Our Daily Saab: Saab Lives Another Day, Waits For Chinese Money

Bertel Schmitt
by Bertel Schmitt

Today, Saab creditors met in a packed-beyond capacity courtroom on Vänersborg. After a short deliberation, the district court approved the reorganization plan, Göteborg’s Posten reports. It will cost 500 jobs in Trollhättan. On Friday, China’s Youngman and Pangda had agreed to take over Saab 100 percent – in a Memorandum of Understanding, which isn’t worth much, and which is littered with caveats.

The reorganization plan, ( full text here), was feted in a lengthy press release. It starts like this:

“Pending the approval from all relevant parties, short- and long-term funding for Saab Automobile is assured: Youngman and Pang Da have expressed their commitment to provide EUR 50 million, to fund Saab Automobile while in reorganization. In addition, the Chinese investors will provide a minimum of EUR 600 million in funding to restart production, to settle the company’s clear and due debts and to fund operations for the 2012-2013 medium-term timeframe. To provide funding for the revised business plan and provide long-term financial stability the new Chinese owners have also budgeted funding for the planned expansion of Saab Automobile’s portfolio and additional operations to be set up in China.“

And then it continues:

“Saab Automobile has not received the funds from Pang Da and Youngman that have been committed for today.”

Sound familiar?

Sweden’s Aftonbladet figures that the suppliers alone are owed some $230 million. There is a $300 million EIB loan. $328 million in preferreds are due to GM in 2016. The cost of developing a new platform is in the neighborhood of a billion dollars.

Neither Pangda nor Youngman have anywhere near that money sitting around in their bank accounts. They are dependent on investors, banks, governments. China has tightened the purse strings on its banks, creating what is called a “shadow banking system”, a giant below the table loansharking operation, which many, including the Wall Street Journal, expect to explode any minute. China’s car market is growing in the low single digits, while expensive capacity expansion projects are underway. As far as car producers go, Youngman is at the bottom of the long Chinese food chain.

The reorganization plan expects continuing losses through the 2013. It sees Saab return to profitability in 2014 on sales of around 200,000 units annually. Hope springs eternal.

Bertel Schmitt
Bertel Schmitt

Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.

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  • Jeff_vader Jeff_vader on Oct 31, 2011

    Quite. But add into that melting pot the new 9-4X. Just what the European market needs: an auto only, petrol only crossover that is based on a Chevy that returns 24mpg when fuel is nearly $10.00 a gallon. I'm sure they'll be queuing up round the block for those. Especially at the rumoured UK price of £35000. I know its a crying shame for people to be losing their jobs but there are too many brands making too many cars for too few customers, especially in Europe. The market had spoken. No one knew what Saab was anymore & nobody really cared. To get even close to the figures SWAN are now suggesting the advertising budget alone would run into hundreds of millions. I just keep thinking that this is not a viable business. Outside of China anyway.

    • Bertel Schmitt Bertel Schmitt on Oct 31, 2011

      Inside of China, only readers of foreign car blogs have ever heard of Saab.

  • Domestic Hearse Domestic Hearse on Oct 31, 2011

    Der norba le da morba id coming id a gorba later. Een den da Pangda da bangda id a joke on da Saab anna dobda hork. Der Mueller der bueller, bueller, andybody, bueller? Nope da dope der mope. Da stick in de fork anna bork, bork, bork, bork. Tada! De Chineeb dumb links!

  • JK I grew up with Dodge trucks in the US, and now live in Turin, Italy, the home of Fiat. I don't think Italians view this as an Italian company either. There are constant news articles and protests about how stalantis is moving operations out of Italy. Jeep is strangely popular here though. I think last time I looked at stelantis's numbers, Jeep was the only thing saving them from big big problems.
  • Bd2 Oh yeah, funny how Trumpers (much less the Orange Con, himself) are perfectly willing to throw away the Constitution...
  • Bd2 Geeze, Anal sure likes to spread his drivelA huge problem was Fisher and his wife - who overspent when they were flush with cash and repeatedly did things ad hoc and didn't listen to their employees (who had more experience when it came to auto manufacturing, engineering, etc).
  • Tassos My Colleague Mike B bought one of these (the 300 SEL, same champagne color) new around June 1990. I thought he paid $50k originally but recently he told me it was $62k. At that time my Accord 1990 Coupe LX cost new, all included, $15k. So today the same car means $150k for the S class and $35k-40k for the Accord. So those %0 or 62k , these were NOT worthless, Idiot Joe Biden devalued dollars, so he paid AN ARM AND A LEG. And he babied the car, he really loved it, despite its very weak I6 engine with a mere 177 HP and 188 LBFT, and kept it forever. By the time he asked me to drive it (to take him to the dealer because his worthless POS Buick Rainier "SUV" needed expensive repairs (yes, it was a cheap Buick but he had to shell out thousands), the car needed a lot of suspension work, it drove like an awful clunker. He ended up donating it after 30 years or so. THIS POS is no different, and much older. Its CHEAPSKATE owner should ALSO donate it to charity instead of trying to make a few measly bucks off its CARCASS. Pathetic!
  • RHD The re-paint looks like it was done with a four-inch paintbrush. As far as VWs go, it's a rebadged Seat... which is still kind of a VW, made in Mexico from a Complete Knock-Down kit. 28 years in Mexico being driven like a flogged mule while wearing that ridiculous rear spoiler is a tough life, but it has actually survived... It's unique (to us), weird, funky (very funky), and certainly not worth over five grand plus the headaches of trying to get it across the border and registered at the local DMV.