GM Plans to Close Saab After Sales Talks Collapse
By NELSON D. SCHWARTZ
Published: December 18, 2009
Saab, which earned a loyal following over six decades with its stylish but idiosyncratic cars, failed to attract the buyer it needed most — a new owner for the company — leaving General Motors little choice but to announce Friday that it would shut down the brand.
Bigger car companies, which have been struggling with steep losses of their own, showed no interest because Saab was too small even though the brand is well regarded.
The last hope for Saab, which General Motors took control of in 1990, had been Spyker Cars, a tiny Dutch maker of high-end sports cars.
But some G.M. officials said that Spyker’s reliance on Russian financing for the Saab deal was a major factor in its decision to walk away. “We discovered this week that there were issues that couldn’t be resolved and no additional time would overcome that,” said John F. Smith, a General Motors executive vice president.
He added that G.M. would still be willing to consider selling Saab if a new buyer were to emerge. If that does not occur, the process of winding down Saab will begin in January. “I can’t rule it out, but the clock starts now,” he added.
Saab, which filed for bankruptcy protection in Sweden in February, has been a perennial money-loser.
It is among G.M.’s smallest brands, with sales of 93,000 vehicles worldwide last year, with just under 22,000 in the United States. G.M. also closed its Pontiac and Saturn brands this year.
Besides throwing the fate of some 3,500 Saab workers in Trollhattan, Sweden, into doubt, Saab’s expected closing also was more troubling news for Sweden’s industrial base.
Another famous Swedish automaker, Volvo, is being sold by Ford to Zhejiang Geely Holding of China. Both Volvo and Saab are based in the west of Sweden, and the region has a deep network of suppliers and contractors that will also be affected. “This is of course a major blow to Sweden, though it wasn’t unexpected,” said Cecilia Werner, communications director for the Swedish Agency for Economic and Regional Growth.
She said there were nearly as many Swedes whose jobs were indirectly dependent on Saab as there were Saab employees. Moreover, she said, the company’s long history and distinctive automobile designs have made it part of the Swedish identity, especially overseas.“They say ‘Ikea, Abba, Volvo and Saab,’ ” Ms. Werner said. “This company has been a part of Swedish pride, along with Volvo.” In the auto world, as in Sweden, the announcement Friday was greeted more with sadness than with surprise.
Besides losing money for years, Saab was always on the periphery of G.M.’s empire. In the last year, management in Detroit had made it clear it wanted to dispose of the company.
In a conference call, Mr. Smith repeatedly declined to specify what problems came up during the due diligence process at Spyker.
An earlier deal to sell Saab to Koenigsegg, a Swedish maker of specialty sports cars, collapsed last month.According to people close to the negotiations, G.M. was concerned about Spyker’s Russian financial backers as well as the fate of G.M.’s technology and other intellectual property under Spyker. The people declined to be identified because they were not authorized to speak publicly about the talks.
The main investor in Spyker is the Russian bank Convers Group, which is controlled by Alexander Antonov, a Russian tycoon. His son Vladimir, a 34-year-old banker who is a top executive at Convers, is chairman of Spyker.
Last month, G.M. pulled out of a deal to sell its European Opel and Vauxhall operations to a consortium led by Magna International, a Canadian maker of auto parts. The consortium was backed by the Russian state-controlled bank Sberbank.
“They’d been down the road with Russian investors before and that gave them reason for caution,” said one official, who insisted on anonymity because he was not authorized to speak publicly. “There was no visibility on when that might have been resolved.”
Another snag was the question of whether Spyker could qualify for a 400 million euro ($573 million) loan from the European Investment Bank that was part of the earlier deal to sell Saab to Koenigsegg.
A spokesman for Spyker declined to comment on the question of the company’s Russian ties, as did a spokesman for G.M.
In a statement, the chief executive of Spyker, Victor Muller, seemed to put the blame on G.M. for dragging its feet. “We sincerely regret that we are not able to complete this transaction with G.M.,” Mr. Muller said. “We worked 24/7 for three weeks, but the complexity of the transaction in combination with the strict deadline simply did not allow us to complete the transaction.”
Saab will continue to honor warranties, while providing service and spare parts to current Saab owners around the world.
Nick Reilly, the president of G.M.’s European operations, said that the move was not a bankruptcy or forced liquidation, so he expected Saab to pay its debts, including those of suppliers. In all, 1,100 dealerships worldwide will be affected, including about 200 in the United States.
G.M. initially bought half of Saab in 1990 for $600 million, acquiring the rest in 2000 for $125 million. Under G.M.’s stewardship, Saab lost a large part of its Swedish identity as well as the technical prowess that earned it a loyal following in the 1980s.
“People will say they’re sad to see it go, but what they’re lamenting is the Saabs from the ’70s and ’80s,” said James Bell, executive market analyst for Kelley Blue Book.
“Since the mid-’90s it’s been a pretty irrelevant brand,” Mr. Bell said. “The only reason people would be excited about buying a Saab would be if someone was an enthusiast of the brand. And I think Saab was even pushing their patience.”
December 18, 2009, 9:43 AM
G.M. Closes the Book on Saab
The two leading suitors for Saab were small supercar makers. Koenigsegg has less than 50 employees. Spyker builds around 50 cars a year.
On Thursday, a friend described watching someone he knew repeatedly attempt and fail at an activity as “watching an animal slowly bleed to death.” I think the phrase also applies to following Saab’s final months. On Friday morning, General Motors ended the agony by announcing it was winding down the Swedish brand.
“We regret that we were not able to complete this transaction with Spyker Cars,” Nick Reilly, the president of G.M. Europe, said in a statement. “We will work closely with the Saab organization to wind down the business in an orderly and responsible manner. This is not a bankruptcy or forced liquidation process. Consequently, we expect Saab to satisfy debts including supplier payments, and to wind down production and the distribution channel in an orderly manner while looking after our customers.”
Earlier this week, G.M. had agreed to a deal with Beijing Automotive Industry Holding for the rights to the technology and tooling for the Saab 9-3 and 9-5 sedans.
Update | 10:20 a.m.
Spyker Cars has issued a news release on the failed deal talks with G.M. “We sincerely regret that we are not able to complete this transaction with G.M.,” said Victor Muller, the chief executive of Spyker Cars, in a statement. “We worked 24/7 for three weeks, but the complexity of the transaction in combination with the strict deadline simply did not allow us to complete the transaction timely. Our thoughts are with the wonderful management and employees of Saab in these challenging times.”
.jpg)
GM to 'wind down' Saab business
GM has been trying to sell Saab since January.
GM says it has failed to sell its Swedish car brand Saab and will begin "an orderly wind-down of Saab operations".
ANALYSIS
Jorn Madslien, BBC business reporter
It is the end of the road for Saab, the car that emerged from a company making fighter jets.
When its owner GM bought Saab, it was seen as a brand that could become the US automotive group's European luxury brand.
But the quirky cars did not attract a broad enough following, so it failed to make money.
GM's solution was to cut costs by sharing ever more parts with Opel while, at the same time, toning down their design.
Such moves alienated traditional Saab customers without gaining new ones. New product development ground to a halt and in the end, there was simply not enough left of Saab to make it worth preserving.
New focus
GM said its focus would remain on its four core brands - Buick, Cadillac, Chevrolet and GMC - as well as its European business Opel.
GM pledged to become a leaner company when it emerged from bankruptcy protection in July this year. It had been hit by a sharp slump in sales - partly because of the financial crisis, but also because of stiff competition from Japanese rivals.
The company is now 62%-owned by the US government.
THE HISTORY OF SAAB
1937: Saab founded as aircraft maker
1946: Starts making cars
1969: Merges with Scania-Vabis
1990: Car division splits from aircraft business. GM and Investor AB take 50% stake
2000: GM takes 100% ownership
Jan 2009: GM announces talks to sell Saab
Aug 2009: Koenigsegg agrees terms to buy Saab.
Nov 2009: Koenigsegg pulls out of talks.
1 Dec 2009: GM says will consider offers until end of December
18 Dec 2009: GM announces the winding down of Saab
Source: Reuters
CLICK TO READ:
No comments:
Post a Comment