Saab Survivor's Guide

After Bankruptcy, What Is a New Saab Worth?

Saab owners have a reputation for being fiercely loyal to their brand. But the recently announced bankruptcy of Saab Automobile has left its owners with feelings of uncertainly and a number of difficult questions about warranty issues, parts availability and the possible drop in value of their cars.

Saab filed for bankruptcy in Sweden on Monday, December 19, after a number of failed rescue attempts from Chinese investors. The final proposal was struck down by Saab's former owner General Motors, which still had a say in the matter. GM had developed a number of components that were in Saab vehicles and it didn't want those parts to fall into the hands of the competition in China.

The following day, Saab sent a memo to its dealers, stating that it would no longer honor warranties of any type and that all new vehicles were to be sold "as-is" with no coverage. Tim Colbeck, president and chief operating officer of Saab North America, said that the company intends to keep this bankruptcy out of the U.S. courts. Saab plans to appoint an outside administrator to keep the company from being liquidated in a Chapter 7 bankruptcy proceeding and assist with a gradual wind-down of the brand. Saab has also arranged for McTevia & Associates — a company that deals with corporate turnarounds and financial management — to help guide it through this process.

We've compiled a list of the most common questions facing Saab owners. This is an evolving situation, so the facts could change in the coming weeks and our answers represent only what we know at this time. We will continue to monitor the news and keep you apprised of any important changes.

What Happens to My Warranty?
As of December 19, Saab suspended all of its warranty coverage. This includes new-car warranties, powertrain warranties, emissions warranties, parts warranties, seatbelt and airbag warranties, roadside assistance, recalls and service campaigns, certified pre-owned warranties, free maintenance and even goodwill warranty repairs. Saab's warranty had covered vehicles for up to four years or 50,000 miles, and its free maintenance plan covered the car for three years or 36,000 miles.

However, GM issued this statement the day after the bankruptcy announcement: "In the event Saab cannot or will not fulfill its obligations to administer the warranty programs with its U.S. and Canadian dealers through Saab Cars North America or otherwise, General Motors will take necessary steps to ensure that remaining warranty obligations on Saab vehicles marketed by GM in the United States and Canada will be honored."

A GM spokesperson later clarified this statement by saying that the covered models will be Saabs that are 2009 models or older and a few 2010 models sold in Canada. Colbeck assured consumers that Saab is "aggressively" looking for ways to reinstate the warranty coverage. In the past, failed brands like Isuzu had third-party companies handle the warranty claims, but it is still unclear whether Saab will take this route. In the meantime, Saab recommends that consumers keep their receipts when they pay for any out-of-pocket warranty work so that owners might be reimbursed in the unlikely event that the warranties are reinstated.

Where Do I Go for Service?
For now, Saab owners should still go to their local dealership, although any warranty work or scheduled maintenance will now have to come out of the owner's pocket. While GM has stepped in to cover 2009-and-prior models under warranty, it is still unclear which dealer would actually handle those repairs. If you fall in this gray area, we suggest trying the Saab dealer first. If the dealer won't cover it, try a GM dealer.

Another option would be to go to an independent mechanic. There are still a number of independent shops that specialize in brands that are long gone (we know one that is still servicing Peugeots), so there should always be a place to go for repairs and routine service. The only challenge will be to find one near your home.

Looking forward, it is difficult to predict what will happen to the Saab dealerships. Some may stay in business maintaining vehicles, while others may be not able to build a viable business and will eventually close.

How Long Will Parts Be Available? Where Do I Buy Them?
The good news is that the company that manufactures parts for Saab (and has remained unnamed in Saab's communications) is a separate entity and it is not in bankruptcy. The parts company will continue to provide parts for the foreseeable future.

As for the parts that come from GM, company spokesperson James Cain said, "We will work to ensure there is an adequate supply to cover warranty repairs."

There are also many aftermarket part makers that consumers can use. These parts can easily be purchased at major auto parts chains such as Napa and Pep Boys.

To Whom Do I Send My Monthly Car Payments?
Ally Financial, formerly GMAC, handles Saab's purchase and lease contracts. Ally spokesman Steven Kinkade says that the company will continue to provide loans and leases for Saab during the bankruptcy process. Consumers should still send their payments to Ally. Saab will keep consumers informed about Saab's situation and present them with any updates affecting their loans.

Who Gets My Car When Its Lease Expires?
The process for returning leased vehicles remains unchanged, says Kinkade. In the event that a person's lease has ended and there is no longer a Saab dealer nearby, the customer has the option to turn the vehicle in at a GM dealer.

How Is My Car's Value Affected?
The value of Saab vehicles will fall in the long run. This is particularly true of new vehicles, which now must be sold "as-is" (which means the customary bumper-to-bumper warranty is no longer included). It is still unclear whether these vehicles will be sold as new or used, since they no longer carry a warranty.

Consumers shouldn't expect a fire sale on unsold Saabs just yet, however. While incentives are no longer being offered for now, our research indicates pricing remains unchanged at Saab dealerships. At a Saab dealership in Los Angeles, the new cars were being sold in "as-is" condition as if they were used cars, but were still being priced at full MSRP. A salesman pointed out that some models had $12,000 in incentives the previous day, but these price breaks were no longer available because of the bankruptcy. Dealers are taking a wait-and-see approach since this situation is changing rapidly.

If Saab does go away, however, Edmunds TMV® analysts estimate that the price of new vehicles will be discounted by an average of 28 percent from MSRP — and as high as 33 percent in some cases.

Regarding used Saabs, the drop in TMV will not be as significant as it would be for new Saabs. Our analysts estimate the biggest drop in value will come from recently purchased vehicles, especially used 2011 and 2010 Saab models.