Saab drops warranties on cars here, GM to cover older ones

UPDATE 4:32 ET with detail on GM-Spyker deal.

Saab Cars North America has suspended paying for warranty coverage for all its vehicles in the U.S. and Canada, says Michele Tinson, spokeswoman for SCNA, the Swedish carmaker's sales unit here.

However, General Motors says it will cover any warranty remaining on vehicles sold under its ownership of Saab, which ended in February 2010.

"If Saab is unable or unwilling to service the warranties in (North America), then General Motors is going to step in and take care of it" for cars sold before GM sold Saab to Spyker Cars, GM spokesman Jim Cain said this afternoon. "We're in the process of rolling that (information about warranty reimbursement) out to Saab dealers right now."

By GM's estimate that will cover a majority of the about 48,000 Saabs still under warranty in the U.S. and 9,000 in Canada. Under GM's deal with Spyker (since renamed Swedish Automobile), GM had already been paying for warranty work on those "legacy" cars. But it had been running the payments through Saab in Sweden, which then paid dealers. Now, GM will pay directly in North America.

But that all still leaves out owners of more recent of Saabs still under warranty, nor will it cover the about 3,000 new vehicles sitting unsold on dealer lots, says SCNA. Those new cars must be sold "as is" -- like used cars.

"What (SCNA has) done is suspended warranty reimbursement temporarily until we have further direction," Tinson says. "We need to understand the rules and legalities in Sweden and how they affect the warranties. In the U.S. we have not made a determination of our next steps."

The North American unit is in limbo, not in bankruptcy court here, nor is it part of the petition for bankruptcy liquidation filed by parent Saab Automobile in Sweden on Monday (post earlier in Drive On). "We haven't announced bankruptcy, haven't announced liquidation," says Tinson. "We are on our own financial books, a separate entity."

The warranty coverage is suspended indefinitely, though Tinson says it could resume at a future time. In the unlikely event, for example, a white knight swoops in and buys Saab Automobile intact, warranties theoretically could be reinstated. It seems more likely to be broken up and sold in parts to repay creditors, however.

Dealers could still do work on owners cars, hoping to get paid by SCNA later, but they don't have to. For unsold new cars, dealers also could try to obtain warranty coverage through a third party.

New Saabs had carried a 4-year, 50,000-mile warranty with roadside assistance and service loaners, as well as free scheduled maintenance for three years or 36,000 miles.