Car Loan Holders Take Hit as Saab’s Fate is Sealed
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UPDATED: Dec 23, 2011
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Earlier this week Saab Automobile filed for to have its assets liquidated after negotiations for a lifesaving investment opportunity with Chinese investors fell through.
Saab was acquired by General Motors (GM) in 1990, but this year filed for bankruptcy to avoid complete insolvency.
But Saabs fans and supporters caught a glimpse of hope as the owner of Saab announced a potential safety net for the company. They hoped to sell their name and product inventory to interested Chinese investors. Before the deal could be finalized though, GM blocked the Chinese from acquiring its subsidiary since GM would have been forced to relinquish licenses for various patents and technology.
As a result of the company’s now solidified fate, those who took a car loan out for a Saab after February of 2010 are in an unfavorable position since GM announced it would be suspending warranty claims for those customers. The parent company also announced that it would cease to provide new warranties for those looking to take a car loan out for a new Saab.
The only customers eligible for GM-backed warranties are those who took purchased a Saab before February of 2010.
Even without the warranty though, new Saabs are proving to be attractive to those able to get approved for an auto loan since they’re being advertised at $10,000 off sticker price now.
Aside from warranty issues though, current Saab owners are worried about their investment.
For those concerned about replacement parts for their Saabs, Tim Colbeck, president and COO of Saab Cars North America, confirmed that the part manufacturer was completely separate from Saab proper. As a result, he told the New York Times that “for the foreseeable future there is no worry about there being parts availability issues.”
As for the resale value, Alex Gutierrez, a senior market analyst at Kelley Blue Book, told Smart Money that “Demand for used Saabs will start to drop off 2 percent to 3 percent immediately.”