Saab plant 'could be shut for two weeks'

Saab’s Trollhattan plant has again fallen silent, despite on-going rescue talks with two Chinese carmakers. The company says it could be two weeks before production starts up again.

The plant closed for most of April and May because Saab’s parent Swedish Automobile (formerly Spyker) could not pay its suppliers. It re-started in late May but was forced to halt again when parts supplies ran out.

The company remains locked in negotiations with its suppliers. Reports suggest it has reached agreement with most of its 3,500 suppliers, with around a quarter still seeking assurances over Saab’s future plans.

Swedish Automobile signed a memorandum of understanding with Pang Da and Zhejiang Youngman Lotus Automobile Co a week ago which still needs to be approved by the Chinese authorities. That is expected to take two to three months, putting the business under pressure to secure short-term financing.

One option under consideration is the sale and leaseback of the Trollhattan plant. Swedish business daily Dagens Industri claims that talks have taken place with Swedish property company Hemfosa.

While that could solve the immediate cashflow issue, some analysts believe the rescue package with Pang Da and Zhejiang Youngman is by no means a done deal.

IHS Automotive, Synovate Motoresearch and Autoforesight Shanghai Co suggest that Youngman may be too small a carmaker on the Chinese mainland to obtain government approvals to make cars abroad.

The Chinese authorities are also wary about allowing further capacity expansion in the automotive industry – they are trying to reduce the number of domestic manufacturers to 10 and Youngman is not ranked among the top carmakers.