Latest Saab production halt raises concern

News today that Saab has halted production again, owing to problems paying suppliers, has raised further questions over the long-term financial viability of the independent car maker.

Saab says it continues to negotiate with its local suppliers to ensure a supply of parts, but has declined to mention when production may resume.

Yes. There was a three-day stoppage last week while Saab negotiated an agreement with International Automotive Components Group (IAC), which supplies Saab with dashboards and other interior parts. This was said to have been resolved last Friday.

On the same day, parent company Spyker Cars N.V issued its annual report, saying that it required timely additional financing to ensure continuity of business. 

Today's news is that additional Saab suppliers have halted their supply of parts. Chief executive of FKG, the Swedish association of automotive industry suppliers, Svenake Berglie told the Reuters news agency: 'They cannot pay their bills. It is very, very unfortunate. Saab needs to sort out its financing'.

Reuters is also quoting Norwegian supplier Raufoss, manufacturers of suspension components. Raufoss said it was owed significant amounts and was awaiting a decision from Saab before sending its next delivery due on Thursday. 'This is a major problem for Saab when we and many other suppliers are holding back due to the uncertainty,' said Raufoss director Leif Bronken.

Suppliers have faced tough financial conditions as the industry reacted to the global financial downturn of recent years. Accountable to their own investors and lending institutions, suppliers may not be in a position to extend more favourable credit terms to Saab. The recent history of recapitalisation following GM's bankruptcy and the sale of Saab to Spyker may also cause doubts of Saab's ability to make payments.

Further complicating matters is the situation regarding Spyker Cars N.V's favoured investor, Russian banker Vladimir Antonov. During the original sale negotiations between GM and Spyker Cars N.V, GM insisted as a conditon of sale that Antonov be excluded from the purchase. 

The Swedish National Debt Office, which has guaranteed Spyker's €400m loan from the European Investment Bank, must give its permission for Antonov to invest in Saab. The National Debt Office has confirmed it has received an application from Antonov but declined to comment further while the application is considered. 

Representatives of thwarted Saab investor Vladimir Antonov have been more vocal. Lars Carlstrom, Antonov's representative in Sweden told Reuters, 'It is not an alarming situation. It is not something that would cause major damage to Saab. 'If Mr Antonov is allowed back in, there is no problem for Saab's short-term funding.'

The 35-year old Russian banker himself also appeared to offer comments on the situation via his twitter account. 'Just!!!!! let me in!:)' and 'Money not talks :) sometimes they are screaming!' were the two latest updates on the 'vladantonov1975' account, which is unverified for identity but links to Antonov's official homepage.

Svenake Berglie, chief executive of the Swedish automotive suppliers' industry body FKG, has stated that the current crisis is not about credit terms for future orders, but Saab's failure to pay existing supplier invoices. "There is a perception in the media that there are discussions on extended credit times and such. But it is not about that, it is about the fact that Saab must pay its bills," Berglie told Reuters.
"I don't know how much it is in total, but we are talking about tens of millions (of Swedish crowns)," 

IAC Group, who sparked last week's production halt that was thought to have been resolved on Friday 1 April, also commented on the situation. Andreas Ljungberg, Director of Commercial Vehicles at IAC said to Reuters that the firm was closely watching cash flow to assess future deliveries. "Obviously, we have outstanding payments to the degree where we cannot increase our exposure further."  

Saab spokeswoman Gunilla Gustavs said the carmaker is working intensively to get supplies moving again. "We're expecting that we could resume normal production early next week," she said. "A lot of work is going into strengthening the financial position of the company." (Reuters)

In order to solve its immediate cashflow problem and restart production, Saab is said to be seeking a further draw-down of funds from its €400m European Investment Bank loan. Saab is believed to have used €260m of the loan, and Swedish business newspaper Dagens Industri reports that further funds are being sought to resolve the supplier payment issue. No comment from Saab or parent company Spyker Cars N.V has been issued regarding the report, as private negotiations between the various parties continue. (Automotive News)

CAR will continue to monitor the situation at Saab and update this story as it develops

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5 April 2011 - Latest Saab production halt raises concern

11 April 2011 - Saab's latest factory shutdowns 'just a blip'

16 May 2011 - Saab announces new China Joint-venture

16 June 2011 - Saab 9-5 Sportwagon (2011) prices and revised 9-5 range

24 June 2011 - Saab unable to pay wages as financing crisis deepens

27 June 2011 - Saab secures more funds as it seeks to avert collapse

28 October 2011 - Saab is sold again: two Chinese makers buy Saab

1 November - Saab 9-3: is this the new 2013 hatch

By Mark Hamilton