Saab, Spyker Announce New Auto Deal in China

May 16, 2011
Arrangement calls for Pang Da Automobile to distribute Saabs in China and for both companies to eventually enter into a distribution and manufacturing joint venture.

Saab, the carmaker on the brink of financial collapse, said Monday it has signed a deal to obtain last-ditch rescue funding from a large Chinese distributor.

Saab and its Dutch owner Spyker announced the deal with China's Pang Da Automobile just days after a deal with Chinese car manufacturer Hawtai fell through.

Spyker head Victor Muller said in a telephone conference that the deal with Pang Da, which he described as the No. 1 distributor in China, was "much better for Saab than the previous transaction."

The deal calls for Pang Da to distribute Saabs in China and for both companies to eventually enter into a distribution and manufacturing joint venture.

Pang Da will also buy a 24% stake in Spyker for around 65 million euros (US$91.7 million), according to a Spyker statement.

In a first step, Pang Da will buy 30 million euros ($42.2 million) worth of Saabs -- around 1,300 cars, according to Muller -- to sell in China, followed by a further investment of about 15 million euros after it assesses the market.

"That is exactly the kind of money that will allow us to start up production again," he told reporters, saying he was hoping to relaunch production at Saab's plant in Trollhaettan in southwestern Sweden in a few days.

Production came to a halt last month as suppliers stopped deliveries over unpaid bills.

Pang Da "is a distribution company. They are interested in selling as many Saabs as they can, which of course in the short term is a tremendous boost to Saab," Muller said.

"The short-term effects for Saab, to be able to start to sell Saabs in such a huge distribution network, have a much more positive impact on Saab in Trollheattan as it stands today than Hawtai would have had," he insisted.

The 65 million euros Pang Da eventually plans to pump into the company in exchange for 24% of Spyker, will meanwhile "secure Saab Automobile's medium term funding," the company added.

The deal also includes "a strategic alliance consisting of a 50-50 distribution joint venture and a manufacturing joint venture" for both Saab-branded cars and a new, as yet undetermined joint-venture brand, in China, the statement said.

Saab will hold 50% of the shares in the manufacturing joint venture, with Pang Da and a yet-to-be-determined manufacturer to divide up the remaining shares.

Muller said the decision on the manufacturing aspect of the deal was postponed by a few months to allow time to select the best possible manufacturing partner.

"We have plenty of time to prepare for production in China now that we have secured immediate and mid-term financing needs," he said.

He also stressed that signing a deal with a distributor, instead of with a manufacturer such as Hawtai, would make obtaining approval from the European Investment Bank, former Saab owner General Motors and Sweden's National Debt Office much easier.

"This takes away a tremendous wall of pressure from the regulatory approval side," he said.

Muller said Pang Da had some 1,100 dealerships throughout China and sold 470,000 cars in China last year.

Pang Da chief executive Pang Qinghua said: "Having just gone public ourselves three weeks ago, we are delighted to have the opportunity to become a substantial shareholder in Spyker, Saab's parent."

Monday's announcement comes less than a week after Spyker said a 150-million euro deal with Chinese carmaker Hawtai had fallen through, casting new doubt on the future of Saab.

The iconic Swedish brand, which employs 3,800 people, was rescued at the last minute in early 2010 when tiny Spyker bought it for $400 million from General Motors.

It was forced to halt production "until further notice" last month as suppliers stopped deliveries over unpaid bills.

Copyright Agence France-Presse, 2011

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