Analysts say that Youngman China may not be able to save Saab

Article by Christian A., on June 15, 2011

Analysts are saying that Spyker Cars NV's agreement to sell its 29.9 percent share of Saab to Zhejiang Youngman Lotus Automobile Co. may not be able to help the automaker recover.

The analysts, which are from Synovate Motoresearch, Autoforesight Shanghai Co. and IHS Automotive, stated that Youngman may be too small for an automaker in China to obtain approvals from government regarding the production of vehicles in the largest car market in the world.

They added that there is a high probability that China's focus on the consolidation of the automotive industry may scrap the deal. Spyker is working on securing long-term financing for Saab after the automaker halted production for several weeks in April and May due to disputes on payment with parts suppliers. Spyker stated on Tuesday that it will sell its stock in Saab to Jinhua-based Youngman for 136 million euros ($197 million).

In addition, Pangda Automobile Trade Co. will pay 109 million euros for a 24 percent stake based on a deal last May to invest in Saab. Lin Huai Bin, an analyst at IHS Automotive, stated that he has the impression that Saab is scurrying to find any Chinese partner now.

He added that Saab needs to find a sizable company with good profit as well as government connections if ever it wants to succeed in China.

According to Lin, Youngman may find it hard to persuade the Chinese government to approve a manufacturing venture, considering the company's size as well as the country's cautiousness to have further capacity expansion in the vehicle industry.

Topics: saab, china

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