BEIJING, Aug 22, 2011 (SinoCast Daily Business Beat via COMTEX) -- Sweden's Saab AB, which joined hands with China's Power Diversity Automobile Trade Group Co., Ltd. (shse:601258) and Zhejiang Youngman Lotus Automobile Co., Ltd., is now amongst the shadow of bankruptcy.
In spite of the two China-based companies' investment, the Swedish automaker has entered into the debt collection procedure, since August 17 when it failed to repay the debts owed to two creditors as required. Swedish taxation authorities can suggest the bankruptcy of the Swedish automaker, if the latter could not repay the debts in the period of the procedure.
Power Diversity Automobile Trade Group and Youngman Lotus Automobile has earlier injected up to EUR 58 million into Saab. It was regarded as the preliminary prepayment, and after the injection, the Saab works resumed production at the end of May.
In early July, the three parties signed a final agreement, under which they would set up a joint venture for the production of vehicles under the Saab brand and some self-developed trademarks.
The agreement said that Power Diversity Automobile Trade Group, Saab, and Youngman Lotus Automobile would own a stake of 10, 45, and 45 percent in the venture, respectively.
However, the deal involving Saab has not gained the approval from China's National Development and Reform Commission (NDRC), the nation's macro-economic planning body. Without the approval, Saab cannot get more financial support from China.
Youngman Lotus Automobile will mull an additional investment in Saab so as to help the troubled automaker out of the troubles, said an executive for the Zhejiang-based company last month.
But Power Diversity Automobile Trade Group will not inject additional capital into Saab AB before the NDRC says go-ahead to the proposed joint venture project, stressed Pang Qinghua, chairman for the Tangshan-based company.
Saab will not re-start production until August 29, 20 days after August 9, the day on which it had planned to resume production, disclosed sources.
The ailing automaker, with only a small scale, can hardly make it in the present auto industry which is focusing more on scale, predicted analysts.
In 2006 when Saab saw its zenith, its sales stood at 133,000 vehicles. Last year, the Swedish automaker reaped sales below 32,000 ones.
In addition, Power Diversity Automobile Trade Group and some other distribution groups like China Grand Automotive Services Co., Ltd. made a good performance in May 2011.
These distribution groups even outperformed the producers of Chinese proprietary branded passenger cars in terms of profit. Chinese proprietary branded passenger cars incurred a sales decline of 5.91 percent in May, with a further shrinking market share.