THE WEEK THAT WAS: Saab, again and again and...

By Graeme Roberts | 13 May 2011

Muller needs a new Saab investor fast

Muller needs a new Saab investor fast

What will we write about when Saab finally (a) gets its essential working capital boost from some deep pocket, long-term-view investor and gets back to building and marketing a passable range of planned new cars, (b) gets swallowed up by a BRIC conglomerate looking for an instant luxury car unit (cf Geely's Volvo; Tata's Jaguar Land Rover) or (c) does an MG Rover and finally goes under, leaving thousands facing early retirement or the dole and a factory site ripe for redevelopment?

This time last week, it was looking a bit more promising than it does today. Hawtai (who?) had ridden to the rescue, we were told, bringing gifts of the odd EUR150m it had found in its back pocket. The money would be in Saab's working capital account in 10 days or so, back to making the new 9-5 and 9-3 in, oh, 'bout a week.

Yeah? Really? The supplier body FKG wasn't quite so upbeat, as you'd expect from People Still Owed Money, and there were dark mutterings about parts, yes, you can have 'em, but "cash on delivery" please. The European Association of Automotive Suppliers (CLEPA), meanwhile, insisted a "small miracle has to happen" if Saab was to make make a success of its new venture, even with Chinese funding. Not a lot of confidence there, then.

The little matter over the Swedish embassy's private view of Hawtai becoming somewhat public didn't help much and then their opinion seemed to perhaps have some foundation - the deal came 'orribly unstuck yesterday. With impeccable timing, this was just after our Glenn Brooks had spent hours analysing the prospects of a Saab-Hawtai tie-up, well worth a read for What Might Have Been and What Might Yet Beat the Odds and Still Happen, as Saab confirmed parent company Spyker's CEO Victor Muller was back in China and speculation swirled in China that Great Wall (already in Australia and about to launch here in the UK; thus not inexperienced in the ways of the west) was also eyeing an instant luxury car division.

Meanwhile, CLEPA opined that the Hawtai deal probably came unstuck because of the Saab need for speed which just doesn't happen with government approval of such tie-up with the west in China. This is a country where you need permission to enter, to set up a manufacturing joint venture (often with specific terms such as Honda getting approval for its Jazz/Fit plant conditional on exporting from it) and even separate permission to operate a JV marketing/distribution operation. Get any of it wrong and the bureaucrats can stop you doing business for months, as Mazda's local unit learned to its cost some years ago.

The question as another weekend rolls around is how long can this go on before Saab goes under? There's considerable overhead what with the plant in Trollhattan, and its thousands of furloughed workers expecting to be paid, plus factory-owned national sales companies, still appointing staff, around the world, factory and dealer spare parts stocks to be maintained, service and dealer support network infrastructure and so on. How long before the doors just have to close? No saleable cars have been built for about a month now so how long before dealers become unviable? No wonder Mr Muller's latest trip to China has an air of desperation about it.

It's be a shame if Saab disappeared but, to be blunt, the auto world would hardly notice. Audi, BMW, Volvo, Jaguar et al would still be there to supply nice cars globally in the same segments Saab competes. And the buyers would be confident the automaker of their choice would still be operating a week later.

The workers would notice The End, though. Good luck, Mr Muller.

Graeme Roberts, Deputy Editor, just-auto.com