Barely a Year Into Independence, Saab’s Financial Picture Is Again Dire

By Chris Haak

Just over a year into its new life as an independent company (forgetting the fact that it’s actually held by Spyker, a boutique automaker of sports cars), Saab is again facing financial difficulties.

Spyker’s annual report released today – which is not an April Fool’s joke – said that the company’s continuity is uncertain unless it receives additional funds to finance operations and fund its business plan.  In fact, the situation is so serious that production had to halt for several days earlier this week because some key suppliers stopped delivering parts to Trollhattan due to non-payment.

The supplier payment issue has been worked out, for now (though other suppliers are surely raising their eyebrows and considering carefully whether it’s too risky to do business with a company having trouble making payments to other suppliers).  But more seriously, Saab needs new de-GM-ified models and a freshened lineup yesterday if it hopes to pull out of its sales doldrums and hit its breakeven point.  Depending on who you ask and when, that point is around 100,000 units per year globally, and Saab’s not at that level of volume.

Saab’s management is acutely aware of this, and has been working on the next-generation 9-3, which is no small undertaking for a small automaker with limited resources and even more limited cash flow.  Less than two months ago, we asked whether Saab can be turned around, and our writer’s opinion was that it could be, but a lot had to first go right for that to happen.

One possible white knight for Saab is Russian billionaire banker VladimirAntonov.  Mr. Antonov was a former chairman of Spyker cars, and in fact is buying Spyker’s sports-car business from Spyker so that Spyker can focus on running Saab.  At this stage, Saab needs nearly undivided management attention from Spyker and its own managers (not to mention money), so the divestiture of the sports-car business is a piece of good news for Saab’s prognosis.

A year ago, when GM was in talks to sell Saab to Spyker, a story broke that Vladimir Antonov and his family had ties to organized crime and money laundering.  Amidst those allegations, GM refused to sell Saab to Spyker until Antonov and his family had divested their ownership stake in Spyker Cars.  Antonov did this, and Saab went to Spyker.  Subsequently, Antonov’s name was cleared after investigation, and GM decided to drop its objection to him having an ownership stake in Saab.  Sweden’s Debt Office, which guaranteed a 400 million Euro loan to Saab last year, is considering Antonov’s application to take a stake in the automaker.

Though GM sold Saab to Spyker at a bargain-basement price (it was, after all, severely distressed merchandise at the time, having shuttered all production and begun the process of liquidation), many observers questioned how Saab would be able to afford its much-needed lineup rejuvenation based on the assets it had on hand, Spyker’s own fairly fragile financial state, and the minimal amount of cash that Saab was generating.  We now know that those observers were correct, and Saab needs help in order to survive.

This company seems to have nine lives, at least.  We’ve already written one obituary for Saab after the Koenigsegg deal fell through in late 2009, and the company then managed to get a new buyer and survive another year beyond that.  There’s a lot of loyalty and devotion out there among the Saab faithful.  As long as some of them buy new cars, and Spyker can find a way to keep the lights on until the new models arrive, Saab may just live to see another year.