Spyker Posts Fresh Loss, Trims Saab Target As It Looks for Development Partners

Spyker Cars NV reported further losses on Friday (27 August) and lowered Saab's sales target for the full year, according to a Reuters report. The company, which recently acquired Saab from General Motors (GM), posted a loss of 139.1 million euro (US$177.2 million) on sales of 243.1 million euro. The company did not provide year-earlier comparisons. The money-losing Dutch niche sports-car manufacturer said that the losses would continue into next year. Spyker chief executive officer (CEO) Victor Muller said that the company had sufficient liquidity with net cash of 280 million euro and access to 266 million euro from a European Investment Bank (EIB) loan, which together, Muller said, would carry the company through to its 2012 profitability target. He added that the company would not have to recapitalise despite the continued losses.

The company announced yesterday as part of a regulatory filing that its liabilities outweighed assets (see Netherlands - Sweden: 26 August 2010: Spyker Admits Debts Greater Than Assets), due to an International Financial Reporting Standards requirement to treat the US$326 million of redeemable preference shares issued to GM as part of the Saab acquisition in February 2010 as liabilities instead of equity. Muller said the issue was purely an accounting one, having to do with the way certain items are classified under international rules as opposed to Swedish accounting standards. He also said that Spyker is still pursuing a second share-listing in Stockholm, although it could eventually consider delisting from Amsterdam as well.

Spyker also lowered its near-term sales goal for Saab to 45,000 units this year as the Swedish brand's car sales fell during the reporting period from 24,300 units to 10,500. For 2011 it forecasts sales of 80,000 units and has maintained a long-term goal for sales of 120,000 cars per year. Saab CEO Jan Ake Jonsson had previously stated that Saab could reach a goal of selling 45,000 to 50,000 cars this year. "Maybe we were a little bit optimistic" about the high end of the range, Jonsson told Reuters, adding that Saab's ramp-up out of liquidation took longer than anticipated.

Jonsson added that he is optimistic about the prospects for the newly launched Saab 9-5, which is just being launched in the United States and is trickling through to end customers in Europe. He said that it would take about a month to get a sense of how the car is performing. The company has also announced that it is in talks with three different original equipment manufacturers (OEMs) in order to share the development of new models, which may possibly allow the sharing of platform and powertrain development. The discussions were confirmed last week by Muller. The company hopes that the negotiations will allow Saab to form a meaningful research and development (R&D) partnership with another OEM, which will allow the firm to invest in a new B-segment premium rival for the likes of the BMW Mini and the Audi A2, in the form of an updated version of the 1950s Saab 9-2. The company has also forecast that it will deliver 45,000 cars in 2010, the lower end of a previous forecast range of 45,000–50,000 vehicle sales.

Outlook and Implications

Spyker was loss-making before the audacious takeover of Saab and it should come as no surprise that it remains so to date. The company's plans for the Swedish brand hinge heavily on the success of the new 9-5, and on first evidence the company may have missed the mark somewhat. The model needs to compete with German premium rivals both dynamically and in terms of quality, and first reviews of the model are not glowing with praise as the ride, handling, and fit and finish are enduring some obvious teething issues. The unusual yet attractive styling marks the model as clearly different and has some styling cues taken from previous-generation Saabs. However, it has a huge hill to climb if it is to drag the whole company back to life.

In addition, the fact that it is now entering into negotiations with other OEMs to share R&D of vehicle technology indicates that Spyker's management may have accepted that it has bitten off more that it can chew in attempting to develop a new range of models on its own. It remains to be seen what effect these negotiations will have on earlier reports that Saab intended to develop its own platform technology for the next generation of its 9-3 model range. As important as the new 9-5 is to Saab's plan,s it is the success of the next 9-3 that will ultimately decide the future of the Saab brand. The model sold a peak of 90,000 units in 2007, but its sales have fallen off a cliff as the financial crisis coincided with more modern rivals being launched onto the market, such as the new Mercedes-Benz C-Class and Audi A4. Previous reports indicated that Saab would base the architecture of the next 9-3 on elements of the Delta II platform technology, which forms the basis of the new Opel Astra/Chevrolet Cruze. Either way, readying the new 9-3 by 2012—which is the OEM's supposed launch target date—currently appears highly ambitious (see Sweden: 21 June 2010: Saab Reportedly Underpinning Next 9-3 with Self-Developed Architecture, Signs Up New Designer).