Spyker needs more cash for Saab

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Spyker Cars

If Spyker wants to make Saab a profitable enterprise, they’re going to have raise more cash and do it soon.  Analysts say that in order to put the Swedish auto company into the black they will have to sell upwards of 75,000 vehicles per year.  This number is a far cry from the 39,903 they sold last year, and light years away from the 300 or so cars Spyker has sold in its entire decade of being in business.  In order to meet this goal, which is 250,000-500,000 cars short of projected goals, Spyker will have to invest hundreds of millions of dollars – dollars that will have to come from new investments.  The company asserts that it has enough capital for financing, but CEO Victor Muller recently told shareholders that he wants to list Spyker in the London and Stockholm stock exchanges in order to have closer proximity to investors.

Besides new capital investments and increased production, Saab will also have to sell, service, distribute, and offer parts and warranties to its customers, two-fifths of whom are in the in the United States.  Trying to rebuild strong distribution and service networks to meet all these tasks in this turbulent auto climate will be an uphill battle for Spyker and could delay or stifle their ambitious plans.  On the other hand, Saab sales have dropped so low in the past few years that even moderate improvement could be seen as success.

Saab purchased by Spyker

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Saab Motor Co.

The wake of General Motors‘ June 2009 bankruptcy left several brands stranded: the military-turned-civilian Hummer was sold to a Chinese machinery company, the affordable line of Saturn cars is set to be totally phased out and off lots by this October, and iconic American brand Pontiac will vanish by the end of 2010. Not all of GM’s brands are doomed to the scrape heap, though.  On January 26th, Dutch supercar maker Spyker announced that it had purchased the often unnoticeable Saab for $74 million dollars after months of negotiation.  Its plan for Saab: make it competitive with the well established sedans of companies like BMW and Audi, with the hope that this will make the brand profitable 2012.  Spyker’s plan is an optimistic one, given Saab’s underwhelming financial performance during its tenure as a GM brand.

The purchase offers Spyker a way to enter the lucrative luxury sedan market.  Currently, Spyker produces less than 50 cars a year, each with a price tag well over $200,000.  In stark contrast, they expect to sell between 100,000 and 125,000 Saabs annually.  At the very least, with the increase in workers Spyker will need in order to maintain production capacity for Saab, the company can hope to increase production of its supercars to around 100 a year.