A complete shutdown of Saab is "totally off the map," the company's managing director Jan-Ake Jonsson said in December. But this outcome moved closer with the Swedish brand entering reorganization today.
Reorganizing Saab under the control of a Swedish court is not outright bankruptcy but the move is bound to worry potential buyers of Saab cars and hit already falling sales.
There is also little money to be saved at Saab - the General Motors-owned brand has only one factory in Sweden. Saab desperately needs a buyer or a significant outside investor.
Everything depends on the Swedish government or someone else providing money so Saab can survive until it finds a new owner or a big investor.
Garel Rhys, president of the Centre for Automotive Research at Cardiff University in Wales, said Saab is too small to survive alone with sales of just under 100,000 last year.
"If the Swedish government does not come in with support, we could be looking at the beginning of the end of Saab," said Rhys. "Saab has always been less than sustainable on its own. There is no way it can finance research and development or developing new engines."
Mike Tyndall, head of automotive research at Nomura Bank in London, agreed. "Saab needs to find another company larger than themselves, but I do not think anyone has the appetite for this," he said.
Saab needs concessions from its unions and its debtors as well as money to protect the business, Tyndall said.
Crucial to the brand's survival are the new models that will launch in the next 18 months. Saab is due to introduce a new 9-5 medium-premium car this year and is accelerating the launch of the 9-4X premium SUV.
But whether reorganization and new cars will be enough to save the company is debatable.
Sweden's government has so far refused to take control of Saab or offer specific bailout cash.
Rhys said the government could provide funding as a holding operation until Saab's new models are launched.
Rhys said: "I think the Swedish government may change its mind because of the relative importance of Saab in Sweden. But this would only be a holding operation until next year."
Tyndall said: "Saab will do everything it can to get to the launch of these new vehicles and then hope that this makes it an attractive proposition for an outside buyer or investor."
Rhys said he feared the worst for Saab.
Outside investors would likely not be interested in the loss-making brand in the global recession, especially after watching the way private equity firm Cerberus has lost money during its ownership of struggling U.S carmaker Chrysler.
No other carmakers want additional capacity in a global car market which forecaster J.D Power Automotive Forecasting predicts will be down 8.2 percent in 2009 year.
There will be also difficulty in establishing what Saab owns in terms of technology after being under GM's control over the last 19 years.
Rhys said GM has been a "fairly hopeless" owner of Saab, of which it bought in half 1990, assuming full control in 2000.
The U.S. automaker lacked ideas how to develop Saab and been too slow in introducing new models, Rhys said.
The company is effectively only has two models - the 9-3 lower premium car and the 9-5 medium premium model. But the present 9-5 medium premium car is 12 years old, with its sales suffering as a result. Saab sales fell 25 percent last year 93,338.
"GM never knew what to do with Saab and the company had no growth strategy. They did not develop Saab," Rhys said. "I was at a meeting a few years ago with GM and they said they wanted to get to a three percent market share with Saab in five years. But it took BMW decades to get there. It is not a business plan just wishing to get there."
Tyndall said what happened to the UK's last domestic volume manufacturer, MG Rover, could also happen to Saab.
MG Rover's management bought the carmaker from BMW in 2000 but they failed to find a buyer or a strategic partner and the company collapsed five years later.
Said Tyndall: "Someone needs to broker an agreement where Saab gets to a position where it is sellable. Getting someone in to help is going to be big challenge in the current situation."