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Saab gets back to work

Anticipation: Saab management and workers alike are looking forward to a decision from Chinese authorities to end several months of uncertainty.

Chinese cash resuscitates Saab car production in Sweden, at least for now

30 May 2011

A SMALL order of Saab cars for Australian showrooms is among 6500 back orders for the Swedish company’s Trollhattan plant that resumed production on Friday after being stalled by cash-flow problems since April 6.

The assembly lines began rolling again after Saab Automobile received a €30 million ($A40m) cash advance on an order of cars from China’s biggest automotive dealer group, Pang Da Automobile, which not only wants to distribute Saabs in China but buy a slice of the troubled company.

The payment has enabled Saab to settle unpaid bills with parts suppliers and kick-start operations, producing 100 cars on Friday.

Although more production disruption is possible as Saab gets its rusty supply chain back into the full swing of production, Saab Cars Australia (SCA) expects its order – a mix of 9-3s and 9-5s – to roll down the assembly lines before the plant closes again in July for the annual scheduled summer break.

SCA managing director Stephen Nicholls told GoAuto a small number of cars were in line for production for Australia.

 center imageFrom top: Production at Trollhattan, Spyker CEO Victor Muller, Pang Da CEO Pang Qinghua, Saab 9-4X SUV.

“We haven’t got a precise schedule for the build of those cars yet, but we would expect to get that over the next week or so,” he said.

Mr Nicholls said Saab was still in the process of talking with about 1100 suppliers, including about 700 key parts-makers, to resume uninterrupted supplies, not only in the wake of the Saab production shutdown but also the Japanese earthquake disruption that might have affected some lower tier suppliers.

“I think it would be fair to accept there will be a little bit of disruption over the coming weeks, but hopefully not too much,” he said.

The cash advance from Pang Da Automobile, which operates more than 1000 dealerships across China, is purely an advance payment for 1300 Saab cars it is buying to distribute in the world’s biggest motor market. It is not subject to government approval.

However, the company does need such approval to step up its involvement in Saab. Reports from China say Pang Da has started discussions with Chinese authorities for approval to buy up to 30 per cent of Saab owner Spyker Cars NV, which is changing its name to Swedish Automobile NV.

Spyker CEO Victor Muller said that, based on Spyker’s discussions with Pang Da, Spyker was confident the Chinese company would get the regulatory approvals.

“I am very much looking forward to creating a strong business with Pang Da, initially in the distribution and subsequently in the manufacturing of Saab vehicles in China,” he said.

However, as Pang Da is purely a distribution and retail network, any decision on Saab manufacturing in China still hinges on the two companies finding a third partner – a Chinese vehicle manufacturer – to make Saab cars in China.

Even then, the consortium will still have to jump through hoops for authorities in China, Sweden and the European Investment Bank, all of which need to approve the deal.

A Saab agreement with small Chinese motor manufacturer Hawtai Motor fell over recently when the Chinese government refused its permission for the partnership.

Pang Da Automobile CEO Pang Qinghua was at the Trollhattan plant with Mr Muller on Friday to see his money work its magic by re-starting production.

Mr Muller said Saab had gone through a rough patch in recent weeks, but was back in action.

“I would like to express my deep gratitude to our fantastic suppliers who have worked so hard with us to make this happen, and to our loyal employees who have constantly stood by our side,” he said.

“We will work hard in the coming period to regain confidence and show our ability to become a successful car-maker.

“We are fortunate that we are in the middle of the largest-ever product offensive in the company’s history.”

Those products include the 9-5 SportCombi wagon, which is due to begin production immediately after the summer break, and Saab’s first SUV, the 9-4X, that has just gone into mass production at GM’s Mexican plant, first for sale in North America and then around the world.

Initial road test reviews of the vehicle have been positive, saying it rides, handles and steers better than GM’s version of the car, the Cadillac SRX.

So far, Saab is holding 1600 orders for the 9-4X, taking the company’s total order bank to 8100.

Mr Nicholls said the 9-4X, which is powered by a Holden-made turbocharged V6 in its flagship Aero variant, is still on target for launch in Australia either at the end of this year or early 2012.

He said the resumption of production at Trollhattan and the start of 9-4X mass production in Mexico would help to restore faith in the brand.

“It is one of those things where we have a basis for building the trust and confidence of our customers and prospects, but it is something that we recognise is a pretty major effort over the next coming months,” he said.

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