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January 28, 2010

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Home » Business » Auto

Spyker buys Saab from GM

A small Dutch auto maker will try to do what United States auto giant General Motors Co couldn't - make money by selling Saab brand automobiles in an increasingly competitive global marketplace.

GM signed a deal on Tuesday to sell Saab to Spyker Cars NV for US$74 million in cash plus US$326 million worth of preferred shares in Saab.

The deal hinges on a US$550 million loan from the European Investment Bank, which the Swedish government on Tuesday committed to guaranteeing.

The sale is a coup for Spyker, which is based in Zeewolde, Netherlands, and a lifeline for Saab, which has lost money ever since GM bought a 50 percent stake and management control for US$600 million in 1989. GM gained full ownership in 2000 for US$125 million more.

Saab employs around 3,500 people in Sweden and was within days of liquidation as part of GM's restructuring.

Now GM will continue providing vehicles and parts to the new company, to be called Saab Spyker Automobiles NV.

Spyker CEO Viktor Muller knows that Spyker faces a huge challenge to turn Saab into a money maker, but said he's confident it can be done.

"I think what we can bring to the table is entrepreneurship and tenacity," he told reporters.

Saab already was struggling as a niche brand with a small market share when GM bought it, and industry analysts say the Detroit auto maker ruined Saab's unique character by supplying the unit with vehicles designed for other GM brands.

Before GM, Saab specialized in egg-shaped aerodynamic small cars with rapidly sloping backs and four-cylinder engines. But sales dropped as loyal followers found the GM offerings no different than those made by other mainstream brands.

But Muller said Spyker will harness "the Swedishness of the brand" to reconnect with Saab's loyal following of 1.5 million drivers.

"I think the unique heritage of the brand requires a very strong focus," he said. "If you are part of a very large conglomerate, it's very difficult to have focus on all these brands."

Spyker is estimating that it will make 100,000 Saabs a year, enough to be profitable. Asked whether production would stay in Sweden, Muller joked that it would be shortsighted to believe Saab buyers would remain loyal to the brand if the cars were made in Mumbai.

Spyker also must quickly sign deals with GM or other auto makers to design and build new Saabs, said Michael Robinet, an automotive analyst with CSM Worldwide in Michigan.

Without deals, Saab will have to compete against global auto makers with much lower costs that can pack features into their cars and sell them for less, Robinet said.


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