Saab is getting ready to jump out of the GM aeroplane. Or rather, be pushed. The only issue is, does it have its parachute?
Today, a legal structure has been put in place that means that Saab can be protected from its creditors while it breaks away from GM to operate as an independent company. But it will need money, and as far as we know investors aren’t in place.
You’ll have read of the deep cuts GM is having to make. They’re needed to stave off bankruptcy and qualify for the $22.5 billion dollars (gulp) of US Government loans it is asking for. Among those cuts is to rid itself of Hummer, Saturn and Saab.
Saab has been losing money for most of the two decades GM has owned it. In a document filed with the Swedish court that is reorganising the company, Saab said “The estimated, still unaudited loss for 2008 amounts to SKR3bn [about £250 million]. The current outlook for 2009 suggests a similar level of losses and associated funding requirements.”
Ironically, Saab now has a decent set of new cars in the pipeline, based on some fine GM engineering, including the Insignia. The idea is that the independent Saab will make those cars using GM tech, and indeed many parts such as engines and gearboxes sold to it by GM for many years to come. (For more, scroll towards the end of this post.)
GM isn’t seeking a price to sell Saab. It’ll give it away. But Saab does need a lot of investment, as working capital and to tool up the presses and assembly shops to launch those cars.
As far as we know, some investors are sniffing about, but this really doesn’t look like a propitious time to be investing in the auto industry does it? The Swedish Government has said it’ll support Saab with tax breaks and the like, but not take a stake.
And if the money doesn’t appear, it looks like Saab will have to shut its doors.