I know, as this is typed that I will incur the wrath of many SAAB devotees. That is fine, we are all entitled to our opinion. I am just using this blog to air mine...which is that without huge cash reserves and a massive R&D effort backed by reliable production and delivery, no car company...especially a small one can expect to survive in the harsh world of modern auto retailing.
I do not wish foreclosure on any free enterprise offering, but there are times when the business model is just so wrong that too watch continual difficulty is beyond reason. To understand the sorry SAAB saga, one has to know a little automotive history...so in brief.
- Saab Automobile AB, better known as SAAB ... sold by General Motors to Spyker Cars N.V. in 2010.
- Spyker changed the new group name to Swedish Automobile.
- On 25th February, Spyker Cars N.V. agreed to sell the sports car arm to focus on Saab.
- Beginning of April several suppliers halted shipment of components to the Trollhattan assembly plant because of unpaid invoices.
- As a result Saab had to stop production on 5 April 2011.
Mayhem in May and Chinese Connections...
- On 3rd May 2011, Spyker Cars thought it had an agreement with Hawtai Motor (China) to obtain emergency funding for SAAB to restart production within a week.
- This was a false dawn as on 12th May the deal collapsed as it failed to get the necessary approvals.
- There was a rumour, later denied that Great Wall Motor (also Chinese) was also talking to Swedish Auto about investing. Again it was not to be.
- On 16th May Swedish Auto announced that they had signed a Memorandum of Understanding with Pang Da Automobile Trade Co. (China), Ltd that would give SAAB access to te required cash flow to restart production in exchange for an equity stake.
- The 27th May 27 saw SAAB restart production at its production facility in Trollhättan...now 13 is unlucky for some, and just 13 days later on 8th June SAAB stopped production because of a lack of spare parts following he 7 week halt.
- Following the shutdown it was planned for full scale production to recommence on 9th August. August 9, 2011.
- However, cash flow still bedevils SAAB for on 23rd June SAAB announced that they were unable to pay the June salaries to the entire workforce of 3800 employees due to lack of funding.
- The trade union IF Metall gave Saab 7 days to pay the salaries to their employees, otherwise IF Metall threatened to force liquidation; on 29th June employees were paid.
- In June,Youngman and Pang Da stated that they would acquire 54% of SAAB at a cost of €245m and that financing for the 9-1, 9-6 and 9-7 models would be provided.
Nothing stays calm for long at SAAB as by 26th July the groups had to admit they were unable to pay the July salaries to the white collar employees who numbered 1600. There was no indication of when they would receive payment. The next day the trade union Unionen demanded payment to the white collar staff inside 2 weeks or else they would force liquidation. Payment finally happened on 5th August.
Today....the end is neigh...
SAAB is filing for bankruptcy protection in a self-managed reconstruction process, owner Swedish Automobil NV said. SAAB is to file for voluntary reorganization with the Vanersborg district court Wednesday and the application relates to Saab Automobile AB and its subsidiaries Saab Automobile Powertrain AB and Saab Automobile Tools AB but excludes Saab Automobile Parts AB and overseas subsidiaries.
Swedish Automobile said the reason for the proposed reorganization was to secure short-term stability while SAAB waits for additional funding. SAAB Automobile has a reorganization plan, that will slash the cost base, that will be presented to its creditors in more detail within 3 weeks of the filing.
Parent company Swedish Automobile made a net loss of €224m in the 6 months to 30th June, compared with €56m a year earlier.
How much longer does this crazy situation go on for? This year the losses have widened substantially. No clear place in the market, ferocious competition from rivals with deep pockets and sales that fail to impress as models cannot be delivered. The ongoing lurch from one crisis to another amid continued struggles to secure its future tell me SAAB just ran the red light.
Stephen Pope ~ MarketMind