An update on Saab's situation from the inside

I’ve had a few people in comments ask about the current situation at Saab Automobile. I’ve also read a bunch of reports that continue to cover our apparent demise in the finest detail. From a personal point of view, I store those away and look forward to the best revenge – seeing Saab live well.

It’s difficult to provide constant updates, but the company is doing the best it can to keep the general public informed as to what’s going on. We know that we have a lot of interested stakeholders who are hungry for information and we try to get them the information they need, but the situation is quite fluid and daily updates are not appropriate at this point in time because, as we’ve mentioned in previous releases, the situation changes from day to day, and sometimes from hour to hour within the day.

Nevertheless, here’s an attempt to bring you up to speed with some of what’s going on.

Our medium-long term outlook has recently been enhanced with the deal announced last week for a joint-venture between Saab, Youngman and PangDa for future manufacturing and distribution in China. We see huge potential in the Chinese market. In the short term, we see great interest already in our newest releases, the Saab 9-5 and Saab 9-4x and we have an excellent sales partner in PangDa to enable us to grow our presence in the Chinese market. In the long term, we see great possibilities in terms of wider distribution and new JV manufacturing possibilities to add to our existing manufacturing in Trollhattan, Sweden.

The proposed joint venture manufacturing deal would see Saab-branded and child-branded vehicles being built and sold locally in the Chinese market. Whilst we value all of our markets, the Chinese market is the obvious growth corridor for Saab into the future and this deal is key to that future growth. Whilst we leave no stone unturned in making sure we’re prepared for the approval process, we have every confidence that the deal will get through regulatory approval both in Sweden and in China. Youngman, despite it’s name, is a well established company with a near 60-year history in transportation and automotive manufacturing. Whilst they may not be the biggest vehicle producer in China, they’re very well connected and respected in the industry, which is why we had been speaking with them for a significant period of time prior to this deal.

Our achilles heel at the moment is not the long-term outlook, though we do not take that for granted. Our immediate challenge is cashflow; securing sufficient funds to get suppliers on board and the factory up and running again on a consistent basis.

These are all points mentioned previously in various statements from Saab, but they’re worth repeating again.

  • Saab has a significant order bank in place. Those orders represent a big boost to Saab’s inward cash flows, however we can’t invoice and receive payment for those cars until they’re built. We can’t invoice a 98% complete vehicle. You can call it a Saabish chicken-and-egg puzzle if you like – we have plenty of orders to complete (meaning inwards cashflow) if we can get parts, but parts have been difficult to get because of restricted cashflow. We are working hard with suppliers to resolve this.
  • Some people have mentioned that the PangDa funds should have been sufficient to get things running again on a stable footing. The PangDa purchase was indeed a significant one, however we still have to build and supply those vehicles to PangDa, which is what they paid their money for.
  • We hope to receive another instalment of EIB funding soon, however as many of you know, this is not a short term liquidity solution. EIB funding is for longer term investment in efficient technology. Whilst Saab are fortunate to do a lot of work in this area, we understand that the EIB take a longer term outlook, which is what we’re looking to put in place with deals such as the Youngman and PangDa deals.
  • Work continues to secure the PropCo sale and lease-back of Saab’s real estate, which would provide a significant boost to liquidity.

Saab has a brilliant product plan for the coming years, as well as great offerings for sale in the current range.

  • The Saab 9-4x is completely allocated for the 2011 model year and interest in the 2012 model year is already very strong.
  • We have the all new Saab 9-5 sedan in place and established in the market.
  • The Saab 9-3 Griffin sees a significant technology boost to the 9-3 range and is the best Saab 9-3 we’ve ever built.
  • The 9-3 TTiD range offers the most powerful and flexible sub-120g emissions package in the market. This is a key to sales in many European markets and interest has been very strong for this model.
  • The Saab 9-5 SportCombi, a key for the 9-5’s success in Europe, is about to come into production.

It’s the biggest and best model range that Saab has had in its 64-year automotive history. For those of you who are frustrated that you can’t take delivery of your car just yet, let me assure you that we’re just as frustrated that we haven’t been able to get it to you.

We’d like nothing more.

We will keep you updated as best we can, but no specific date can be promised at this stage for the continuation of production. The conditions that will enable that are still being negotiated with key suppliers around the world.

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14 Comments

  1. Thanks for the update, Swade.  I also read today that VA still wants to invest 30 million euros but is awaiting approval from the EIB.  Is there any word on when this approval might happen?  Can you comment on why it’s taking the EIB so long to make a decision?  30 million would allow Saab to start producing again.  Thanks.

    1. Curtis, first of all, I’d urge caution in assuming how much is needed for us to start producing again.  I’m seeing figures being thrown around in various places and the only ones who know for sure (and I’m not one of them) are the people involved.  It’s a complex situation with various parties wanting various things.

      Commenting on EIB matters is out of my domain here, but the EIB have been consistent on a few things – they are not a short term liquidity provider and want to see stability in the company.  My understanding is that that remains.

      1. Sorry to put you on the spot regarding the EIB.  They’ve been slammed in a number of Saab forums and I was hoping to get an inside perspective on their decision making process.  I made the assumption that Saab insiders, having dealt with the EIB, might have some insight as to if and when a decision regarding VA might be made.

        1. That’s OK.  It’s never satisfying to not provide a full answer, but in this case we just can’t.  EIB reasoning is their own and we just have to plow on and meet their conditions as best we can, when we can.

  2. Hey Swade, it’s Jake from SU. I’ve even checking up on Inside Saab religiously for this news, so rs nice to hear a update from the inside rather than the inside.

    You have a tough job right now, and the Saab community and I all thank you for your large amounts of work.

    Hope to finally meet you soon,

    -Jake

    1. Wow, I made some pretty awful spelling errors there… I’ve BEEN checking up on Inside Saab religiously…

      It’s nice to hear an update from the inside, rather than rumors from the outside…

  3. Swade I just read your next post, regarding workers. If the workers can bridge the gap between now and the inflow of short term funding, which I think will happen then, all will be made right, as the middle income plans for the company are sound. We must make it throught the next weeks. Have everyone write ” stand fast” on their knuckles and pray. You and I have not always agreed in the past, however we both know the Saab brand is bigger than all of us and still has about 4 lives left to go!
    Chris Hansel

  4. Steven, I suppose you work very closely together with Eric Geers and his staff, as far as external communication is concerned. As a head of the department, what is he up to these days? I don’t see his name connected to much of the communications lately.

  5. As usual, Steve, your explanation of a difficult situation is clear and concise. I hope Inside Saab reaches a wide audience of Saab enthusiasts around the world. On other blogs, sad to say, there’s just too much idle speculation about Saab and its future, some of the speculation wildly fan boy positive, some of it drearily negative. The facts are the facts, and it’s nice to see that you’re presenting them in a logical way.  

  6. I am in absolute love with my Saab,…..I love to have a high standard, underground great performance car, I would suggest a few improvements here and there, but generally speaking  I LOVE MY SSSAAAAAAAABBBBBB

    Keep going guys!!!!!!!!!!

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