GM Close to Deciding Saab Buyer; May Need Until Mid-January for Final Opel Plan

General Motors (GM) is about to make a decision on the winning bidder for its Swedish premium car manufacturing unit Saab, according to Swedish news agency TT. The company had been close to completing a deal with Swedish supercar manufacturer Koenigsegg which was to be part financed by Chinese carmaker Beijing Automotive (BAIC). However, this deal collapsed at the end of last month after Koenigsegg chief executive Christian Koenigsegg became unhappy about the time the deal was taking to be completed and ongoing funding issues (see Sweden: 25 November 2009: Saab Future in Doubt as Koenigsegg Withdraws Offer). The TT report claimed that the buyer which GM is likely to favour is experienced in small-scale car production and plans to keep Saab production, design and development in Sweden. This would indicate that Spyker, the previous favourite for Saab, following the collapse of the Koenigsegg bid, is in line to be chosen as the winning bidder. The Dutch supercar maker's bid is being backed by Russian–owned bank Investbank. Saab spokesperson Eric Geers declined to comment on the report but intimated that a deal is progressing towards conclusion. Geers said, "There are signals everywhere showing we are well on track."

GM is also said to be talking to BAIC about a partial sale of Saab's assets, which are said to include the rights to manufacture the outgoing 9-5 model and all the production equipment associated with this model. The announcement of a winning bidder for Saab appears to have been accelerated as a result of the Swedish government pushing for a resolution. Swedish newspaper Svenska Dagbladet reported yesterday that the Swedish Secretary of the Enterprise Ministry Joran Hagglund has told GM's management that needs to decide this week on a buyer for Saab. He said, "GM has a lot of contracts to negotiate [with a possible buyer] and the European Investment Bank and the [Swedish] debt office need to undertake a detailed economic analysis of a buyer's financial strength." Meanwhile, GM has said that it would continue to run Saab past the self-appointed deadline of 31 December if a buyer had been identified by that point. GM spokesperson Chris Preuss said, "Yes, we will continue to run Saab during that period. But I think that... a decision about Saab is going to come very soon."

Meanwhile GM has also announced that it may require until January until it can complete its full rationalising plan for its Opel unit. The company had originally said it would be finalised in December but new GM Europe President Nick Reilly wrote on a weblog that this deadline was now unlikely to be met. He said, "Although we had hoped to have the new business model finalized in December, it appears that more work needs to be done and further consultations will not be rushed. This is going to be one of the largest, most complex industrial reorganizations in European manufacturing in years. It will affect thousands of people and their families [and] impact plants and other stakeholders." Opel plans to cut around 8,300 jobs from its workforce of 50,000 in a 3.3-billion-euro (US$4.85-billion) overhaul that seeks state aid from countries with Opel plants including Germany, Britain, Spain and Poland (see Europe: 26 November 2009: GM Announces Allocation of Opel Job Losses; Germany to Bear Brunt).

Outlook and Implications

GM appears to be coming under added pressure from the Swedish government to announced the favoured bidder for Saab, but that announcement will only be the beginning in terms of attempting to complete a deal. The words of the Swedish secretary of the enterprise ministry Joran Hagglund are ominous as he highlights the complexity of the deal and the sheer number of interested parties that need to coordinate their activities if a sales contract is to be completed and signed. The Swedish debt office will need to complete a full audit of Spyker's finances and this is likely to be a time consuming process given their apparent complexity. Spyker itself his very much a loss making entity and only made 43 cars in 2008, with the company having never turned a profit in its modern history. The question for the Swedish government and the EIB will be what intentions Spyker and its backers the Convers Group, which owns Investbank, has for Saab.

Spyker may be after the money included with the takeover of Saab. With the Koenigsegg negotiations, the European Investment Bank (EIB) provided a loan of 400 million euro to assist a new owner with the turnaround of Saab. The same loan will be provided to other interested parties, according to Hagglund. However, this money will only be available if the buyer makes firm commitments to Saab's green vehicle technology. Ultimately it seems that the same issues surrounding clearing the finance for the deal and the regulatory hurdles that need to be overcome, which ultimately did for the Koenigsegg bid, will be at least as difficult to overcome for Spyker and its partners

With regards to the Opel restructuring deal Nick Reilly said as recently as 2 December that he intended to present his plan for Opel and Vauxhall by the middle of December. It is unfortunate that GM's management is not able to stick to this original timetable. However, the extended timescale appears to have the blessing of the German unions and their colleagues in Opel and Vauxhall's other European production locations. The head of the powerful German works council Klaus Franz has adopted a more conciliatory tone towards GM's management in recent days, following his initial opposition to GM's plan to retain control of Opel (see Germany: 9 December 2009: Opel Labour Chief Adopts Conciliatory Tone to GM's New Management). Ultimately it is correct that the restructuring plans are fully discussed with the union leaders so that a restructuring deal can be agreed by all sides and prevent the potential of industrial action and deteriorating management/union relations further down the line at a vital juncture in Opel and Vauxhall's history. In his weblog Reilly went on to say, "Our company needs great products and a winning product portfolio, which includes future technologies and investments. To that end, I held a day-long meeting with senior Opel leadership Tuesday to strategize on what needs be done now and in the new year."