Confidence in Saab the key to profits: Spyker CEO
AMSTERDAM (Reuters) - Loss-making Swedish auto maker Saab will return to profit in the "foreseeable" future, the chief executive of its buyer Spyker Cars SPYKR.AS said, and the key will be to restore confidence in the distinctive and quirky brand.
The Dutch luxury carmaker, which produces several dozen handmade sports cars a year, clinched an audacious deal to buy Saab from General Motors GM.UL this week, rescuing the brand from looming oblivion. But skeptics have said it faces many challenges -- ranging from outdated designs, to high labor costs -- in resurrecting the firm.
"It's all about the restoration of the confidence in the company. Customers have been very reluctant to buy because of the uncertainty surrounding the brand," Spyker Cars Chief Executive Victor Muller told Reuters in an interview on Friday.
The number of Saabs sold last year slumped to 39,903 from 94,751 in 2008. Muller blames this on customers' inability to get finance, so finding ways to provide financing will be an important step to boost sales.
Much will also hinge on the development of the new generation Saab 9-5 and the 9-3, and Muller has stressed the new combined company will have enough capital to fund the development, adding that the business plan has taken into account the possibility of a slow economic recovery.
"Saab has to do nothing but regain its existing and old customers because that in itself would be in enough to create a very strong business model," Muller said.
While outlining his business vision, Muller also dismissed investor criticism over the fact he would soon hold more than a 30 percent stake in the new combined company, obligating him under Dutch law to make a full public offer for the firm.
"There is a 30-day grace period if you're over 30 percent, and the period only starts to run once the deal is done," Muller said. "So it is just way too early to say anything sensible about that."
Dutch investors group VEB has criticized the secrecy around the financing and structure of the deal to buy Saab, with Muller buying out the 29 percent stake in Spyker Cars held by Convers Group, a Russian bank controlled by the Antonov family.
Muller also financed the deal via a newly-established investment company, but has declined to reveal who his backers are, telling Reuters he has signed a confidentiality agreement.
And although he did not indicate he would make a public offer for the company, Muller said his options include selling shares in the market, selling shares to an investor, or making a public offer for the company.
But he added any public offer would be made against the average price of Spyker shares over the past year and that investors would be unlikely to offer their shares at that price given that the offer price would be below the current market price.
As hopes of a deal between Spyker Cars and Saab rose in recent weeks, Spyker shares have risen 70 percent since January 1, hitting a peak of 6.8 euros on Wednesday a day after the deal was announced. They have since fallen back to 3.60 euros.
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