GM deadline puts pressure on Saab

Washington's decision to hand General Motors a new deadline to reach viability and to demand it sack its chief executive could put more pressure on the company's beleaguered Swedish subsidiary Saab, analysts said on Tuesday.

“This will first and foremost make it very difficult for (US President Barack) Obama to defend sending any US tax dollars across the Atlantic” to Saab in Sweden, wrote Jonas Fröberg, a commentator for the Svenska Dagbladet daily.

“The question is whether GM money now, in this new situation, will be made available to keep Saab afloat,” he added.

GM’s chairman and chief executive Rick Wagoner was forced out at the request of Obama.

The president on Monday gave the company, which along with competitor Chrysler is requesting an extra $21.6 billion in loans, a 60-day deadline to come up with “more aggressive” restructuring plans.

But he also warned that the two might need to use the bankruptcy process “as a mechanism to help them restructure quickly and emerge stronger,” he said.

GM, which bought 50 percent of Saab in 1990 and acquired the rest 10 years later, said late last year it was looking for a buyer for the Swedish carmaker but has since virtually washed its hands of the unit, calling on Stockholm to step up and rescue it.

The Swedish government however has repeatedly said it “is not prepared to own car factories,” basically leaving it up to Saab’s own management to scramble to find a buyer during a three-month restructuring period that ends in May.

“Saab is a very small part of GM’s many concerns … Saab is at the bottom of the list, including when it comes to how GM will prioritise what needs to be done first,” Mikael Wickelgren, a car industry expert and professor at the University of Skövde in southern Sweden, told AFP.

Swedish media also speculated on Tuesday that the appointment of Fritz Henderson as GM’s new chief executive spelled more bad news for the Swedish unit.

“He is not a Saab fan … That may not have a huge impact now that Saab has already been pushed out into the cold by GM, but it may play a limited role when it comes to deciding if money should be sent to Trollhättan,” Saab’s hub in southwestern Sweden, Fröberg wrote.

Wickelgren however pointed out that Henderson was number two at GM before being promoted to chief, “so I suspect his opinion mattered a lot before as well (and) I have a hard time seeing that it will make much difference to Saab that he is now on top.”

State secretary Jöran Haegglund at the Swedish Enterprise Ministry meanwhile said he believed the tougher conditions facing GM might turn out to be good news for Saab.

“GM has now come under pressure to speed up finding an owner” for Saab, he said in a statement conveyed to AFP through a spokeswoman.

Wickelgren though said Saab’s leadership would probably still be pretty much on its own in finding a buyer, something he said would be difficult but not impossible due to the company’s small size.

While analysts have said expansion-minded Chinese automakers remain too small to purchase Sweden’s Volvo from US giant Ford, Wickelgren conceded that they could conceivably buy Saab, which is four or five times smaller than its compatriot.

“A smaller company is easier to sell, so that is a possibility,” he said.

Media reports on Tuesday meanwhile speculated that the Swedish GM unit might convert into a supplier if it was unable to find a buyer.

Wickelgren however insisted that was far-fetched, pointing out that the industry is already saturated with suppliers that are struggling to stay afloat.

“I have a hard time seeing the logic in that kind of reasoning,” he said.