(Updated for name of Chinese investor and date of planned GM board meeting)




General Motors


deal to sell

Saab Automobile

to Swedish specialty maker Koenigsegg Automotive has fallen apart six months after it was announced.

No reason was provided for the disappointing turn of events in the attempt by


to sell off Saab, and analysts were surprised by the failure at this stage of the sale process.

"We don't know why

Koenigsegg is pulling out of the deal, but it seems that what is happening is not GM deciding not to sell, it is Koenigsegg," said European auto industry analyst Phillipe Houchois at UBS in London. "This could be the end of the road for Saab," he added.

Houchois and other auto industry analysts had questioned the feasibility of the transaction since its announcement in June. There is potentially some good news in the deal's implosion, too. The UBS analyst explained that auto players have typically loathed the keeping afloat of weak companies as the excess depressed returns across the industry.

It is possible that Koenigsegg decided the deal was too risky. Analysts have argued that Saab does not have enough scale to become a big brand -- something GM failed in its attempt to turn the company into -- and loyal-customer-centric brands like Saab often lose their advantage anyway when buyers try to change the nature of their approach to the market.

"They are the type of company that's a catch 22 for potential buyers," Houchois said.

The road for Saab is difficult to foresee now. A Chinese co-investor, state-run Beijing Automotive Industry Holdings, was coming onto the deal with Koenigsegg. It is possible the Chinese investor could re-emerge as a lead investor if, in fact, it was Koenigsegg alone that got cold feet.

None of the big auto companies showed any interest in Saab when the company was first being shopped.

GM said in a statement confirming the deal's failure that it needs several days to assess the situation. GM's board is reportedly planning to meet next Tuesday to discuss its options.

The unfortunate truth may turn out to be that "there is no good outlook for Saab or for GM," said UBS' Houchais.

-- Reported by Eric Rosenbaum in New York

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