Press Release: Information On Restructuring Plan for Saab Automobile

Trollhättan, Sweden: Swedish Automobile N.V. (Swan) announces that Saab Automobile AB and its subsidiaries Saab Automobile Powertrain AB and Saab Automobile Tools AB (together Saab Automobile) today present their preliminary reorganization plan to their creditors during a creditors’ meeting in Vänersborg, Sweden.

The preliminary reorganization plan, which was developed by Saab Automobile management and supported by the current and foreseen owners of Saab Automobile as well as its administrator of the reorganization, contains the following highlights:

  • Pending the approval from all relevant parties, short- and long-term funding for Saab Automobile is assured: Youngman and Pang Da have expressed their commitment to provide EUR 50 million, to fund Saab Automobile while in reorganization. In addition, the Chinese investors will provide a minimum of EUR 600 million in funding to restart production, to settle the company’s clear and due debts and to fund operations for the 2012-2013 medium-term timeframe. To provide funding for the revised business plan and provide long-term financial stability the new Chinese owners have also budgeted funding for the planned expansion of Saab Automobile’s portfolio and additional operations to be set up in China. Saab Automobile has not received the funds from Pang Da and Youngman that have been committed for today.
  • New strategy and structure to combine the strength of Pang Da, Youngman and Saab Automobile, with Saab Automobile’s brand equity and heritage, product portfolio and capabilities being the key elements of that partnership combined with the distribution capabilities of Pang Da in China and the manufacturing expertise of Youngman.
  • Key actions during reorganization: establish new ownership structure with Pang Da and Youngman as strategic partners; reach agreement with creditors on repayment of outstanding debt to restore Saab Automobile’s supply chain; reduce structural costs by SEK1 billion, among others through reducing headcount by 500 employees; and generally restore confidence and trust with all key stakeholders
  • Restart plan highlights include: seamless production restart supported by existing order bank; accelerate access to China as major growth market; new distributorship agreements in other emerging markets like Russia, new products for traditional key markets (65% of volume) and China which include the 9-5 SportCombi and the 9-4X.
  • Confirmation of the long-term strategy of repositioning Saab as a distinctive, near premium brand supported by a renewed and broadened product portfolio, a more flexible cost structure with global production footprint, cross-carline modular technology architecture generating synergies, provision of external engineering services and expanded operations to take advantage of growth opportunities available in China and provided by strong Chinese owners.
  • Sales targets for 2012 of 35-55,000 cars and 2013 of 75-85,000 cars based on realistic ramp up in line with sales development since last restart.
  • Long term volume outlook of 185-205,000 cars of Saab Automobile based on three main growth drivers: 1) broadened product portfolio in fast growing market segments; 2) capitalizing on access to Chinese market, and; 3) strong profitability focus.
  • 2012 and 2013 seen as financial transition years, profitability expected no later than 2014. Long term margins and profitability in line with other near premium car manufacturers.

A complete version of the preliminary reorganization plan is available for download via www.swedish-automobile.nl (pdf) and http://media.saab.com.

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12 Comments

    1. I’m not sure that’s the case at all.  We basically haven’t really ramped up properly there yet, so the distributorship is essentially still new.  Might be something to check on.

  1. What about China manufacturing? It says cars will be built there for local and global sale? Does this mean established markets too? I can understand in asia but surely Trollhaten can supply everywhere else.

    1. Ben, I have no idea of where they’ll sell Chinese manufactured cars.  We’ve only just signed the MoU and it needs to be approved, so it’s very early days now.  That situation is a number of years away. 

      However, I’m not convinced of a manufacturing plan that assumes it’s OK to sell cars that are perceived to be sub-standard in any market.  Saab’s mission will be to ensure that our vehicles are premium quality regardless of where they’re built.  The Chinese market is not one that will accept substandard cars in the sector of the market we’ll be moving in.  

      I understand where your apprehension is coming from.  It’s quite common and it’s a perception that all manufacturers have to deal with.  It’s also a challenge that I think we’ll find car manufacturers need to tackle by building and proving their product to be a quality product.  There’s no questioning the quality of manufacture when it comes to the iPhone, for example.  Car builders will need to develop the same acceptance with their products, too.

      1. Once the Chinese are able to build Saabs of equal quality, and once the customers accept this fact and are happy to buy Chinese Saabs, then it’s goodbye Trollhättan. There’s just no competing with that wage difference.

        Let’s assume that Chinese wage costs are one fifth of Swedish ones. (I wonder if the difference may not be even greater.) And let’s assume that the average salary in the Trollhättan plant, including payroll taxes, is SEK 40 000, and that the number of employees is 3 500. Reducing the wages to one fifth would then save 112 MSEK (appx $17.5M) every month! If you don’t lose anything in the bargain except the one-time costs for moving the tools to China and the added shipping costs for the cars to Europe, then there is just no way any owner or CEO can say no to that.

      2. I’m sure quality can be just as good but the problem is very much in perception. Why should people buy a Saab made in China when they can buy a BMW made in Germany or Volvo in Sweden. The other thing is where does this leave Trollhaten? If Saab are only making 190,000-200,000 cars and say 40% are made in China that doesn’t leave much for Trollhaten as it is, let alone if they are making cars for other markets too. I would argue people looking to buy a Saab value the fact they are supporting Swedish jobs highly. The fact is I’m sure most Australian’s would be happy to buy Saabs built here but people elsewhere probably wouldn’t and same applies to China

  2. For the record, I (a U.S. based consumer) will never, ever, ever buy a Chinese made Saab.  I believe in heritage and the individuality of nations and I want my hard earned dollars to help put lingonberries on the dinner table of the trolls who have been making Saab cars for generations.  And, for what it’s worth, I would also never buy a U.S. produced BMW, a Finland produced Porsche, or an Austrian produced Aston Martin.

    1. I have no problem buying a Saab that has parts made in China as long as its assembled in Sweden. I wouldn’t buy a VW assembled in Mexico though (too many Jettas appear to have problems). 

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