Usually there's a lull in auto news at this time of year, but Saab is bucking the trend with plenty of high-stakes drama. New reports indicate that the Swedish government is about to seize Saab's assets, customers are fleeing the brand, and curiously, the CEO of Saab's parent company has landed a raise.
A couple of years ago, Saab was at a standstill. It had never turned a profit for then-owner General Motors, and in the face of the Great Recession, GM was trying hard to sell it off. After several potential deals collapsed and GM threatened to shutter the brand, a buyer was finally found in early 2010 -- Spyker, now called Swedish Automobile (despite being based in the Netherlands). But by that time, Saab had few products in development, meaning that it would take some time for the automaker to pick up speed again.
During this extended period of slowdown and reinvention, Saab had to borrow huge sums of money to stay afloat. Paying that money back has been a problem because (a) the company hasn't had many new models to entice shoppers, and (b) even the shoppers who've been interested in Saab have been wary of its instability. Times have been so tough that Saab workers recently went two months without paychecks, and production ground to a halt last spring because suppliers wouldn't give the company any more parts on credit.
Saab's debt problems have forced the Swedish government to step in. The country's Debt Enforcement Agency has contacted the company's banks and is now preparing to seize Saab's assets to pay back 4,000,000 Swedish kronor ($625,000) that the company owes to suppliers. Another 5,100,000 ($794,400) is due next week. Saab won't say how much the company owes in total -- possibly because the people in charge don't know.
That, in turn, may explain why Swedish Automobile's chairman, Hans Hugenholtz, recently received a raise of 464,000 kronor ($58,000). Granted, that's not huge dough compared to other CEOs, but the pay-jump seems pretty indefensible in the face of Saab's overwhelming debt.
If Saab were doing well in showrooms, the story might be different, but according to a report on Bloomberg, Saab customers -- once some of the most loyal on the planet -- are leaving the brand in droves.
Worse still: the company has pulled out of next month's 2011 Frankfurt Motor Show. Perhaps it's wise for Saab to avoid the spotlight and the scrutiny of the press, but the company's withdrawal also means no flash, no reveals, no new models, and no way of building excitement among its shrinking and increasingly dubious fan base.
We wish we had better news to report, but the situation looks pretty grim. For more background on Saab's bankruptcy fiasco, click here.