As SAAB crisis deepens, is the only way forward a sale to the Chinese?

saab 95 saloon

With production halted again and employee trade unions threatening to bankrupt the company if overdue wages are not paid soon, does China hold the key to SAAB’s future?

Yes, I know SAAB is a Swedish institution, up there with smorgasbord, Ikea and ABBA.  But SAAB is in very deep trouble.  And, to be fair, it hasn’t been Swedish owned for some time.  The Svenksa Aeroplan Acktie Bolag (Swedish Aeroplane Company Limited) owned the car company until 1990 when it was purchased by US giant General Motors, at a time when the SAAB car brand was struggling.  GM thought they could turn it into a Global executive car brand to rival BMW and Audi.  When GM failed, Dutch sports car maker Spyker bought SAAB in a fire sale (2010).  But without the might of a global car manufacturer behind it, however, it’s struggled to turn the Trollhattan based company around.

And this week news has come that as production has been halted yet again — I lose count, but this is maybe the fourth time since Spyker took over — as suppliers refuse to deliver components until they get paid, the previously loyal employee unions are now threatening to force bankruptcy on the company to recover unpaid wages.

But how could this be, I hear you cry.  Didn’t Spyker (now renamed Swedish Automobile as their Spyker sportscar business has been sold off to Coventry based CPP) get a cash injection from the Chinese just a few weeks ago?  Yes, Pang Da, a Chinese car distributor, is paying 109 million euros for a 24 per cent stake in Swedish Automobile.  And more recently Swedish Automobile has agreed to sell a 29.9 per cent stake to Youngman Lotus Automobile, a Chinese manufacturer of cars under licence.  But these agreements most likely haven’t been completed yet, due to the complexities of international finance and the need for Chinese government approval.

These deals are still likely to go ahead, although in order to resolve SAAB’s deepening crisis may yet get renegotiated to include more cash and a greater stake.

Yes, SAAB, like MG Rover and fellow Swedes Volvo, is going to the Chinese.

The end of the company as we know it?  Well, perhaps not.  Volvo is doing just fine under Geely, although it’s still only fairly recently that the brand went East and stopped being able to rely on Ford, whose platforms underpin all the current cars.  Geely has not yet had to develop a new car that’s competitive on a world stage from scratch.

MG and Roewe however (as Rover is now called, but the same platforms underpin models from both brands) are doing better than they ever did as an independent company in recent times, if not producing as many cars as the heydays of BL/Austin Rover Group.  Don’t read into the current success of these brands based on the meagre output of cars from the decimated Longbridge site in the UK however; China is now the big market for the MG and Roewe brands and SAIC — current Chinese owners of both — expects to shift 230,000 cars this year.  That’s a lot for a niche manufacturer and the sorts of figures that SAAB and Volvo dream about.

I think a SAAB future may be under full Chinese ownership, with production for Europe kept in Trollhattan; an extension of the current agreement that sees the 9-4 SUV made by General Motors alongside Cadillacs for the North American market; and a new future for SAAB in Youngman’s factories, serving a growing market of affluent middle class Chinese locally.  SAAB’s conservative executive saloons are exactly what the Chinese love.

It may not be the future we hoped for a brand that holds a special place for many of us who remember the quirky sports saloons and rally successes of the 1970s, but it’s possibly the ONLY way we’ll see SAAB badged cars in the future.

What do you think?  Share your views by adding a comment below.

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Debbie Kirkley

Director at OSV Ltd
Debbie enjoys: Spending time with her family and dogs, travelling and her work.

Debbie has had exposure to every aspect of the business, ensuring a tight ship at every stage of the process. She thrives on achieving great results, all the while being a great person to laugh and joke about with.
Debbie Kirkley

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  • 27th June 2011

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