Saab suspends output again, to resume today

ERJ staff report (AN)

Stockholm, Sweden (Reuters) -- Saab, which was shut for most of April and May after it ran out of cash, had to halt production again on Tuesday, though the company said it would be up and running on Wednesday (today).

Saab, which Dutch sports car maker Spyker bought from General Motors Co. last year, restarted production at its Trollhattan, Sweden, factory on May 27 after a deal with Chinese auto dealer Pang Da to buy 30 million euros worth of Saab cars.

"We will start tomorrow again," company spokesman Eric Geers said on Tuesday. His colleague, Gunilla Gustavs, added that a disruption in the flow of components had affected the company's just-in-time production system.

Spyker CEO Victor Muller told Reuters that he had not heard of any stoppages, but added: "It's possible that not the full capacity is used to make cars. Many suppliers did not make parts during the shutdown, some for almost two months. If you run out of parts it can impact production," Muller said.

Swedish news agency TT said the head of the FKG auto suppliers association, Svenake Berglie, indicated not all suppliers had been paid yet and some had been unable to restart parts production.

Pang Da deal

The Pang Da deal, which allowed Saab to restart production at Trollhattan in late May, is still pending Chinese government approval. Pang Da will be able to purchase vehicles from Saab either way, but Beijing could prevent Pang Da from investing in Spyker and becoming a minority shareholder.

"It's tough for me to predict but I think everybody expects it to come through," Saab President and CEO Tim Colbeck said at a media luncheon in New York.

If approved, the Pang Da deal could be a midterm solution to Saab's financial woes, Colbeck said. "Midterm" means at least through the end of 2012, he said, adding that Saab's message to dealers right now is to focus on the company's long-term potential.

"If this deal fails, it's on to the next one. There are a lot of people looking to invest in Saab," he said.

There is no timeline for a final decision from the Chinese government on the Pang Da deal, he said.

Besides the financial component of the deal, Pang Da and Saab aim to set up a manufacturing venture in China within a year and have 50 Saab outlets in China before the end of 2011.

China in 2009 surpassed the United States as the world's largest auto market, but the market remains fragmented. There are currently more than 100 automakers in China and some experts have said the government may block Pang Da's investment in Saab on the grounds that it wants to limit its home-grown brands to just a few, which can compete globally.

From Automotive News (A Crain publication)