Joined by the newly appointed Vice President and Head of Manufacturing and Quality for Saab Automobile, Göran Ejbyfeldt, is the Swedish automakers new restructuring plan. Swedish Automobile N.V. and all its Saab subsidiaries presented to its creditors its preliminary plan, which was developed by the company’s current management and owners. Ejbyfeldt, who is a regular in the company, replaces Gunnar Brunius who is moving on to Volvo.
As of now, Saab still plans on working directly with the two Chinese companies: Pang Da and Youngman. Short and long term funding, depending on approval from the relevant parties, will be supplied to Saab by the investors. The purchase plan for 50 million euros of Saab stock, which was made not too long ago, is still in play. On top of that buyout will be a at-the-least 600 million euro investment so production at Saab’s Trollhättan assembly plant can finally restart. That investment should also fund operations until 2013. Pang Da and Youngman also plan on bringing Saab vehicles, in one way or another, to the China market. At first, the 9-5 SportCombi and the 9-4X will make it to the country.
Saab looks to repay its debts to its Swedish creditors. In hopes of reducing structural costs, there will be an unfortunate cut in employees by 500. By the end of 2012, the company hopes to sell between 35,000 to 55,000 vehicles. When 2013 is over, they are looking to jump that number up to around 75,000 to 85,000 cars and SUVs. Swedish Automobile N.V. is still refreshingly realistic in this move and admitted that 2012 and 2013 will be “ financial transition” years. They do not look to become “profitable” until 2014.
Saab’s summarized plan of attack is below.
Trollhättan, Sweden: Swedish Automobile N.V. (Swan) announces that Saab Automobile AB and its subsidiaries Saab Automobile Powertrain AB and Saab Automobile Tools AB (together Saab Automobile) today present their preliminary reorganization plan to their creditors during a creditors’ meeting in Vänersborg, Sweden.
The preliminary reorganization plan, which was developed by Saab Automobile management and supported by the current and foreseen owners of Saab Automobile as well as its administrator of the reorganization, contains the following highlights:
- Pending the approval from all relevant parties, short- and long-term funding for Saab Automobile is assured: Youngman and Pang Da have expressed their commitment to provide EUR 50 million, to fund Saab Automobile while in reorganization. In addition, the Chinese investors will provide a minimum of EUR 600 million in funding to restart production, to settle the company’s clear and due debts and to fund operations for the 2012-2013 medium-term timeframe. To provide funding for the revised business plan and provide long-term financial stability the new Chinese owners have also budgeted funding for the planned expansion of Saab Automobile’s portfolio and additional operations to be set up in China. Saab Automobile has not received the funds from Pang Da and Youngman that have been committed for today.
- New strategy and structure to combine the strength of Pang Da, Youngman and Saab Automobile, with Saab Automobile’s brand equity and heritage, product portfolio and capabilities being the key elements of that partnership combined with the distribution capabilities of Pang Da in China and the manufacturing expertise of Youngman.
- Key actions during reorganization: establish new ownership structure with Pang Da and Youngman as strategic partners; reach agreement with creditors on repayment of outstanding debt to restore Saab Automobile’s supply chain; reduce structural costs by SEK1 billion, among others through reducing headcount by 500 employees; and generally restore confidence and trust with all key stakeholders
- Restart plan highlights include: seamless production restart supported by existing order bank; accelerate access to China as major growth market; new distributorship agreements in other emerging markets like Russia, new products for traditional key markets (65% of volume) and China which include the 9-5 SportCombi and the 9-4X.
- Confirmation of the long-term strategy of repositioning Saab as a distinctive, near premium brand supported by a renewed and broadened product portfolio, a more flexible cost structure with global production footprint, cross-carline modular technology architecture generating synergies, provision of external engineering services and expanded operations to take advantage of growth opportunities available in China and provided by strong Chinese owners.
- Sales targets for 2012 of 35-55,000 cars and 2013 of 75-85,000 cars based on realistic ramp up in line with sales development since last restart.
- Long term volume outlook of 185-205,000 cars of Saab Automobile based on three main growth drivers: 1) broadened product portfolio in fast growing market segments; 2) capitalizing on access to Chinese market, and; 3) strong profitability focus.
- 2012 and 2013 seen as financial transition years, profitability expected no later than 2014. Long term margins and profitability in line with other near premium car manufacturers.
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