Tuesday, November 1, 2011
11/01/11 – Welcome to another update of One Stop Motors continued coverage on Saab Automotive’s developing story. Ladies and gentlemen, it’s time for SAAB WATCH2011! The East Coast is currently being blanketed in a snowy blizzard, but it appears as though on the Eastern Hemisphere, it’s raining money. Reported today on Bloomberg.com, the Chinese investors who have arranged a deal to purchase the Saab brand from owner, Swedish Automobile NA, have gotten the blessing from Swedish courts to keep Saab protected from creditors. This will allow them to restructure, redistribute and realign as they start to resemble an actual company for the first time in a long time. Of course, this has everything to do with Chinese companies, Pang Da Automobile Trade Co. and Zhejiang Youngman Lotus Automobile, who are set to invest $844 million (610 million euros) into the Swedish car manufacturer over the next several years. This pledge, according to Bloomberg.com, has satisfied courts and coaxed them into extending the companies protection.
In an immediate move, Pang Da and Youngman will be providing a bridge loan of 50 million euros to keep the company afloat while it reorganizes. Unfortunately, this is only the good news. The bad news comes to 500 to-be-determined Saab employees who will lose their jobs over budget cuts. Saab’s current Chairman, Victor Muller, was reported saying, “But we have a lot of work ahead to even get the investment approved, and Saab has suffered tremendous damage to its brand and supplier base that must be overcome.” His optimistic words at least somewhat implies Muller may not be in that wave of 500 who lose their jobs. Still one thing is certain, nothing is really certain. Saab is stuck waiting on the investment from the Chinese to be approved by the appropriate channels. Until then, there is still a looming potential for a breakdown in business.
The Chinese have also outlined a plan that would use their $844 million to make Saab profitable by 2014. According to Bloomberg.com, Saab’s new plan hinges on their expectation to sell 35,000 to 55,000 cars next year. By 2014, they expect to sell 130,000 to 150,000 cars. This may be a gross overestimate seeing as Saab hasn’t sold over the 100,000 mark since 2007 (then owned by GM). Last year they only sold 32,048 and the year before that, 20,905. 2011 wasn’t that great of a year either, with the assembly line shut downs and the bankruptcy spectacular. Having damaged their relationship with everyone but the Chinese (which they almost ruined last week), it will be interesting to see how Saab fares in the next year or two. Until then, they are alive; leaner and meaner, but alive.
Tyler Baker; OSM Writer
( Source : Bloomberg.com )
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