Saab confirms new Chinese deal

Cash-hungry Saab Automobile appears to have secured its immediate future with the signing of a Memorandum of Understanding between parent Spyker, Saab Automobile and the big Chinese retail group Pang Da Automobile.

This is only days after a deal was announced with another Chinese partner, Hawtai Motor Group, which was hailed at the time as an indication the Swedish marque was back on track towards global viability.

With its Swedish factory in Trollhattan stalled for the last six weeks due mainly to withheld services from unpaid sub contractors, the company has been in a tricky position as it aims to promote its re-emergence. The Pang Da deal appears to provide the funds needed to get production rolling again.

Pang Da Automobile is a major Chinese player in the car industry with around 1100 dealers throughout the country.

First part of the deal is for Pang Da to buy 1300 Saabs valued at 30 million Euros (A$40 million) for sale in China, with the second and more enduring part the signing of a declaration of intent that first must be approved by authorities in Sweden and China, as well as the European Investment Bank and previous Saab owner General Motors.

According to reports the initial part of the deal has been signed off, and paid for, releasing much-needed funds. This is to be followed by an option to purchase additional vehicles to a value of 15 million Euros (approx. A$20 million) within 30 days of the initial purchase.

The second part of the deal is a 65 million Euro (approx. A$87 million) plan where Pang Da will acquire a 24 per cent ownership of Saab.

A statement from Spyker Cars and Saab CEO Victor Muller says the Pang Da deal will bring Saab back into prominence again, hinging largely on its activities in China.

"Pang Da is a forward-looking, profitable and well-capitalised public company that, as the single largest automobile distributor in China, sees enormous potential for our brand in their home market. We will work hard to finalise the relevant agreements and firmly establish Saab in the world's fastest growing car market. Pang Da taking a substantial equity stake in Spyker underlines their confidence in our plans for the future and China in particular."

According to Mr. Pang Qinghua, CEO of Pang Da, "This partnership allows us not only to distribute Saab, the iconic European premium brand, in China but also to set up a manufacturing joint venture which will further enhance the competitive position of the Saab brand in China.

"With the new products Saab has launched since it became an independent car manufacturer early last year, such as the all new Saab 9-5 and the Saab 9-4X which have been widely acclaimed, and not in the least the upcoming successor to the current Saab 9-3, we believe the timing is perfect for Saab to enter the Chinese market. Our size, financial strength and competence in addition to our ability to move fast will be crucial to Saab's success in China."

However some scepticism about what all this means for Saab's long-term future prevails, including the suggestion by some analysts that the figures quoted don't appear sufficient to fully do the job.

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