By on June 28, 2011

Saab has reached a deal to sell 50.1% of its real estate holdings to a consortium led by Hemfosa Fastigheter AB, for about $40m, and has also received an order for $18.4m worth of vehicles from an unnamed Chinese firm according to AN [sub], giving the dead-alive Swedish firm the faintest, cruelest glimmer of hope. The real estate deal was for about a third less than the property had previously been valued at, and still needs to be approved by the Swedish Debt Office, the EIB and GM. Meanwhile, the real struggle is ongoing, as a Saab spokesperson tells Reuters that

Today’s news takes us a good way in the right direction, but it is the agreement (with suppliers) that matters and only then will we be able to communicate a date when we can restart production

But suppliers aren’t even the first in line for Saab’s much-needed cash injection: that goes to workers who are promising to take the company into bankruptcy if they aren’t paid soon. These two recent deals should be enough to pay worker salaries through July, but if suppliers aren’t brought back as well to restart production, the bulk sale and an earlier order from PangDa will never be filled. And those suppliers are currently mulling over an offer of ten percent of what they are owed until the Chinese inject more cash later in the year… not the greatest deal ever. Meanwhile, Saab says

There are other initiatives still being pursued. There is not much we can say about that until we have something concrete to communicate

Like what? What could there possibly be to communicate?

SVD.se reports that GM is increasingly sympathetic to Vladimir Antonov’s case, and that approval of his stake in the firm could come “within days.” But the problem, it seems isn’t GM but the EIB. A rumor reported in SVD.se goes something like this: the EIB “found something” in its research on Antonov, and with Swedish elections coming down the line, the government wants to let the EIB take the fall for “killing” Saab by not giving approval to Antonov. This is very much a rumor, but given how important confidence is in any kind of cash crisis, not to mention the fact that an eventual Antonov investment has been a key confidence builder for struggling Saab, this is shouldn’t be dismissed out of hand. In any case, there’s got to be a reason for the EIB’s continued non-approval of Antonov’s investment, and even if there isn’t, every day that goes by without approval, these rumors will only grow and further undermine confidence in Saab as a going concern. Ironically, the EIB cites Saab’s lack of viability for refusing to pay out further installments of its loan as well, further aggravating the vicious cycle that we call “circling the drain.”

And the problem, ultimately, all comes back to production. Some of Saab’s suppliers, including dashboard contractor IAC, are refusing to go along with Saab’s plans to restart the line next week, saying they are not cooperating with the factory at all. And though dagensarena.se is trying to put political pressure on the Swedish government to force the EIB’s hand and get a deal together, there seems to be relatively little leverage for that argument. After all, Saabs employees aren’t working now, and observers seem to believe that many current employees could keep working even in bankruptcy. How? Give up the building cars thing and become a dedicated engineering and consulting outfit. After all, that strategy has kept even smaller firms (like Lotus) afloat before now…

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14 Comments on “Saab Sells Factory, But Sweden and EIB May Be Killing It Off Anyway...”


  • avatar
    Cammy Corrigan

    I don’t think this is end of SAAB. I think it’s the death rattle for SAAB under Spyker. I really have no idea what Spyker were thinking when they bought SAAB. Pretty much the same thought ran through my head when Cerberus bought Chrysler.

    If SAAB file and are declared bankrupt, I strongly suspect it’ll be bought up by a Chinese buyer. The Chinese government declared that they want to invest in Europe (and subsequently, ease off the US Dollar). Buying SAAB would be a good start. Once a Chinese company buys it, it has automatic access to the Chinese market. Once the inevitable squeeze on foreign partners happens and they are forcibly removed from China, SAAB will have the distinct advantage of not having to leave due be being owned by a Chinese company. Now, no doubt a lot of jobs will be lost in Europe and a lot of jobs created in China. Maybe a token factory will be retained in Sweden, but the majority of operations will be moved to China (See MG-Rover for more details), but I’m not talking about that. I’m talking about the survival of the company. Granted they’ll lose a lot of goodwill in Europe, but China won’t care. SAAB will flourish in China alone (it’s the largest car market in the world, don’t ya know?). And with the upcoming Greek default and inevitable recession/depression in Europe, buying cars will be the last thing on Europe’s mind.

    So is the death of SAAB? Almost certainly. Will SAAB rise back up? There’s a good chance of it…

    • 0 avatar
      Pig_Iron

      I think Cammy is mostly right. What ever happens, I won’t be happy. I still think their best hope is to hitch up with somebody like VAG, but I recognize it has the lowest probabilty of occurance.

      “And with the upcoming Greek default and inevitable recession / depression in Europe…” Holy… is it really that bad? – I still havn’t recovered from the last recession (or I would have done my bit to save SAAB).

    • 0 avatar

      SAAB gobbled up and moved to China might save the name, but not the soul and identity of the company. Nor would it make the product any more desirable for global markets aside from China’s. See MG as it is now.

  • avatar
    Robbie

    There may be some extremely good deals on the last SAABs ahead of us…

  • avatar
    cdm

    I think that there is still value in SAAB for the Chinese. The Chinese government may be concerned about the number of brands manufacturing and selling in China, but the flip side that comes with SAAB is distribution in Europe and North America, which most Chinese manufacturers have yet to secure.

    I am coming to the opinion, though, that the weak link in all of this is Victor Muller. This additional financing should have been wrapped up long ago. It seems that he wanted to try to make it work with out diluting his shares, and that the financing was a last ditch effort – when it should have been first.

  • avatar
    cdm

    Also, given the standing of the suppliers relative to the workers, it seems that the 10% now solution is as good as it gets.

    If they do not take it, they get nothing after the workers are done.

  • avatar
    erikhans

    Head on over to the SU website….Apparently NDO, GM and the Swedish Gov. said yes to Antonov 8 weeks ago. (which somehow was not communicated to each other?) Now the EIB needs to do something. Seems very convoluted at the point and like everyone is trying to cover their butts now…Very weird situation. Someday this is going to make a great book!

  • avatar
    Ingvar

    “… the EIB “found something” in its research on Antonov, and with Swedish elections coming down the line, the government wants to let the EIB take the fall for “killing” Saab by not giving approval to Antonov.”

    You can forget about that rumor. General elections aren’t coming down the line for another three and a half years. Besides, the government wouldn’t let anybody “take the fall” for anything that they hadn’t been bringing down themselves in the first place. If EIB or the Swedish government doesn’t approve of Antonov, then, most likely, it would be because they really have some dirt on Antonov.

    The premise for this rumor is ludicrous, because the truth is that nobody in particular tries to kill Saab. The simple answer is that Saabs owners has brought this down by themselves for not making Saab a viable business proposition. Neither EIB nor the government will throw good money after bad, especially when nobody and their grandmothers see any sort of secure future or even a sound business plan for the company.

  • avatar
    Robert.Walter

    “we call “circling the drain”, which we call something else, but by the time I finished reading the comments and answering a call on skype, I forgot what else we call it!

    In other comments:

    “The simple answer is that Saabs owners has brought this down by themselves for not making Saab a viable business proposition.”

    No profit under GM, no profit under Investor. Seems SAAB was only ever a side-line started to give some unemployed aircraft designers something to do until the next new aircraft needed to be designed, and it is, as an industiral concern, and an idea that had long-ago run its course, this being something nobody wanted to accept or come to terms with…

    … even if they do pass this current bump in the road, what happens when the product begins to age again, and has to be renewed? Or they have to change, or augment, their mode of propulsion? They don’t have the volume to finance this… And they can’t really move up-market … so they can’t finance this … we will soon see how many degrees of freedom there are between the proverbial rock and hard place…

    I can’t blame Muller … easiest thing to do would be nothing and to let it die … was there ever a really qualified and interested suitor for saab? Perhaps Muller was the only one really gutsy enough to take the risk (maybe with some wrong financing assumptions but one never knows, they play the card that they are dealt and they roll-the-dice… (mixed metaphor, I know, but it still makes the point…)

    btw, the banner photo looks like a metaphor for: a) the passengers got out of the car and walked away, b) no passengers have yet been inticed to get in, or c) the lights arestill on, but no body’s, or bodies, are in the saab plant…

  • avatar
    gslippy

    Saab is toast. GM didn’t ditch them because they were profitable, and Saab is dead weight for Spyker.

    Saab’s US sales are virtually non-existant. Their cars are not distinct, and the development cycle is too long and expensive to change that.

  • avatar
    seth1065

    The Zombie car company lives another day, they will not be killed, you gotta root for the underdog and let’s face it I do not know any other car company that has survived the Sh** they have gone through.

  • avatar
    Sam P

    When Saab eventually ceases to be a going concern, I wonder how much of a depreciation hit late-model Saabs will take.Saab produced a 280 horsepower AWD 9-3 with a 6-speed manual gearbox in 2007-8 and brought a number of them to the US market.

    http://www.thetruthaboutcars.com/2008/11/review-saab-9-3-turbo-x/

    I bet parts will be pretty much unobtanium after the company’s demise, though, and reliability will probably make my Bimmer look like a Corolla.

  • avatar
    meccano

    And you would loose that bet. SAAB’s part division is a separate entity; a subsidiary legally protected from the sins of the parent. SAAB goes under, SAAB Automobile’s parts division lives on. They have their own contracts with suppliers, their own inventory, their own lines of credit, their own warehouses and their own distribution chain. Perhaps most importantly they are profitable. There are millions of SAABs out on the road (despite your presumed unreliability), so they have plenty of business for many years to come even if the last SAAB has already rolled off the assembly line. There is nothing mystical about repairing a SAAB either and any competent mechanic can work on them. Most independent mechanics that specialize in Volvos also gladly work on SAABs as well.


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