Koenigsegg Group AB, a consortium formed by Swedish luxury sports car maker Koenigsegg Automotive AB, said Tuesday it pulled out of the deal in part because it was unable to agree with investors on how best to move the brand from mass-market to premium.
For GM, it was the third time this year a deal to shed one of its brands fell apart. It is trying to recover from a stay in bankruptcy protection by focusing on a core of four: Chevrolet, Buick, GMC and Cadillac.
The next move is up to GM's board, which will decide Saab's future in a few days. But with no apparent backup investors and the Swedish government refusing to buy Saab, GM might follow through on a contingency plan to let the brand die.
That jeopardizes the jobs of Saab's 4,500 employees, most of them in Sweden.
Joran Hagglund, a senior official at Sweden's Ministry of Enterprise, said the government will continue talking with GM but that the only solution for Saab is for another company to buy it.
"We have been very clear from day one that the government will not be the owner," he told reporters in Stockholm.
GM, which earlier this year conceded it has never made money with Saab, is unlikely to keep the brand, and industry analysts said any potential investors likely stepped away when Koenigsegg emerged as the buyer.
Matts Carlson, an automotive analyst at Gothenburg Management Institute in Sweden, said Chinese automakers or Italy's Fiat Group SpA might still be interested, but he acknowledged there is a substantial risk that Saab could be closed for good.
The chairman of the Koenigsegg consortium said Tuesday that financing had been worked out but that as negotiations with GM and investors grew lengthy, it appeared less likely that Koenigsegg would be able to make money on the deal.
Mr. Carlson said the financial condition of Saab, which went into a court-protected restructuring Feb. 20, worsened since Koenigsegg announced plans to buy it in June.
Koenigsegg, a tiny company that makes only a dozen high-performance luxury cars a year, was formed in 1994. Its headquarters and factory -- which produces cars that cost more than a $1 million each -- are at a former air force base in southern Sweden.
It will be difficult for Saab to recover from Koenigsegg's decision. GM has been selling off existing inventory and preparing to end its role with the company, which would be hard to reverse.