Saab on the road to bankruptcy after court decision

Saab looks like it'll soon be sitting on bricks - unless some much-needed cash falls out of the sky...

by Dave Waller
Last Updated: 06 Nov 2012
In what looks like it could be the final nail in its bonnet, Saab has been delivered a major blow by the Swedish courts, which have declined an application from the carmaker for protection from its creditors. It was trying to delay proceedings while attempting to secure extra funding. Having failed, it’s looking at bankruptcy within days.

It’s a sad conclusion, but this is a story that’s been rumbling along down that particular road for some time now, and always with the likelihood of that ominous dead end ahead. Saab had to suspend production in April when its suppliers stopped deliveries over lack of payment. Saab owes 800 suppliers Eur150m. It’s also been struggling to pay its workers – and both of these elements are pretty essential to the car-making process.

Of course, rising debts wouldn’t be such a problem if sales were soaring too. Yet that’s far from the case here: Saab needs to shift 120,000 cars in order to break even. Last year it sold just 30,000 motors; this year things are looking even worse.

Saab is owned by Swedish Automobile, which bought it in January 2010. The original plan was to sell minority stakes to two Chinese companies, but the deals have failed to get regulatory approval in either country. It’s thought that the Chinese government will never go for it, given its fears over fragmentation of the Chinese car market. It wants fewer larger firms to bolster its competitiveness on the global level.

Swedish Automobile chief exec Victor Muller had one other tenuous hope – that he could get financial backing from his former business partner Vladimir Antonov, the Russian banker. The other option was to sell Saab’s assets and lease them back.

But the court has decided the rescue simply isn’t going to work, and the unions are now threatening bankruptcy action in order to protect Saab’s 3,700 workers. So it looks as if it’s time to kiss goodbye to another well-liked car marque. What will all those dentists and designers drive now?

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