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Saab Oz ‘has plenty of stock’ for starters

Frozen: A payment dispute with parts suppliers has stalled production at Saab's Swedish plant.

Factory cash-flow woes stall Saab production, but Australian 9-5 supply locked in

11 Apr 2011

SAAB’S network of eight Australian dealers had all the cars they needed to launch the new 9-5 and would be unaffected by stalled production at the company’s Swedish plant, according to Saab Cars Australia managing director Stephen Nicholls.

“In terms of lost production, in the case of the Australian market, we are not going to notice it,” he said of the current factory shutdown by the cash-strapped Swedish company amid a payment dispute with parts suppliers.

“The cars that we need are already here or on the boat, so we don’t think it will affect our short-term supply.”

A Bloomberg report from Sweden suggests the Swedish government is trying to find a way to enable Saab to access a commercial bank loan to help pay its suppliers and break the stalemate that is threatening renewed bankruptcy for the Trollhattan-based car-maker.

Bloomberg speculates that the loan would come from Lithuanian bank Bankas Snoras, which is controlled by Russian investor and former major shareholder of Spyker Cars, Vladamir Antonov, who also is trying to buy into Saab.

Mr Antonov, who was forced to sell his shares in Spyker before General Motors would sell Saab to the Dutch sportscar-maker, has reportedly applied to the Swedish authorities for permission to buy a maximum 30 per cent slice of the new Saab, saying that GM was now happy with his involvement after an investigation cleared him of money laundering and mafia links.

38 center imageLeft: Saab Cars Australia managing director Stephen Nicholls. Below: Saab's 9-5 on the production line in Sweden.

News that Saab had been forced to halt production at its Swedish car plant due to parts shortages came on the eve of the Australian launch of the new 9-5 flagship.

Mr Nicholls described the timing of the troubles in Sweden as unfortunate for the local operation for which the 9-5 debut marks a rebirth in Australia.

“It is disappointing, but had I known this a week ago, would I have pulled the event? No, I wouldn’t,” he said.

“It is just part of starting up the business. We have got to expect there will be the odd hiccup along the way.

“This is unfortunate and the timing is not ideal for us, but it is what it is, and we just have got to get on with it. The impact on the Australian operation is going to be limited.”

Saab Automobile AB’s €400 million ($A547m) in loans from the European Investment Bank are tied to new-model projects, and that money is not available to help with other day-to-day running costs.

The company is therefore caught between high new-model launch costs and, so far, minimal sales of the new 9-5 range that are needed to generate cash.

Saab says it hopes to make 80,000 vehicles this year – up from a tiny 31,696 units last year – and on to 120,000 units in 2012, by when it should be profitable.

Mr Nicholls said Saab Cars Australia, which formally took over as Australian importer on January 1 from Holden’s GM Premium Brands, would concentrate on profitability rather than volume this year.

He said the company hoped to sell 400-plus units this year, with between 80 and 100 of those coming from the new 9-5.

“We had a discussion with our dealers at the end of last year and they were talking about some quite large numbers, which of course we would be very happy to see,” he said.

“We think that 80 to 100 this year should be quite achievable. If we sell more, that’s great.

“But what we are focussed on this year in Australia – as we are around the world – is Saab Cars profitability. So we would rather walk away from a deal than lose money.”

Mr Nicholls said Saab Cars Australia would not advertise the new 9-5 on television in Australia, instead putting its marketing emphasis on new media such as the internet and direct marketing by working its database of more than 100,000 contacts with customers and other leads.

He said Saab recognised that it had significant holes in its dealership network, particularly in New South Wales where it has just one outlet, at Artarmon, in Sydney’s north.

He said a priority of new Saab Cars Australia national sales manager Adrian Givoye – a former Toyota and Nissan staffer – would be to identify locations for future Saab dealerships, with emphasis on finding out where they were most needed.

So far, Saab has four dealerships in Victoria – three in Melbourne and one at Geelong – and one each in Sydney, Brisbane, Adelaide and Perth.

All were Saab dealers under the former importing regime that had more than 20 dealerships.

Mr Nicholls said Saab needed to restore the special brand and identity of Saab in Australia.

“We have to get back to that,” he said. “Nobody just buys a lump of metal these days, nobody just buys a car, particularly in our segment – they are buying into a lifestyle.”

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