Two Chinese car companies are about to buy Saab, but that hardly ensures that anyone will purchase cars from the nearly defunct manufacturer.
“Zhejiang Youngman Lotus Automobile and Pang Da Automobile Trade have agreed to pay €100 million, or $140 million, for Saab and its British unit,” reported the New York Times. Chinese regulators could scuttle the buyout, which would push Saab into a liquidation.
It is hard to find Saab’s value. The firm’s plants have been shut off and on since the spring. Saab has only sold 4,612 vehicles in the U.S. through the first three-quarters of the year. September sales were a mere 429. Saab’s dealer network in America likely will have dwindled to a few dozen. It is expensive to maintain showrooms and salesmen for cars that do not exist.
Saab’s new owners may expect that they can sell the company’s products in China. It is the world’s largest car market. However, sales in the People’s Republic are extremely competitive as manufacturers via for portions of the customer base. This is especially important to car companies based outside of China. These have wrestled with weak sales in the U.S., UK, Europe and Japan. Saab has no resources to take business from these much larger companies that have established brands and dealer networks.
Saab may have found a buyer, but it has almost no customers and that is not likely to change.
Douglas A. McIntyre
Top Gaining Stocks
Top Losing Stocks