Over at the WSJ's "The Source" blog, Alessandro Pasetti offers a masterful analysis of Saab's troubles. Here's a sample:
On its own, Saab looks to have very limited chances of survival. Its financials are not encouraging, to put it mildly.Russians to the rescue?
Under a very bullish scenario, we estimate that even at steady normalized long-term 10% growth of sales -- a rate never consistently achieved by any auto maker on the planet -- combined with a break-even earnings before interest, taxes, depreciation and amortization in 2011 and mid-teens operating margin expansion afterwards, the group will not be able to service its debt obligations by 2016. That's precisely when the majority of its debt comes due, according to Saab's financials.
Pasetti suggests that Fiat could acquire Saab, mainly to have access to developing markets and Saab's U.S. distribution network. This would mean that Saab changing hands twice in two years: General Motors (GM) sold it to Dutch supercar maker Spyker when GM was coming out of bankruptcy; and now Spyker would unload Saab after a very brief period of ownership.
Oh, and Spyker isn't really Spyker anymore -- the sports car business was sold to former investor Vladimir Antonov, a Russian financier of questionable repute who was jettisoned from Spyker at the behest of GM when Saab was initially being sold. Sweden went along with this, as a condition of providing loans to its domestic automaking brand.
Antonov was exasperated about being forced out of the Saab deal, and made no secret of the fact that he thought it was motivated by GM's residual Cold War paranoia about Russia getting its hands on precious American technology that no one was actually buying in the U.S. But now he has a shot at getting back in.
Saab needs breathing room to introduce new models
Pasetti doesn't think Antonov has enough cash to alleviate Saab's liquidity crunch. He's probably right, but that's not the point.
Saab doesn't really need to be a global brand. It could survive as a brand that's sold in Sweden, Russia, California, and the U.S. Northeast. In fact, if it took advantage of the Antonov proposal to assume ownership, it could conceivably relocate some production from Sweden to lower-cost factories in Russia. In the short term, it just needs some time to refresh its aging lineup, which consists of only three vehicles.
My question is whether GM still holds any sway over the Swedish government, which needs to approve Antonov's application to fund Saab. For whatever reason, GM is completely paranoid about Russia developing it a modernized, indigenous auto industry, perhaps because GM now assessing that country's auto market as a plum ripe for the picking. I think GM is taking its eye off the ball here, however, and forgetting, among other things, that:
- China is more important
- It needs to fix Opel in Europe before it can start using Opel to open the Russian market
- Saabs are currently built on aging platforms that wouldn't help the Russians that much, anyway
Fiat was interested in buying Opel from GM, back when Opel was for sale. But I don't think CEO Sergio Marchionne is in a buying mood right now -- he's too busy integrating Chrysler and trying to finance the U.S. carmaker's forthcoming IPO. Saab doesn't make much sense in that framework. So let the Russian have what he's wanted all along.