Saab Speeds Up Talks With Suitors – The Wall Street Journal
Directly from the Geneva auto show, where the new Saab 9-3X has its world premiere today…
Saab Speeds Up Talks With Suitors – The Wall Street Journal
By John Stoll — March 3, 2009
GENEVA — General Motors Corp.’s flagging Saab division will accelerate talks this week with “a number” of potential buyers, the unit’s top executive said Monday.
Saab Managing Director Jan Ake Jonsson, in an interview at the Geneva auto show, said Saab is working with Deutsche Bank and has begun discussions with potential investors from the auto industry and outside it. He declined to name any of Saab’s suitors, but said it is possible a deal could be completed by next year.
Mr. Jonsson also said Saab needs €500 million ($628.8 million) in aid from the Swedish government to survive amid the deep downturn in global auto sales. Saab recently sought to reorganize under court protection in Sweden, a process similar to Chapter 11 bankruptcy protection in the U.S.
The reorganization was prompted by GM’s decision to turn Saab into an independent company. Saab will be challenged to survive on its own, however. GM and Saab have asked the Swedish government for financial aid, but the request hasn’t yet been granted.
Without aid, Saab could run out of money, Mr. Jonsson acknowledged.
Mr. Jonsson added he is confident Saab can attract government support thanks to its importance to Sweden’s economy. Saab and its suppliers employ 15,000 people in Sweden, and it has more than 1,000 dealers world-wide.
Saab is committed to reaching profitability by 2011, Mr. Jonsson said. That commitment is at the core of its discussions with the Swedish government concerning the need for loans to keep it afloat.
“The Saab brand at this point is very relevant,” he said. Saab’s vehicles are known to be fuel-efficient and sporty, a combination that appeals to certain consumers in the U.S. and Europe.
Its sales fell to fewer than 100,000 vehicles in 2008, down from a peak of 130,000 in 2006, mainly because it has only had three vehicles in its lineup and GM hasn’t updated its main models. The Saab 9-5 sedan has been on the market for 12 years and the 9-3 sedan for seven.
Saab is minor in GM’s international operations. But it is symbolic of the strategy that GM Chief Executive Rick Wagoner is being forced to abandon as he lobbies for tens of billions of dollars in government aid in the U.S., Canada and Europe.
GM’s large stable of brands, long criticized as bloated by outsiders, was supposed to help the auto maker cast a wide net over various types of buyers in the industry. But that approach was costly and complex.
In an interview Friday, GM Chief Operating Officer Fritz Henderson said GM was “on the cusp” of launching new Saab models, but then the company’s “revenue collapsed” when auto sales fell dramatically in the second half of 2008.
Saab is using the Geneva auto show as the venue to unveil a new all-wheel-drive wagon variant of its 9-3. The unit is also poised to launch a redesigned 9-5 sedan and debut the 9-4X crossover in the coming year.
Mr. Jonsson said Saab is working to reassure potential customers. “We’re not naive in terms of believing that what has happened in the past couple weeks has not impacted customers’ judgment,” he said.
Technically under Swedish law, Saab needs to be reorganized by May 20, but it is allowed to file for delays of up to a year.