February 24, 2009
Saab set to sink as GM steps aside
"Nej tack nu går bort!" (No thanks, now go away!)
Such was the response from the Swedish Industry Ministry, when approached by the General to purchase a majority stake in the ailing automaker.
Now, Saab is mounting its last stand against mounting debts and a critical lack of suitors interested in the struggling automaker.
Last week, General Motors announced plans to shutter or sell off its oh-so-Swedish subsidiary by the end of this year. The announcement came after repeated efforts to coax the Swedish government into purchasing a majority stake in the automaker failed.
Yesterday, the Swedish court granted Saab a 60-day protection order against its creditors, who are owed $127 million for parts shipped since January 1. The automaker lost about $340 million in 2008, according to documents filed with the court; Saab expects a similar loss this year, due to high costs, weak sales and an aging product line.
Yesterday, the Swedish daily Dagens Industri reported that GM was ready to invest $400 million into Saab if the Swedish state would guarantee a loan of $590 million.
The package would set a target of 120,000-130,000 vehicles sold worldwide and a return to profit in 2011 or 2012, the newspaper said, quoting unnamed sources. Saab sold just over 93,000 cars in 2008 — 21,368 of those in the United States. It was the company's worst year in the US since 1994.
A weak product line has been Saab's weakness since GM took full control of the automaker in 2000.
First came the 9-2x, a cheaply disguised version of then-corporate partner Subaru's Impreza wagon. Lacking the charismatic burble of its discount Japanese cousin along with the sophistication of its mainstream Euro competitors, the 9-2X languished on the lots while the A4 and 328i set sales records.
The utterly irredeemable 9-7X SUV was even worse. At the time, every other luxury brand had a chic sport-ute; Saab dealers were left out in the cold. GM responded with a badge engineered version of the decrepit Chevrolet Trailblazer.
The 9-7X was doomed from the start. Despite feeble attempts to Saab-ify the 'Blazer, It drove like the $30,000 body-on-frame truck from whence it came, without the pot-hole smothering suppleness of the Lexus RX or the Teutonic precision of the X5.
Recently, GM has pumped a bit of marketing cashflow into new concepts; a hybrid version of the 9-3 sedan, for instance. Yet it's all coming a day late and a dollar short.
The lack of a consistent theme has left Saab stranded. If the automaker cannot sell its current inventory and thereby finance its short-term operations, the story of Swedish car building is over. In addition to a new owner, Saab has 60 days to find $1 billion in new credit. Both will be hard to come by; neither guarantees survival.