GM kills Saab rescue plan
Published on November 8, 2011 by Tycho de Feijter
The owner of Saab cars are scrambling to save a rescue deal for the Swedish car brand after General Motors said it would stop supplying components and technology if two Chinese companies succeeded with their acquisition bid.
The GM statement represented a hardening in its opposition to the proposed sale of Saab and called into question the survival of a niche brand beloved by enthusiasts for its early use of technology like turbocharging and its distinctive Scandinavian designs.
Many analysts had seen the plan to save Saab from liquidation as a longshot in part because the sale to Chinese investors Pang Da Automobile Trade Co and Zhejiang Youngman Lotus Automobile required approval from GM and government officials in Sweden and China.
“As far as I can see this was really the last roll of the dice,” said IHS Global Insight auto analyst Ian Fletcher. “We’re back to square one.”
Victor Muller, chief executive of Saab’s embattled owner Swedish Automobile, said GM’s rejection of the proposed rescue plan would mean that negotiators would have to “go back to the drawing board” with Chinese investors Pang Da and Youngman Lotus.
A deal for the Chinese companies to rescue Saab had been awaiting approval from Chinese government officials. The Swedish government, a Saab creditor, also had yet to approve the deal.
Muller told Reuters he expected to speak to the Chinese companies on Tuesday to try to consider the remaining possibilities for Saab after GM’s announcement.
“There are always alternatives but we only have limited time,” Muller told Reuters in a text message.
The proposed rescue deal for Saab had to be approved by GM, which still has preference shares in Saab and has supplied the Swedish auto brand with crucial components.
GM, which operates in China in a partnership with state-run automaker SAIC Motor Corp, said it had concluded that continuing to supply vehicles and technology to Saab’s new owners would run counter to the interest of its own shareholders.
“Although General Motors is open to the continued supply of powertrains and other components to Saab under appropriate terms and conditions, GM will not agree to the continuation of the existing technology licenses or the continued supply of 9-4X vehicles to Saab following the proposed change in ownership as it would not be in the best interests of GM shareholders,” GM spokesman Jim Cain said in a statement.
A sale of Saab would also have required review by BMW. The German carmaker had agreed to supply Saab with 1.6-liter engines for future vehicles.
Lurching between crises
On Friday, GM had said that it would be difficult to support a sale of Saab if it would hurt GM’s competitive position in China and other key markets.
GM had offered to continue to supply Saab under its new owners if they would agree to pay the US automaker about $US500 million, a person with knowledge of the talks that took place late last week said. GM declined to comment on the details of the closed-door negotiations.
Saab has lurched from crisis to crisis in the past year and has not produced a car in months. Its main factory in Trollhattan, Sweden, has been shut down.
The company was given court protection from creditors in Sweden in September after unions representing Saab employees began proceedings to put it into bankruptcy over unpaid wages. It was the second time Saab had received protection from creditors in two years.
In June, Youngman Lotus and Pang Da had agreed to take a combined 54-per cent stake in Saab. But with Saab’s position worsening and liquidation a looming risk, the companies offered in October to buy Saab outright for 100 million euros.
“I had warned the Chinese that GM would have a mega problem with any other deal other than the original 54 per cent stake in Swedish Automobile. Unfortunately, I was right,” said Muller, who engineered the purchase of Saab from GM in 2009 and remains an investor in Swedish Automobile.
Pang Da operates auto dealerships in China. Youngman produces commercial vehicles, including buses and trucks, and sells cars under the Lotus brand.
Shares in Swedish Auto have lost almost 90 per cent of their value since the start of the year.
Saab has sold just under 5,000 vehicles in the United States this year through October. By contrast, Volvo, a competing Swedish auto brand, sold about 57,000 vehicles in the same period. Ford Motor Co sold Volvo to Chinese automaker Geely Automobile Holdings Ltd in 2010.
Saab was formed in 1937 in Trollhattan in southwestern Sweden to make high-performance aircraft. A decade later, it began making cars.
By 1990, GM owned half of Saab’s auto operations and bought the remaining half in 2000.
Via: Sydney Morning Herald.