Saab declares bankruptcy, likely to close

[AF News Desk]

After months of efforts to keep the barely-breathing auto manufacturer above water, the end has come for Saab following a failed last-ditch effort to have General Motors rescue the company.

The move to file for bankruptcy comes after multiple efforts to complete investment deals with different Chinese companies to help Saab pay its bills to suppliers, though no deals were able to be completed.

The story from Auto News:

Originally Posted by Wire Reports - Automotive News, 12/19/11

Most recent Update: 1:30 p.m. ET

Saab heads for scrapyard as long rescue quest fails
Swedish court approves bankruptcy, 2 receivers named to run automaker

Famed Swedish car maker Saab was declared bankrupt by a court on Monday, ending a nine-month survival battle by its Dutch owner.

Saab, which has made cars for 64 years, has suffered cash flow problems since March after 2010 sales fell short of target amid the disruption of its sale by General Motors.

It has not made any vehicles since April and several rescue attempts have failed.

Saab owner Swedish Automobile said former owner and key license holder GM had blocked a last-ditch rescue plan by Chinese investor Zhejiang Youngman Lotus Automobile.

"After having received the recent position of GM on the contemplated transaction with Saab Automobile, Youngman informed Saab Automobile that the funding to continue and complete the reorganization of Saab Automobile could not be concluded," Saab's Dutch owner, Swedish Automobile, said in a statement.

"The Board of Saab Automobile subsequently decided that the company without further funding will be insolvent and that filing bankruptcy is in the best interests of its creditors."

The court approved the company's bankruptcy request filed earlier Monday and appointed two receivers to run the company.

Swedish Automobile "does not expect to realize any value from its shares," the company added.

In receivers' hands

Saab is still attractive for some investors, Swedish Automobile said.

"There are parties out there that have expressed an interest to pursue a possible acquisition of Saab from bankruptcy," Swedish Automobile CEO Victor Muller told a news conference. He said it was now up to receivers appointed to oversee the bankruptcy process to judge such offers.

He said GM had been a problem in finalizing a rescue plan, though its unhelpful attitude had only emerged from the middle of the year. He said a court-appointed lawyer who had overseen Saab's creditor protection process had undermined rescue efforts.

Michele Tinson, a spokeswoman for the automaker's U.S. sales operations, said today it is "too premature to define our next steps at this time."

Saab currently has 188 U.S. dealers.

Total U.S. sales this year through November rose 22 percent from a year earlier to 5,340. Saab's U.S. sales peak was 48,181, set in 1986.

"There are parties out there that have expressed an interest to pursue a possible acquisition of Saab from bankruptcy," Swedish Automobile CEO Victor Muller told a news conference today. Receivers appointed to oversee the bankruptcy process will judge such offers.
Photo credit: BLOOMBERG

"It feels really tough," Mats Faegerhag, Saab's product development chief, said in a phone interview. "We've been fighting so hard for so long. Saab is part of Sweden's industrial history, and it'd be a big blow not just to us if we go under."

There is still a possibility for Saab to be rescued in one piece if a "viable investor" steps in, Faegerhag said. "But that would have to happen quick, in a few weeks, because our employees will be looking for other jobs."

Saab, which GM sold to Swedish Automobile in February 2010, won protection from creditors in September and has been seeking an investor since then. Guy Lofalk, Saab's court-appointed administrator, applied on Dec. 7 to end the reorganization, saying the carmaker was out of money and had no realistic hope of gaining financing soon.

Saab was in discussions with Youngman and a Chinese bank to secure about 600 million euros ($782 million) in loans, Swedish Automobile's Muller said on Dec. 7. GM said Dec. 17 that it couldn't support proposed alternatives for Saab because the options "are not meaningfully different" from previous suggestions GM had rejected on the grounds they would hurt the U.S. company.

Saab's workforce totals about 3,600 employees, including 3,400 in Saab's hometown of Trollhaettan, Sweden. Saab's global vehicle sales, which reached 133,000 cars in 2006, have plunged in the last few years. The company sold 31,696 cars in 2010, missing a target of 50,000 to 60,000 vehicles.

Swedish Automobile, which changed its name from Spyker Cars NV in June, had planned for Saab to sell 120,000 cars and become profitable by 2012. The Zeewolde, Netherlands-based company, which began in 1898 as a maker of horse-drawn wagons, has more recently been a manufacturer of supercars, including the $235,000 C8 Aileron. Saab began as Svenska Aeroplan Aktiebolaget in 1937, making airplanes, and started producing cars in 1947.

Aerospace split

Saab Auto split from the aerospace operations, now known as Saab AB, in the 1990s, with GM gaining a 50 percent stake in 1990 and full control in 2000.

The U.S. carmaker, itself saved by a U.S.-steered bankruptcy in 2009, put Saab on the block that year as one of four divisions marked for sale or shutdown. Saab Auto suspended production in March, when it couldn't pay suppliers, and has only occasionally restarted assembly lines since then. It has delayed wages several times and has yet to give workers pay that was due at the end of November.

Youngman, Chinese car dealer Pang Da Automobile Trade Co. and Russian banker Vladimir Antonov, a former Spyker shareholder, have all been failed suitors for a stake in Saab as Muller tried to fund the unit's turnaround since its purchase.

Saab's collapse may also hurt competitor Volvo Car Corp., the Swedish automaker owned by China's Zhejiang Geely Holding Group Co., as suppliers to both manufacturers will be hampered and may go out of business as well, production chief Faegerhag said.

Reuters and Bloomberg contributed to this report.

SAAB STATEMENT

Zeewolde, The Netherlands, 19 December 2011 – Swedish Automobile N.V. (Swan) announces that Saab Automobile AB (Saab Automobile), Saab Automobile Tools AB and Saab Powertrain AB filed for bankruptcy with the District Court in Vänersborg, Sweden this morning.

After having received the recent position of GM on the contemplated transaction with Saab Automobile, Youngman informed Saab Automobile that the funding to continue and complete the reorganization of Saab Automobile could not be concluded. The Board of Saab Automobile subsequently decided that the company without further funding will be insolvent and that filing bankruptcy is in the best interests of its creditors. It is expected that the Court will approve of the filing and appoint receivers for Saab Automobile very shortly.

Swan does not expect to realize any value from its shares in Saab Automobile and will write off its interest in Saab Automobile completely.

[ [ [ [ [ [ [ [ [ OUR VIEW ] ] ] ] ] ] ] ] ]

Given the up and down timeline of events surrounding this automotive soap opera, it seemed inevitable that the time would come for Saab to accept their fate and face the possibility of closure.

There are a few unfortunate items of note here, as well. First and foremost are the jobs that will be lost because of the shutdown. Losing employment in any part of the world is difficult, especially for those with families who depend upon it. It's also unfortunate that the closure of Saab has the potential to impact competitors.

I can't say that I am terribly broken up about the loss, however. Though they were unique in their own way, they were often considered very expensive to drive due to parts and maintenance costs - something that would likely be more well received if the car had a propeller or tri-star emblem.

Still, it's sad to see any long-standing car manufacturer close its doors. I still miss seeing new Pontiacs on the road. However, the demand was just no longer there for Pontiac, just like it hasn't been there for Saab the last few years.

If you happen to be one of the few people who have purchased a new Saab this year, you might consider garage keeping your car for a few years as it now looks like new Saabs may become collectible due to their rarity.

[Moppie]

SAAB hasn't truely existed a SAAB since GM took over.

They used to make very unique cars, with individual styling and their approach to engineering.

GM put a stop to the style and way of SAAB, turning them into nothing more than badge engineered Opals with some styling changes.
They destroyed the very things that made SAAB unique, special and appealing to buyers.

[MagicRat]

Originally Posted by Moppie

SAAB hasn't truely existed a SAAB since GM took over.

They used to make very unique cars, with individual styling and their approach to engineering.

GM put a stop to the style and way of SAAB, turning them into nothing more than badge engineered Opals with some styling changes.
They destroyed the very things that made SAAB unique, special and appealing to buyers.

I don't blame GM for this. According to Bob Lutz, who was a Chairman at GM in the past decade, Saab's problems were first and foremost, financial.

Saab management insisted their products were unique and special and insisted on unique (but not superior) engineering features (ie: wiring harnesses) not shared with Opel or any other GM platform. This negated much of the economic benefits Saab might have enjoyed as part of GM, and took away development funds which could otherwise have been used to effectively improve and differentiate the vehicles. Their cars ended up being expensive to produce and subsequently, Saab lost money for GM in 19 out of 20 years of ownership.

Furthermore, Saab failed to exploit the product development resources offered to them. Their cars were different, but not better than their competitors

Finally, Saab was simply too small a company to prosper in the highly competitive markets in which they operated. Such a business model favours mass production, low per-unit margins and high volumes, objectives Saab never achieved.

To sum up, market forces killed Saab, facilitated by Saab management. It was already dying when GM bought it. GM's money simply kept it alive on financial life support for an extra decade or more.

[Moppie]

SAAB has always been an alternative and unique car builder, and they have always ridden a fine line with cars that people wanted and that broke traditional molds of car design.

They always prided themselves on being alternative, on doing things differently and not following the mass produced norms. Their customers shared this passion, and as long as they didn't try and grow beyond their niche market they were fine.

GM is a company that prides itself on mass production and share holder returns. Growth and profit are it's under laying foundations.


What GM ever expected to get out of SAAB I have no idea, and it is no wonder the SAAB managers pushed back at everything GM told them to do.
They understood that SAAB's need to have that point of difference Even if it was something irrational from a business point of view, they knew that their market was not always rational, they wanted something that broke the mold.

But GM forced them into the GM mold and SAAB's loyal customers picked up on it.
Yes, technically the cars we're more efficient and meet global ideals of consumer transport. But SAAB customers didn't want to buy Opals and Vauxhalls and Chevys with SAAB badges on them, and while they not be rational buyers, they are not stupid buyers. They knew enough to know what was underneath the SAAB badge.

So they simply went else where and bought Smart cars and Mercedes A Class and Toyota Pirous, or fell back on safe cars like Honda Accords and Audi's.
The university staff car parks that used to be filled with new SAAB's are now filled with old second hand SAAB's, all pre-GM models.