Car buyers are being warned not to purchase Saab cars, because the company producing Saab vehicles appears unlikely to survive, having recently filed for bankruptcy protection for the second time in three years.
The car review website dogandlemon.com warns that Saab cars are still being offered by dealers without any mention that the parent company is in serious trouble.
dogandlemon.com editor Clive Matthew-Wilson says the Saab company may end up being sold to China, but there was no guarantee the new owners will continue to support existing vehicles.
“Saab cars would appear to be the worst possible choice for consumers: they are likely to need lots of expensive repairs, but owners of Saab cars may find themselves unable to obtain parts and service in years to come.”
Matthew-Wilson points to a recent reliability survey by the giant English consumer organisation Which? Of the 34 car brands surveyed, Saab vehicles rated third from the bottom for reliability.
“Buyers of Saab vehicles probably have some warranty protection if they buy from a local dealer, but none if they buy privately. Even so, getting a Saab vehicle fixed if it breaks may soon become an impossible task. If a single major part, such as a headlight unit, becomes unavailable, then the vehicle that it fits will essentially become scrap metal.”
"Our only possible advice is to avoid Saab vehicles entirely."
Background
In 2009, after years of losses, Swedish specialist carmaker Saab Automobile AB filed for bankruptcy protection.
Saab was formerly owned by General Motors. After the bankruptcy of both General Motors and Saab, Saab was sold in 2010 to the tiny Dutch carmaker Spyker Cars NV, with finance from Russian businessman Vladimir Antonov, who allegedly has links to organised crime.
Spyker Cars changed its name to Swedish Automobile.
In May of 2011, Swedish Automobile announced that it had sold 54% of Saab to two Chinese companies, Pang Da Automobile Trade Co and Zhejiang Youngman Lotus Automobile for 245 million euros (US$347 million).
The Chinese investors then backed away from this agreement.
In late October of 2011, Swedish Automobile announced a new deal: it had agreed to sell 100% of Saab and its British unit to Pang Da and Youngman for 100 million euros (US$140 million).
However, although a general agreement has been reached to sell the Saab company, a final contract has not been signed. The Chinese investors have yet to make a major payment.
The purchase of Saab by a Chinese company will require the approval of the Chinese government. The deal will also require the approval of the European Investment Bank, the Swedish government and General Motors, all of which have existing investments in Saab. If any of these parties dislike the deal, the entire sale could be halted.
The Chinese investors have already backed away from a previous agreement; there’s no guarantee they won’t back away from this one as well, or try and renegotiate the terms of the contract.
Many of Saab’s employees have not been paid for months; any delay in selling the company could see the employees and other creditors restarting bankruptcy proceedings against Saab.
An apparent rescue by an American company – North Street Capital – appears to have been a sham.
Many industry commentators believe that Saab’s position is now hopeless. Most of the Saab model range is obsolete. Saab sold 31,696 cars in 2010. According to industry estimates, Saab would need to sell a minimum of 120,000 cars per year just to survive.
Even if the Chinese investors pay over the entire US$140 million, Saab will still require a further estimated US$800 million to US$1.5 billion to turn the business around.
For the foreseeable future, there is little chance of Saab regaining a strong market share in Europe or America. While Saab’s new owners hope to expand into the Chinese market, China’s car market is cooling.
With China’s three major luxury carmakers – BMW, Daimler and Audi – all discounting heavily to achieve sales, it seems unlikely that Saabs could be sold profitably into the Chinese market in the near future.
