Saab production restart falters

ERJ staff report (AN)

Trollhattan, Sweden -- Saab halted production yesterday at its Trollhattan, Sweden, factory after output had restarted for just a short period earlier in the day.

Production "ran for a short period this morning, but it stopped and will remain stopped for the rest of the day,'' Saab spokeswoman Gunilla Gustavs told Automotive News Europe. Asked when output might resume, she said: ''It is hard to predict."

Gustavs said disruption in the flow of materials was to blame for the latest production difficulties, adding that the automaker had been aware that its just-in-time production system could be a problem. ''We knew there could be these kind of stops,'' she said, adding that negotiations are still continuing with some suppliers.

Saab had halted production on Tuesday after restarting on May 27. The automaker was shut for most of April and May after it faced a cash crunch over unpaid supplier bills. The company only restarted production after a deal with Chinese auto dealer Pang Da provided a cash injection by agreeing to buy 30 million euros worth of Saab cars.

Spyker CEO Victor Muller said on Tuesday: "Many suppliers did not make parts during the shutdown, some for almost two months. If you run out of parts it can impact production."

Swedish news agency TT quoted the head of the FKG auto suppliers association, Svenake Berglie, as saying that not all suppliers had been paid yet and had not managed to get their own production going again.

Pang Da deal

The Pang Da deal 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 COO Tim Colbeck said at a media luncheon in New York on Tuesday.

If approved, the Pang Da deal could be a mid-term 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.

Reuters contributed to this report

From Automotive News (A Crain publication)