Tuesday 5th July 2011

Has Cash Injection Saved Saab?

Money for new models on way with Chinese joint venture

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Seems that Saab, despite barely being able to find sufficient spare change for the meter to keep the lights on in recent months, might just be on the verge of sorting itself out.

Firstly, the cash-strapped Swedish car maker could be brought back from the brink after the European Investment Bank today approved its plan to sell a 50.1 per cent stake in the company that owns Saab's property (including its Trollhattan factory) - a deal worth £25m.

Secondly, Saab (or rather its Parent company Swedish Automobile, nee Spyker) has also today formalised a deal with China's Zhejiang Youngman Lotus Automobile Co. (catchy name) and Pang Da Automobile Trade Co. Ltd (a little more memorable) to develop a new 9-1 supermini, a 9-6x SUV and a 9-7 - er, well we don't actually know what a 9-7 would be.

That deal, although yet to be approved, is said to be worth around £221m, and would also open the way for Russian investor Vladimir Antonov, who has apparently said that he wants to put between £30m and £90m into Saab.

Now we'd be the first to admit that we don't know the ins and outs of in-depth financial journalism so we'll leave it there for now, but you can find out more by checking out the story on the Wall Street Journal's website...

[Al 450]

So in other words the Chinese will prop them up until the engineering on the new models is almost done then they will wait till they go bust and buy the rights for tuppence a la MG Rover.

[GTEYE]

I hate to say this, but I have a feeling Saab are not out of the deep water yet. Not sure either that an investment of this kind of scale is enough to fix what needs fixing at Saab, which is 25 years or more of marginal product investment.

[Ray Luxury-Yacht]

Well, I guess the front of a Saab looks a little Chinese

Glad it's not been left to die anyway.

[wab172uk]

Quite how Spyker thought they could save Saab in the first place is beyond me.

Spyker build a very low volume car.
They got into F1, ran out of cash very quickly and had to sell. Failed.
They then bought Saab. Have ran out of cash very quickly and are trying to sell in to the Chinese and Russians. Failed.

[Ray Luxury-Yacht]

The Crack Fox said:

That bloke looks like most staff on parts counters....

[DoctorWhom]

wab172uk said:

Quite how Spyker thought they could save Saab in the first place is beyond me.

Spyker build a very low volume car.
They got into F1, ran out of cash very quickly and had to sell. Failed.
They then bought Saab. Have ran out of cash very quickly and are trying to sell in to the Chinese and Russians. Failed.

Maybe you should reread that.

A 50.1% stake in the company that owns the property was sold, not a 50.1% stake in Saab

A deal was made with the Chinese on a joint project. The Chinese front some cash and Saab develops new products and has these two companies produce the Chinese market ones in China.

Nowhere has any stake in Saab been sold.


Oh and the Spyker division has been sold off so Saab is fully independent.


Also adding that Saab was promised money from the EIB if they made some investments so Saab dumped a lot of cash in there and then the EIB decides to Balk on the deal and stalls.

Edited by DoctorWhom on Monday 4th July 23:49

[skwdenyer]

DoctorWhom said:

Maybe you should reread that.

A 50.1% stake in the company that owns the property was sold, not a 50.1% stake in Saab

Yes, correct.

DoctorWhom said:

A deal was made with the Chinese on a joint project. The Chinese front some cash and Saab develops new products and has these two companies produce the Chinese market ones in China.

Nowhere has any stake in Saab been sold.

Untrue. The deal on the table is that both Youngman and Pang Da take stages in Saab sufficient to, between them, exert control. Some of Pang Da's stake will be available for repurchase at a later date if certain conditions are met.

DoctorWhom said:

Oh and the Spyker division has been sold off so Saab is fully independent.

Not quite so. Although the sale, to an Antonov-controlled company, was announced, it has not been announced that the deal has closed, i.e. completed. Right now I believe Spyker is still owned by Swedish Automobile NV.

DoctorWhom said:

Also adding that Saab was promised money from the EIB if they made some investments so Saab dumped a lot of cash in there and then the EIB decides to Balk on the deal and stalls.

That may be true. Others suggest that Saab used the EIB's money to pay some general bills, not only for the specific projects which the EIB had approved. That debate is ongoing, but nothing is - yet - black and white about this.

[Martin 480 Turbo]

In my eyes all those numbers, that are getting tossed around
concerning the future of SAAB are missing a 0 digit at the end.

The developement of a completely new car like the Insignia is
the better end of a billion euros these days.

How SAAB will do that on a fraction of the cost, is beyond
me.

Martin 480 Turbo

[minicab]

Good news but it's nowhere near enough!

As others have said, the cost to develop 'new' cars is substantially greater than the numbers mentioned in the article.

[hairy]

Ray Luxury-Yacht said:

That bloke looks like most staff on parts counters....

Would probably be more helpful and have more charisma than most parts departments!

[P9UNK]

I just wonder whether there is room for Saab, although there is a niche market for them I can't see it developing much. The 'glory days', as it were are out of the memory of many of the buying public. As in the States some brands need to go and for me of the great marques Saab are the dispensible one! Not a point the finacial backers agree with of course, and be nice to be proved wrong but not at the expense of Jaguar etc

[Slade Alive]

Before I get locked out of this topic too for being optimistic about Saab's future........

Nah never mind

[steviegunn]

Article said:

formalised a deal with China's Zhejiang Youngman Lotus Automobile Co. (catchy name)

Not another one, do the boys down at Hethel know?

[S18DMW]

steviegunn said:

Not another one, do the boys down at Hethel know?

They're preparing a pointless lawsuit to nothing as we speak. :lol:

[skwdenyer]

P9UNK said:

I just wonder whether there is room for Saab, although there is a niche market for them I can't see it developing much. The 'glory days', as it were are out of the memory of many of the buying public. As in the States some brands need to go and for me of the great marques Saab are the dispensible one! Not a point the finacial backers agree with of course, and be nice to be proved wrong but not at the expense of Jaguar etc

"The glory days" for Saab are a bit of a myth in sales terms. At their height, pre-GM, they sold around 100k cars per annum. Under GM they did better than that. Were it not for the extra costs heaped-upon them by GM (developing the ill-fated Cadillac BLS, developing the 'Premium' platform which was destined only for the Alfa 159, being the global centre for turbocharged engines in GM, and so on) then they might have broken-even during those years. GM kept the $400m they reportedly received from BAIC for the IP / tooling / etc. for older models, and the $70m from Spyker, and the $300m in debt from Spyker. If Spyker comes good, they will have got out of Saab with almost $800m, which seems pretty good to me, and a bad deal for Saab, together with ongoing revenues from Saab for the 9-4X production, platforms, parts, engines, and so on.

Compare GM's treatment of Saab to BMW's treatment of Rover. Had GM left the £400m from BAIC in Saab, and sold Saab to Spyker for £10, Saab would have been a fully-viable entity to start over with. It is a shame that that couldn't have happened.

[Slade Alive]

Pretty much everything gets signed off today, property etc, Chinese deal in place. Still a few hurdles to jump but nothing like those jumped already.

Muller and his team have done amazing patching this together in such a short space of time. I know from experience how much head and paperwork a small fraction of deals as huge as this take to put together. I can't imagine how these people have managed to find time to sleep let alone even breathe. I suspect they haven't much!

I don't believe I'm premature in saying Saab are saved and the future looks promising.

[Black S2K]

I admire your confidence & believe there is a slim chance (that's the skeleton) that it might yet happen.

But there are a LOT of hurdles to overcome first;

1. SAAB are almost unknown in China
2. Their image in EU has virtually been Roverised by Gov't Motor's clownmanagement for a decade.
3. The massive economic hard down expected 2013-14 may wipe out a LOT of stuggling businesses yet.
4. It will ba a while before new models are GM-free enough to be considered good.

[Slade Alive]

Black S2K said:

I admire your confidence & believe there is a slim chance (that's the skeleton) that it might yet happen.

But there are a LOT of hurdles to overcome first;

1. SAAB are almost unknown in China
2. Their image in EU has virtually been Roverised by Gov't Motor's clownmanagement for a decade.
3. The massive economic hard down expected 2013-14 may wipe out a LOT of stuggling businesses yet.
4. It will ba a while before new models are GM-free enough to be considered good.

What utter nonsense. All four of your points!

[Slade Alive]

Toad said:

The question now becomes, who gets the first of the newly produced car, the European & American dealers who have now basically run out of stock or the Chinese?. So if you order a new 9-5SC Aero tomorrow (£41500 in the price list), when would you actually get it?

Now it looks like Saab might just live on, true to form, more glee from the Toad.