Saab's road ahead leads to shutdown -- and has sparked a heated political row over the government's handling of the sale.

Sweden is bracing for the end of an era as General Motors' failed bid to sell iconic carmaker Saab means the Swedish group will likely close, leaving thousands of layoffs in its wake unless a Chinese rescuer steps in to save the day.

Koenigsegg, a niche sportscar maker that rolls out 18 luxury cars a year, stunned the automotive industry Tuesday when it announced it was abandoning its bid to buy Saab from its US parent GM, citing costly bureaucratic delays in the takeover process.

The decision left Saab's 3,400 workers in the Scandinavian country in a state of shock, sparked a heated political row over the government's handling of the sale, and raised questions about the future of the rest of Sweden's automotive industry as well as the fate of Saab's hometown Trollhaettan.

"Saab is very important to Sweden," summed up Trollhättan mayor Gert-Inge Andersson, whose son and son-in-law have both worked at Saab in the southwestern Swedish town of 55,000.

Between 8,000 and 15,000 jobs could disappear if Saab were to close, including those of suppliers and subcontractors, and if they also shut down that could pose a big problem for Sweden's other carmaker Volvo, owned by US group Ford.

A Saab closure "could have major consequences for subcontractors and so on. This will affect a lot more people. If this goes in the wrong directon it's also going to impact Volvo," the head of the IF Metall union Stefan Loefven said.

"We risk losing a big chunk of our exports, which is important for Sweden's general welfare," he warned.