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Once again, Saab nears the end of the road

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hatien


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Saab’s survival is once again in doubt after a cash-injection deal with a Chinese automaker collapsed, a year after the brand was brought back from the brink when purchased by Dutch firm Spyker.

Saab’s plant is the southwestern town of Trollheattan has stood still for many weeks, just like in pre-Spyker days at the start of 2010, and industry sources put its debt to suppliers at some 100 million euros ($142 million).

It was those suppliers which highlighted Saab’s pressing liquidity crisis in March, when they began to stop deliveries to the carmaker due to unpaid bills.

Any of them “could go to court today and get Saab declared bankrupt but they wouldn’t gain anything. They live in the hope that perhaps a miracle will happen,” said Lars Holmqvist, the head of the Brussels-based European Association of Automotive Suppliers.

As for Saab “I don’t think they have enough money to pay the salaries for a very long time. We are talking of a very desperate situation,” he told AFP.

“I can’t tell you if it’s going to be five days, ten days, but it’s not going to be many months,” he said.

Saab’s future appeared secure and its financial crisis solved at last when Spyker announced on May 3 that China’s Hawtai would pour 150 million euros into the carmaker in exchange for a 30 percent stake in Spyker.

But the deal collapsed Thursday because Hawtai Motor Group had been unable to obtain the necessary approvals for it to go through, Spyker said.

The new road bump spurred questions about Spyker head Victor Muller.

“Saab’s overenthusiastic owner won’t succeed in giving a new life to the carmaker,” leading Swedish daily Dagens Nyheter (DN) wrote under a large “Muller can’t save Saab” headline.

Known for his ability to convince and charm, Muller’s credentials are less impressive: his Unwired Concepts business went bust in 2011, and Spyker, which until recently made exclusive sports cars, never turned a profit.

He has also been fined by Dutch authorities for financial irregularities and flawed reporting, the Wall Street Journal said.

“He’s certainly not a credible businessman,” Holmqvist charged. “He takes decisions before he gets the financing clear.”

“There are people that are really upset about him first of all because they have been misled into believing that Saab would be able to pay,” he said. “Today, if you deliver something to Saab, you have no guarantee whatsoever that you’ll be repaid.”

When Spyker bought Saab from US auto giant General Motors in February 2010 for 400 million dollars, it was seen as a last-minute rescue for the ailing brand, which hadn’t turned a profit in 20 years under GM.

“Give us a chance! And if this time it doesn’t work, we’ll close up shop,” a high-ranking Saab executive told AFP early in 2010.

Last year, the company’s sales did not reach expectations, selling a little over 30,000 cars when aiming for 50,000. Spyker hoped to sell 80,000 in 2011, but admitted last month it would not be possible.

On Thursday, Sweden said once again it would not offer state help to save the brand, even though its iconic status makes it a symbol of the glory days of Swedish industry.

Despite the failure of the deal with Hawtai, Saab said discussions were ongoing with the company and other Chinese carmakers.

There is also hope the Vladimir Antonov, a controversial former Spyker shareholder, will get approved by the European Investment Bank (EIB) to enter into Spyker’s capital and inject cash into Saab.

But the main question remains the long-term viability of a small, 3,800-employee strong, automaker in a European market with excess capacity.

“In the long run, emergency injections of fresh cash aren’t enough,” pointed out Jacques Wallner, who covers the auto industry for DN.

“Saab is a small and weakened constructor that needs a solid larger partner to share its development costs,” he said.

“If there is still a future for Saab Automobile.”
Source: AFP

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