Saab Automobile owner Spyker Cars NV's agreement to sell a 29.9 percent stake in the struggling Swedish company to Zhejiang Youngman Lotus Automobile Co. may not help the carmaker turn itself around, analysts say.
Youngman may be too small a carmaker on the Chinese mainland to obtain government approvals to manufacture cars in the world's largest auto market, analysts from IHS Automotive, Synovate Motoresearch and Autoforesight Shanghai Co. said. There is also a high likelihood China's focus on automotive industry consolidation may scuttle the deal, they said.
Spyker, based in Zeewolde, Netherlands, is trying to secure long-term financing for Saab after a payment dispute with parts suppliers caused the company to halt output for seven weeks in April and May, reported The Detroit News. Spyker said Monday it will sell the stake in the Swedish carmaker to Jinhua, eastern China-based Youngman for 136 million euros ($197 million). Pangda Automobile Trade Co., which agreed to invest in Saab in May, will also pay 109 million euros for a 24 percent stake.
"I have the impression that Saab is scrambling for any partner in China now," said Lin Huai Bin, a Shanghai-based analyst at IHS Automotive, in an interview. "If Saab wants to succeed in China, they need to find a sizable company with good profit and good government connections."
Youngman may find it difficult to persuade China to give approval for a manufacturing venture, given the company's size and China's wariness about further capacity expansion in the auto industry, Lin said.
China has been trying since 2009 to reduce its auto industry to 10 companies holding 90 percent of the market, from about 100 manufacturers currently. The China Association of Automobile Manufacturers sales data doesn't rank Youngman among the nation's top 10 carmakers.
The deals with Youngman and Pangda need approval from Chinese authorities, the European Investment Bank, Sweden's government and national debt office, and from General Motors Co., which sold Saab to Spyker for $74 million in cash and $326 million in preferred shares in 2010.
The Chinese investment "significantly strengthens Saab's financial position," Victor Muller, chief executive officer of Spyker and Saab, said Monday.
Youngman builds sedans for U.K. carmaker Lotus Cars. Phone calls to the company's office weren't answered.
"We feel that Saab as a premium European brand appeals strongly to the taste and preferences of the Chinese customer," Pang Qingnian, chief executive officer at Youngman, said in a statement Monday.
The accord comes a month after a carmaking agreement with Beijing-based Hawtai Motor Group Co. collapsed. Saab last year sold 31,696 cars and has said it will be unable to meet a target of 80,000 this year because of the production problems.
The automaker's North American headquarters, in Royal Oak, employs about 35.
