GM still in talks over Saab despite wind-down

0 Shares Twitter 0 Facebook 0 LinkedIn 0 0 Shares ×

Saab, the Swedish carmaker, could be sold for a nominal $1, but only if the buyer can convince its parent company, General Motors, that they have a sustainable long-term business plan for the brand.

Nick Reilly, President of GM Europe, said that even though it had begun the process of winding down Saab, it was still talking to “at least a couple of potential buyers”, including the Formula One boss Bernie Ecclestone.

Mr Reilly told reporters at the North American International Auto Show in Detroit today that a team led by Mr Ecclestone and backed by a little-known Luxembourg-based private equity firm called Genii Capital, to buy Saab was still looking at “what they can make out of it”.

He said: “They are not going to do anything unless they think they can make money.”

Even though it will cost GM €50 million to €100 million to wind down Saab, the US company will proceed with closure unless it can find a buyer with a viable business plan and loan support from the European Investment Bank or from the Swedish Government or from both of them.

Mr Reilly said: “We have a large carpark of owners around the world, which we have to support and we want to support.

“If any company comes along that quickly or in a year or two decides they cannot make a go of it, then that will come back to us. We need to know that there will be a company to continue producing components.

“We look at our responsibility to consumers a least on a ten-year basis and so if we sell [Saab] to somebody who really doesn’t have a viable business case, it will hurt our consumers and it will hurt us long term.”

Mr Reilly said that if no buyer for Saab could be found, all the technology for its new 9.5 model, which was ready for production before GM decided to sell the brand as part of its restructuring, could be scrapped.

His comments come a day after GM’s chairman and acting chief executive, Ed Whitacre, played down eleventh-hour bids for Saab from the Dutch company Spyker and from Mr Ecclestone, saying “we’re winding down Saab, there’s really no change”.

Final decisions on both Saab and on the restructuring of GM’s Opel business in Europe, which includes the two Vauxhall plants in the UK employing 5,000 people, were likely to be finalised later this month, Mr Reilly suggested.

GM Europe is not seeking government grants or even loans to keep its Opel Vauxhall business afloat, he said. Rather, it was hoping to secure €2.7 billion in loan guarantees from European governments in countries where it operates.

Although Lord Mandelson, the British Business Secretary, has been supportive in this, the German government, which had been angered by GM for reversing an earlier decision to sell Opel Vauxhall to a Canadian and Russian consortium, had delayed negotiations.

“When GM decided to keep Opel Vauxhall in the GM family, it took the German Government a bit of time to accept that and understand it,” Mr Reilly said.

Mr Reilly said that Opel Vauxhall was planning to launch its own version of GM’s Chevrolet Volt electric car, probably in 2011. He suggested that the vehicle, which is expected to be called the Opel Ampere, may be produced in the UK

“Ellesmere Port has been mentioned as a potential manufacturing source for that vehicle, but it’s not been decided at all,” he said.

He added that Opel Vauxhall also planned to produce its own mini car, smaller than the existing Vauxhall Corsa, within the next two to four years.

“We have talked about filling a hole in the mini segment,” he said. “Opel Vauxhall doesn’t have a vehicle of that size. I think that’s a segment that can grow will grow quite a lot, particularly for city-type use. Potentially, it’s a car than can be electrified as well.”

In the immediate future, however, he painted a grim picture of the European car market, suggesting that sales could fall by as much as 10 per cent in 2010, from 2009’s figure of 15 million.

The expected drop in sales was due in part to the withdrawal of government scrappage schemes in Europe, which provided generous subsidies to buyers of new fuel-efficient cars last year, which dragged some sales forward from 2010 to 2009.

Mr Reilly said: “In 2011 we will start to see a pick-up. But I’m fairly cautious about overall volume in Europe for the next four years.”

He did not think that sales would revert to previous levels of 17 million, adding that they would probably settle at about 15 million to 16 million in Western Europe. He expected sales in Central and Eastern Europe to remain flat at about four million vehicles in 2010. thanks The Times


Leave a Reply

Your email address will not be published.