killed Saab Automobile? - Business School - University of Edinburgh

this revival plan and did not propose an alternative. It thus appears somewhat naive of Spyker to
assume that Saab could be developed and sustained on the basis of a plan that others had considered
and rejected.
Production restarted under Spyker, but the necessary sales failed to materialize and Saab quickly
burned through its cash until it could not pay its suppliers or even its staff. By September 2011, shortterm
liabilities mounted to 6.94bn SEK (€775m), compared to liquid assets of 40m SEK (€4.47m). We
estimate debt to suppliers to have been €260m at this point lxxi .
The launch of the new 9-5 in 2010 had offered real hope for Saab, but there was a very small window
during which sales had to take off and economic levels of production be achieved before the cash ran
out. The new 9-5’s poor sales were partially driven by the global financial crisis, and were not helped by
uncertainty over the company’s future, which sparked concerns over residual values and future
servicing and support of Saab cars.
Muller's plans, such as they were, also contained a number of contradictions. lxxii On one hand, he
declared his aim to be to restore the company’s fortunes by making 'Saabs feel like Saabs again', yet
all he had were three models developed by GM: the 9-3 (7 years old), the new 9-5, and the 9-4 (to be
launched in 2011 and produced by GM in Mexico). It would have taken another full development cycle
of 5-7 years to have 'all-new Saabs' to sell. Given this, was there any real chance of sales of current
models picking up far enough and fast enough to fund future developments?
Could China have saved Saab?
With the recent growth in BRIC (Brazil, Russia, India, China) countries, many firms in these emerging
countries have rapidly developed by exploiting growing local demand. It is not surprising that BRIC
firms have developed global aspirations: Tata's US$ 2.3 billion acquisition in 2008 of Jaguar Land
Rover is a good example, as is Shanghai Automotive Industry Corporations (SAIC)'s bid for Rover in
2004.
In the case of China, many Chinese firms are growing on the back of soaring domestic sales, but are
eager to develop or acquire technology and brands. Buying stakes in ailing Western firms appears a
quick and easy way to achieve this, but also brings several challenges for Chinese acquirers.
Acquisitions, especially in the auto industry, are subject to China’s wider economic policy. Since the
mid 1990s the China has been attempting to rationalize its fragmented automotive industry into a
handful of champions and develop it as a ‘pillar industry’ of the economy. This has implications for
Chinese auto firms wishing to engage with non-Chinese ones. China’s Central Government implements
its automotive policy through the National Development and Reform Commission (NDRC), whose
approval is required for any merger or takeover.
The reasons for choosing the auto industry as a pillar industry are not difficult to see. An automobile is
composed of more than 10,000 parts and components; the automotive industry is related to many other
industries such as metallurgy, petroleum, chemistry, coal, light industry, electronics, and textiles, and it
was reasoned that the development of an automotive industry would encourage Chinese enterprises in
many sectors to specialise and better co-ordinate their efforts lxxiii .
Initially China’s approach was to attract foreign vehicle manufacturers to establish a local production
base in China, under the condition of forming a joint venture with a local state-owned enterprise (SoE).
This policy saw a raid growth in production capacity, and local sourcing, but it did not produce the
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