Saab Executive says chinese turnaround plan not yet complete, bumpy road ahead

The turnaround plan presented Monday for troubled Swedish carmaker Saab Automobile AB is far from complete, said Martin Larsson, the company’s executive director of new business development and, according to speculation in Swedish media, the company’s next chief executive. The Swedish district court in Vanersborg on Monday gave the company the go-ahead to continue its reorganization under creditor protection, after Chinese companies Pang Da Automobile Trade Co. and Zhejiang Youngman Lotus Automobile Co. reached an agreement last week to buy the carmaker from Dutch owner Swedish Automobile NV for EUR100 million ($140 million).

The Chinese companies plan to return the Swedish carmaker to profit in 2014 by investing 20 billion Chinese yuan ($3.08 billion) into it over the next five to six years. But Larsson told Dow Jones Newswires, “The Chinese side of the business plan is not complete, we still need some input from our new owners.” He referred to the overall business plan as a work in progress and said Saab Automobile still needs to confirm certain parts of it with the new owners, as well as obtain necessary approvals from third parties, such as former owner General Motors Co., the European Investment Bank, the Swedish national debt office and China’s National Development and Reform Commission.

“The only thing that’s certain is that things won’t turn out exactly as planned,” Larsson said. “We still have a bumpy road ahead, I believe.” Larsson, who has been with Saab Automobile since 2003, said he believes the company’s business plan will be more successful than the one put forward during the company’s previous reorganization in 2009, which greatly overestimated the number of cars it would be able to build in the years following its emergence from the liquidation process. “It will take time to start up production so we have tried to be conservative when it comes to volumes,” he said.

Under the latest plan, the company is aiming for a modest 35,000-55,000 in vehicle sales next year, gradually increasing to 185,000-205,000 in 2016–about 50% more than Saab Automobile’s highest ever sales volume of about 130,000 in the mid-2000s. Saab Automobile also has to reach an agreement with all of its creditors, most of them suppliers, before production at the company’s Trollhattan plant can resume, Larsson said.

Production has been halted at the plant since the beginning of April due to unpaid supplier bills. Larsson didn’t want to speculate when it might be up and running again. “I don’t want to guess, we still have a lot of work to do,” he said. “It would be irresponsible of me to assume that our suppliers will act in a specific way.”

Source: Saab Executive Says Chinese Turnaround Plan Not Yet Complete - Driver's Seat - WSJ