As predicted by many industry analysts, Spyker is going to need a serious infusion of cash if they expect to make their acquisition of Saab a profitable move. In order to gain profitability, the Dutch custom-car builder will have to double Saab”s production, roll out new models, and build a vast network through which to distribute their products; it will not be easy nor will it be cheap.
Currently, with Saab”s $200 million in the bank, a 400 million euro loan, and shares issued to GM, the company claims they can keep operations afloat, but is seeking investors to finance the expansion process so that they may see profitability. CEO Victor Mueller has a stellar reputation when it comes to attracting investors, and has mentioned that he will be seeking to list the shares in Stockholm and London, and delist in Amsterdam.
Many in the industry predict necessary sales of 75,000 cars per year to be cash flow positive, up from 39,903 last year. When one considers the 300 units Spyker sold last year, that is a daunting number. “Competing in this sector requires significant investment at the best of times,” said Stuart Pearson, analyst at Credit Suisse. “It will be very difficult for Saab to get back to previous production and sales levels.”
Key to Saab”s comeback is distribution, as it is well-noted that brands that do not pay enough attention to distribution fail. GM”s current distribution and support network will not be enough, and Saab will have to either sign up with a private distributor which will eat at their margin, or develop their own network, which is a painstakingly long process.
– By: Stephen Calogera
Source: Automotive News (Subscription Required)