan of nationalizing what is seen by many as a money pit of a carmaker.

Bankruptcy protection, in this case, will hold creditors at bay during a three-month process of reorganization managed by a Court-appointed independent supervisor in Sweden combined with the efforts of Saab’s management team. The goal is essentially to put Saab Automobile back together in the fully-independent configuration it was in when GM took over in 1990 and then find private investment or a partner to keep the company going.

On the surface, frankly, things look VERY bad for Saab. Always a niche player, Saab’s marketshare in Europe is just .4%, and it has operated at a loss for 19 of the last 20 years. Saab’s losses for ‘08 were about $340M, with as much expected for 2009. Sweden’s government has issue and emphatic “No!” to the idea of buying the carmaker, to which Cantor-Fitzgerald’s Stephen Pope said “Unless the Swedish government is prepared to put a lot of money into Saab, I think that this is just another step down the road to the graveyard.” Surprisingly, GM is going to help out with a payment schedule for the effected creditors.

But underneath, there may be some very good things for a potential suitor for Saab. The company has three long-anticipated new models waiting in the wings for release this year. All are tied to GM platforms, but Saab has taken other manufacturer’s technology and exploited it to good use before (most notably engineering years of powerplants starting with a mediocre Standard-Triumph design of the late 1960’s and the Group-4 car, the Saab 9000, developed with Fiat and Alfa-Romeo in the 80’s).

Saab would also allow a company like Hyundai – perhaps the ideal suitor – to have a ready-made premium brand, even if it’s one that’s been in the wilderness for awhile. And Saab’s losses – though considerable – are small and easier to turn around than something like GM’s total losses because of the lean size of the company.

Saab Sweden also has capable management, though it has been routinely hampered by GM’s bean-counting. Jan Aake Jonsson, whom I talked with at last year’s New York International Auto Show, is a capable executive with huge loyalty in the organization. But it was only recently that GM allowed the Saab people to do what they wanted and provided platforms that were world class for them to base new models on.

Those of us who were underwhelmed at the “new” Saab 900 of 1994 remember its milksop Opel-Vectra underpinnings and poor electrical systems only too well, and that car carried Saab for eight years. Saab’s upcoming 9-5 replacement, based on GM architecture (from the European-Car-of-the-Year-Opel-Insignia) but heavily modified, should be far, far superior.

Saab loyalists might also return to the brand post-GM, as many were alienated by their management and the stagnation of Saab under the general. When GM took on Saab in 1990, the company had just two platforms and sold less than 100,000 cars a year. The same is true in 2009.

Every venture GM tried with Saab seemed to lead the brand further away from what made it popular in the 1970’s and 1980’s. A big V8 SUV? A rebadged Subaru Impreza? A big anonymous sedan (the 9-5) that weighed as much as a ’79 Eldorado? None of these resembled Saab’s glory days with the quirky but fun mk1 900 – still the best selling and most loved model in the marque’s history.

For the moment, however, Saab dealers must be in a panic. They now face a very tough challenge – continuing to sell cars while the company that makes them is bankrupt and facing an uncertain future. Saab’s were already selling for less than MSRP thanks to GM’s woes. All is not lost, but it certainly does seem gloomy.