According to the GM, the deal was cancelled at the discretion of Koenigsegg, with Saab now facing a possible closure as there are no other interested bidders.
Saab dealers in the US are also likely to close following the decision, having all signed termination agreements in June when GM entered bankruptcy.
These agreements stated that if the Saab deal fell through, GM would close the brand and all its dealerships would be terminated.
“I don’t feel that it would be accurate to say definitively that that’s what’s going to happen … that the dealerships would be closed,” GM spokeswoman Ryndee Carney said.
GM had hoped to close a deal by the end of next month to sell Saab to a partnership between Swedish supercar manufacturer Koenigsegg Group AB and backed by China's Beijing Automotive Industrial Holding Ltd.
"We're obviously very disappointed with the decision to pull out of the Saab purchase," said GM President and CEO, Fritz Henderson.
"Many have worked tirelessly over the past several months to create a sustainable plan for the future of Saab by selling the brand and its manufacturing interests to Koenigsegg Group AB. Given the sudden change in direction, we will take the next several days to assess the situation and will advise on the next steps next week."
Following this decision, a 13-member board for GM is scheduled to meet next Tuesday in Detroit to decide what to do with Saab, with a wind-down of the brand imminent.
Koenigsegg has also made comment in a separate statement today that it had withdrawn from the sale process; about five months after the two sides had reached a preliminary deal.
"The time factor has always been critical for our strategy to breathe new life into the company," Koenigsegg said.