Saab Automobile AB CEO, Jan Åke Jonsson Says Three Months To Secure Buyer, Saab History Thinks Three Weeks

Posted on 03. Mar, 2009 by Ryan in 2000-2009

Photo Credit: ERIK ABEL/Associated Press

Christiaan Hetzner at Reuters reports that Saab Automobile AB’s CEO, says that the company, working towards full independence from General Motors, is targeting three-months to find a buyer, since February 20th when they filed for reconstruction. This three-months of searching would result a deadline for May 20th, 2009.

This is all good and everything, but what if General Motors files for bankruptcy on March 31st, 2009? That is the second date that the U.S. Treasury needs to see some significant progress from the company. While just about all industry experts all over the globe believe that this is inevitable for the company given that more taxpayer money won’t solve their corporate culture, what would this mean for Saab Automobile? If GM does file for bankruptcy by the end of this month, would Saab Automobile’s factory suppliers still keep getting paid by GM or would those contracts be able to be broken?

I hope these 7-8 potential buyers come forward prior to March 31st (28 days from now). And when they come, they better be ready to go with cash in hand basically, for the Swedish Government to also respond with their EIB loan guarantees for Saab Automobile AB.

I personally think that three months to find a buyer is nice, but it may be unrealistic if GM files for bankruptcy, given that GM is effectively still making payments to suppliers, staff, personell, employees, etc (ie. keeping the factory moving, etc). GM however, tends to think they cannot afford to go into Bankruptcy citing it would cost them $100 Billion dollars.

In the meantime, here is the nicely written piece below from the Reuters interview at the recent Geneva Motor Show.

By Christiaan Hetzner

GENEVA (Reuters) – Swedish carmaker Saab (GM.N) is hoping to find a new investor within three months, promising profitability even with a volume of as little as 150,000 vehicles sold, its chief executive told Reuters in an interview.

Thanks to reallocating production of its 9-5 model sedan to Trollhattan, its plant should be utilized much more efficiently and far from cutting jobs, Jon-Ake Jonsson expects to add jobs in Sweden, where salary and wage costs are very competitive.

“In the next few days we will go out more actively and present our case to the ones (potential investors) who have been showing an interest as well as looking for new alternatives, scan the market,” he said on the sidelines of the Geneva auto show.

Jonsson said potential investors in Saab were from both inside and outside the car industry. He is working to find an ownership solution for Saab before the three-month reorganization deadline expires.

He said this time period would not necessarily include time for due diligence, and that the deadline could be extended on a three-month basis for up to one year.

“We need to accelerate this issue, and I have good hopes we will find interested investors,” Jonsson said.

“If you are fully financed through the government and through GM, it’s a manageable size business so I think it’s easier probably to find a buyer for us than any of the bigger companies,” he said.

With Saab slated for sale and asking for state aid to survive, Jonsson’s business plan will be key if the Swedish carmaker wants to secure a future in a rapidly shrinking market.

“With the 9-5, 9-4x (model) vehicles almost done, we are in a very good shape to be profitable within that range” of 150,000 to 175,000 vehicles. “It’s still a relevant volume range.”

GERMAN PLANS

Jonsson said part of the problem has been the enormous manufacturing complexity of the current 9-5 sedan, which has been in the market for more than 10 years.

He said next year’s relaunch could go a long way to improving margins and boosting Trollhattan’s extremely low utilization rate of less than 50 percent.

“The 9-5 (model) and the future 9-3 (model) are engineered to be manufactured in a much more efficient way. If you take today’s 9-5, it goes back a couple of architectures from a GM point of view — back to probably the end of the 80s,” he said.

“When you go to the next generation vehicles you will have a much more efficient way of building them.”

Since Saab generates two-thirds of its sales in the U.S., UK and Swedish markets, he said it was “critical” to expand shares in European premium segment markets such as Germany, where he believes volumes could rise to 15,000 from a current 4,000.

Tags: car industry, enormous manufacturing complexity, Geneva, Germany, ownership solution, Sweden, Swedish Government, United Kingdom, United States, USD