By on January 27, 2010
Here’s a situation in a hypothetical tense for you. If you were the CEO of a car company which never made a profit in 11 years and you offered to pay $74 million for a car company which hasn’t made a profit since 2001 and had a badly damaged brand, how would you expect your share price to go? Trust me, you’re not even close. MarketWatch.com reports that Spyker shares soared as much as 74% when they announced they had reached an agreement to buy Saab from General Motors. Spyker’s market capitalisation is now €107 million, four times more than when GM first put Saab up for sale.
Spyker will need to turn Saab around very quickly. Saab does have €198 million in cash and a €400 million loan from the European Investment Bank and an extra €150 million in other financing. Sounds like a lot, until you realise that Saab lost $340 million in 2008 and is projected to lose a similar amount in 2009. Couple that with the fact that tooling and IP for the current 9-5 and the pre 2003 9-3 has gone to China and all that’s left, that’s fresh, is the new 9-5, this looks like a hefty task in front of Spyker. After digesting all this information, I have only one question. What do the markets see that I don’t to warrant Spyker’s shares going up?
Whatever it is, Fiat/Chrysler’s CEO Sergio Marchionne isn’t seeing it either. And for a guy who is trying to turn around America’s most damaged brands, he isn’t shy about sharing his contempt for crazy dreamers and their crazy dreams. He tells Autocar:

I like the Saab brand, [but] I think it’s very difficult to be a niche player and profitable. Marginal players will continue to be marginalized. We cannot build on hopes and dreams.

Unless the American government has been kind enough to underwrite those hopes and dreams, right Sergio?

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21 Comments on “Spyker Stocks Soar, But Sergio Isn’t Buying...”


  • avatar
    Garrick Jannene

    Don’t they get the rights to the 9-4x as well?

    • 0 avatar
      bill h.

      Correct. The 9-4X is reportedly already in limited production off the SRX line.

    • 0 avatar

      Yes, they are probably going to pay GM a royalty for it since it is their vehicle and a rebadged Equinox/Terrain/SRX. The 9-5 and upcoming 9-3 are also GM vehicles. They aren’t getting all of GM’s latest goodies for nothing.

      GM also gets stock in Spyker/Saab and will likely be supplying them cars for the foreseable future. I still don’t quite understand how this arrangement benefits GM more than simply discontinuing the brand.

    • 0 avatar

      TriShield, let’s distinguish between a “badge” and a “platform”. The 9-7X was a rebadge of a TrailBlazer. The 9-4X is built on a platform shared with the SRX – no more a “rebadge” than an A4 is a “rebadged” Passat.

  • avatar
    bmoredlj

    This, from someone whose brand renaissance depends on a drunk Dexter mumbling into a mic for a minute, costing millions.

  • avatar
    gslippy

    “…hopes and dreams”

    In the US it’s called “hope and change”.

  • avatar
    Lokki

    The only way this whole thing makes any sense to me is if I imagine the following:

    1. The Swedish government doesn’t want to deal with the bad press of a bunch of unemployed auto workers and don’t really care that much whether the company is long-term viable or even actually able to produce cars.. Laugh if you choose, but there’s plenty of presecedent for throwing a lot of money towards auto union worker employment.

    2. The executives of Spyker want to continue to pull large salaries for the next 4 or 5 years and don’t really care that much whether the company is long-term viable or even actually able to produce cars. There’s plenty of room in those numbers able to pay a few half-million dollar salaries plus all the perks that go with those jobs.

    Now THAT perspective makes sense to me. The interest of the groups involved meet at: Get past the next election cycle and keep the gravy train rolling

  • avatar
    late_apex

    Lokki +1
    Rod +1 except in GM and Chrysler’s case the bailout was also to get their friends (Cerberus) money back from a bad investment and to make another bad investment by those same friends (GMAC) into a good one. Gosh knows these politicians need some consulting jobs and industry think tank positions after leaving office or for the family.

    Amazing that Sergio thinks Spyker is dreaming while their turn-down plan for Chryco shows a total inversion of the current trend happening with absolutely zero quantifiable metrics to prove it’s a realistic plan.

    If I start chittin twenties I’ll have a hundred dollars in no time, which makes loaning me $75 today a good investment.

  • avatar
    Stingray

    “I think it’s very difficult to be a niche player and profitable. Marginal players will continue to be marginalized. We cannot build on hopes and dreams.”

    I hope this gentleman is speaking from his own niche brands perspective: Alfa Romeo and Lancia

    Because both of them are also going to see themselves in the Saab mirror.

    And that’s not taking into account the american patient.

    If I were him, I’d STFU and focus on my stuff. Instead of seeing what the others have in their eye.

  • avatar
    krhodes1

    Keep in mind that it has been reported that most if not all of Saab’s “losses” were due to GM’s accounting practices. Prime amoung them being that while all costs associated with Saab were laid at Saab’s feet, all US sales of Saabs were booked by GMNA. Small wonder they seem like a loss-maker! Not to say this was illegal or even wrong, it is just the way of global corporations and GAAP. But that does not mean that Saab will continue to lose $340M/yr. Perfectly possible that with another set of perfectly legal books they could have been shown as profit making up until GM started screaming about shutting them and sales fell off a cliff. They have also done essentially NO marketing in the past couple years. They have good product, no reason Spyker can’t make a go of it. The new 9-5 and 9-4x should be successful as long as they don’t go nuts with the prices.

  • avatar
    saabista63

    I understand very well that for many people the Spyker deal must be an incredible embarrassment.
    They had it all figured out by the book: loss-making Swedish niche brand SAAB has to die.
    Overcapacity being the cardinal sin of the automotive industry, you just need to get rid of 100.000 SAABs per annum, and things will flatten out again.

    And now this!
    What’s going to happen now?
    Who’ll have to cut back, if SAAB doesn’t?

    SAAB is in fact marginal, if we talk about overcapacity: whether SAAB lives or doesn’t live, won’t change a thing.
    However, SAAB is, what some people forgot to consider: a brand other brands dream of being.
    If anything has been made clear during the last 15 months, then it is this: SAAB is anything but insignificant. It is an iconic brand with a world-wide community of supporters and aficionados.
    And – like any powerful brand – it is an idea, not only a label you print onto whatver you want.
    GM could not even destroy the idea of SAABness by sticking the Griffin onto a Subaru or a Chevrolet.

    I wanna be realistic: This is an incredible challenge with a lot of unknowns. But I think, SAAB will show us that economy is not for book-keepers only. There is more to it, and we better start to relearn – NOW!

    • 0 avatar
      Pig_Iron

      @saabista63: “a brand other brands dream of being.”

      True. I don’t see people writing songs or arranging convoys to protest Volvo’s sale to the Chinese.

  • avatar
    tparkit

    “What do the markets see that I don’t to warrant Spyker’s shares going up?”

    Simple. Spyker has now tapped into a flow of US taxpayer money, and probably some from Sweden too. Spyker is being paid to take Saab off the hands of Government Motors. Team Washington will pay a high price indeed to be extricated from their unpopular rescue of Detroit – as long as the exit can be made to look like something other than failure, and the price tag can be hidden.

    • 0 avatar
      charly

      Why would Saab get US tax money? There is also the issue that Spyker wasn’t particular well known under buyers of expensive cars. Trying to take over Saab solves that.

  • avatar

    I used to be a relatively happy curmudgeon, working on mostly Saabs for the last thirty years. Now unfortunately, I have to work on virtually everything. Our shop, and Im sure many others survive because of horribly engineered products made by Chrysler, followed closely by Jokeswagon/Audi and the other german wundercars. Sometimes, we really want to see copies of the degrees of the jackasses that sign off on this crap. And Sergio bought Chrysler? Talk about something that needed to be put out of everybodies misery.

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