Doubts over niche player Spyker's ability to save Saab

Fiat chief executive Sergio Marchionne is one automotive industry executive sceptical about the ability of Dutch niche player Spyker Cars NV to turn around the fortunes of Sweden's Saab.

Spyker this week bought Saab from owner General Motors for US$74 million ($104.6 million) - US$50 million due by February 15 and the rest by July 15 - as well as US$326 million of preferred shares in the merged company. Spyker has a market value of less than US$85 million.

Hours before the deal was signed, Marchionne told an automotive industry event in Stockholm that being a profitable niche player was extremely difficult.

"Marginal players will continue to be marginalised," he said. "We cannot build on hopes and dreams." Doubts about whether the new company, Saab Spyker Automobiles, can survive centre around the fact that neither company is profitable, and around Spyker's tiny size - the Dutch carmaker employs about 100 people while Saab has about 3400.

Nick Margetts, a Germany-based analyst at Jato Dynamics, said: "It would be nice to see it survive, but it would be a first for a brand of Saab's size to go in the hands of a company that is not a major player."

Margetts said Saab could be too big for Spyker, which makes about 40 hand-made $500,000 supercars a year.

"Spyker knows about cars but they play in a different league," he said.

Since Spyker was resurrected in 2000, it has not made a profit. It lost 8.7 million in the first six months of last year and its sales fell by 1.6 million to 4.1 million compared with the year before.

Saab has lost money for GM over the past decade. It lost 400 million last year on sales of 1 billion, Spyker said. Saab's new-car sales fell to 39,903 cars from 94,751 in 2008 and production dropped to 20,791 cars from 89,086.

The Swedish Government has agreed to guarantee a European Investment Bank loan valued at US$563.5 million ($796 million).

Spyker also took out a backup facility of 150 million with the GEM Global Yield Fund, part of Global Emerging Markets, a US$3.4 billion alternative investment group.

Spyker chief executive Victor Muller said the company "absolutely" had the financing to bridge a three-year development cycle for new Saab models. Muller, a 50-year-old lawyer and former fashion executive who engineered Spyker's relaunch at the 2000 British motor show, and whose company motto is "nulla tenaci invia est via - for the tenacious no road is impassable", said Spyker would give Saab the financial backing required to compete as a competitive global brand.

John Smith, GM vice-president for corporate planning and alliances, said GM would continue to support the new Saab-Spyker company, building the brand's new 9-4X crossover in Mexico and providing powertrains and engineering expertise.

Saab will bring Spyker a strong, global distribution network with 1100 dealers, state-of-the-art production facilities, a skilled work-force and solid engineering, sourcing and research and development capabilities.

Spyker was founded as a builder of horse-drawn coaches in 1875. In 1903, the company created the world's first car with a six-cylinder engine, which also had permanent all-wheel drive, a second world-first.

After World War I, Spyker ran short of money and went out of business in 1925.

Muller relaunched Spyker at the British motor show in 2000 after teaming up with car designer Maarten de Bruin.

De Bruin had built his own dream car, a two-seat coupe which he called the Sylvestris, in the garage of his home in the village of Gorsel, 100km east of Amsterdam.

The Sylvestris forms the basis of today's Spyker cars, the C8 Laviolette Coupe and the C8 Aileron Coupe, which both have Audi V8 engines.

- additional reporting: agencies