Swedish car manufacturer Saab has a new lease on life. Again. Given up for dead in late 2009 following a botched deal that would have sold the company to exotic car manufacturer Koenigsegg Automotive AB, Saab was rescued at the last minute by another exotic car producer, Netherland’s Spyker Cars.
Spyker, however, has had a tough time swallowing Saab. Although Saab is one of the smallest car manufacturers in the world, Spyker is much smaller, producing only a handful of its pricey handcrafted sports cars annually. Saab is also a financial drain, having been cut loose from General Motors and carrying enough baggage to sink a ship.
In recent weeks it has become apparent that Spyker was in over its head with Saab. A series of announcements and reports have shown that Saab was losing money, unable to pay its suppliers and that it wouldn’t be able to meet its goal of building 80,000 cars in 2011. In early April, “The Detroit News” reported that Saab production was halted following a dispute with suppliers over payments for essential components.1
On Tuesday, Spyker Cars N.V., the parent of Saab Automobile AB, announced that it had secured short term funding in the form of a convertible loan agreement from Gemini Investment Fund Limited. Saab was given US$44.7 million, money that will enable the automaker to resume production.2 Production at the company’s Trollhattan plant in Sweden has been shut down for over a month because of disputes with suppliers.
Today, Saab and Spyker announced that the companies have signed an agreement with “Hawtai Motor Group Company Limited” whereby the Chinese company will be providing medium term funding and includes financing in the form of subscription agreements in the amount of EUR 150 million. This agreement also forms “a strategic alliance for China including joint ventures on manufacturing, technology and distribution.” 3 Hawtai gains a 29.9 percent stake in Spyker as a result of this deal.
Said Hawtai vice-president Richard Lang, “This is a great day for our relatively young company which was founded ten years ago. The partnership with the iconic Saab brand will give us access to innovative technologies and an international network which would have taken us decades to build. On the other hand we have a very strong Chinese manufacturing and distribution infrastructure which we will make available to our new partner Saab Automobile. Our participation in Spyker, Saab’s parent company, demonstrates our commitment to the future of Saab Automobile as a premium European car manufacturer.”
Hawtai is a name that is unfamiliar to most western automotive manufacturers. Launched in 2000, the company produces 350,000 cars annually for the Chinese market. Hawtai is also a manufacturer of clean diesel engines and automatic transmissions. The company has set a goal of raising production of vehicles, engines and transmissions to 1 million units annually each by 2015.
Will Saab survive its present crisis? For now, yes. Long term it and Spyker may need to be folded into a much larger company if both are to survive in a highly competitive global automotive market. An expanded Hawtai just might provide the resources the companies need to stay in business.