Saab - A Viking Saga

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The Saab story seems to have been going on so long that it would probably have appealed to Richard Wagner as a subject for an opera. All the ingredients are there: the legend of the Saab brand, the revolving cast of foreign investors that span the globe, the Russian investor whose money no-one in authority seems to want to touch.

A cynic might say "Saab: The Opera" would be more likely to make money than he company that made the cars.
We say "made" the cars, because the production line has been stopped for most of the last few months as suppliers refuse to provide more parts until previous deliveries have been paid for. Now the great hope for resurrection lays with the Chinese – the nationality that is always the great hope of car manufacturers in trouble (remember the last days of Rover?). Now it seems a Chinese car manufacturer called Youngman has handed over some cash to Saab – reported to be around £10 million – in order that wages can be paid at the end of October. This is meant to be part of an interim loan of approximately £60 million to arrive in the next two weeks. The hope is that a combination of Youngman and Pang-Da (a big Chinese car dealer) will ultimately invest approximately £210 million for a 53.9% stake in the company.

At one level that sounds like a bit of a bargain - £210 million for control of a car manufacturer, when that sort of money would not pay for the development of a single new model. However, that is the problem. If Saab in total is really worth about £400 million, why is it worth buying at all? Saab's two model ranges would cost far more than that to replace, and if you started from scratch, you would not have the issue of Saab's losses to sort out.

Chinese companies always like the idea of acquiring Western brands, but the Chinese government tends to be more hard-headed – and no deal can be completed without their permission. The government wants to see a smaller number of bigger Chinese manufacturers competing globally – which is why an earlier Saab deal with a Chinese company called Hawtai was vetoed. Youngman-Pang-Da-Saab hardly seems to fit in with the central plan. If these Chinese companies can talk the government round, they must have remarkable political connections.

It is noteworthy that no western company has expressed the slightest interest in buying Saab, because they can see no value in the brand. To some Chinese, the idea of owning a western car company is very appealing, but the deeper question is what they are buying? Almost all the technology of a Saab comes from General Motors, and GM's lawyers will have made sure that buying Saab does not give them ownership of the technology inside the cars. In addition, GM has a joint venture with Chinese giant, SAIC, who will not allow a far smaller rival to take ownership of anything developed by their partner.

It is possible Saab will be nursed back to health with Chinese money, but that is a plot more far-fetched than any Wagnerian opera.