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SAD DAY FOR SAAB

Monday December 19th 2011

 
It is a sad day in the automotive world as once great and iconic SAAB Automobile filed for bankruptcy. This brings the troubled Swedish carmaker to the point of no return as it was unable to find investors to rescue the company which boasted a fine pedigree running  over 74 years.
 
SAAB submitted to the Vaenersborg District Court an application for bankruptcy proceedings and the remnants of the company may well be carved up as there have been several indications of interests to acquire parts that are deemed to have value in another operators structure.
 
I know that earlier notes I have placed about this prospect were met with disdain from within Sweden and from SAAB devotees across the world, but how it was ever thought the company could mount a serious challenge to the likes of Audi, BMW and Mercedes Benz was always beyond me.  It has to be accepted that regardless of any wishful thinking from Victor Muller, CEO of parent company Swedish Automobile NV, this is the end.
 
In the 1980's, the SAAB 900 was just as desirable a car for the yuppie brigade as was a BMW 3 Series or a Mercedes Benz 190E. It was seen as a sleek and definitely sexy vehicle but sadly, GM ruined it! They made the fast sporty car cut costs and share a chassis with Opel and Vauxhall. To suddenly demand a BMW or Merc price when all one was getting was a Vauxhall with a different body shell was the height of marketing folly.  That exercise should be a standard case study at any business school on how to ruin a brand!
 
SAAB was sold in 2010 to Spyker which turn became  Swedish Automobile. However, there reliance on GM for parts continued and new models where still nothing more than rebadged and skinned Opel/Vauxhall products.  
 
Swedish Automobile was running short of cash and had been dealt several body blows with strikes and and an inability to pay it suppliers. A a result the company suspended production in March and has only randomly restarted assembly lines since then. It has been forced to delay wage payments several times, and has yet to meet its wage bill that was due at the end of November.
 
The group was able to hold the line, albeit briefly as in September it won court protection from creditors as the frantic scramble to secure funding took place. It was all to no avail and Guy Lofalk the court- appointed administrator, applied on December 7th to terminate all activities including efforts at reorganization as the manufacturer was out of money andtime with no hope of gaining financing anytime soon.
 
The group had been talikng with Zhejiang Youngman Lotus Automobile and a Chinese bank to secure about €600m in loans, however, GM, which retained a say in SAAB's future as a result of the enduring technology ties had announced on December 17th  it couldn't’t support proposed alternatives as they were are not "...meaningfully different...” from previous plans GM itself had rejected on the grounds they would hurt the US company.
 
Swedish Automobile, which changed its name from Spyker Cars NV in June, was planning for Saab to sell 120,000 vehicles and return to profit by 2012. SAAB’s deliveries, which peaked at 133,000 cars in 2006 were never able to match the parent company’s intermediate goals. Sales totaled 31,696 cars in 2010, compared with a target of 50,000 to 60,000.
 
Swedish Automobile has tumbled 76% to just 5 cents this year.  
 
Steve
Stephen Pope
Managing Partner ~ Spotlight Ideas

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