Hawtai purchase of Saab stake fails

The recent report of the buy-over of Swedish automotive maker Saab Automobile by Chinese auto manufacturer Hawtai Motor Group has hit a snag after it failed to obtain the approval from the relevant authorities. According to an announcement made by the companies, due to the fact that Hawtai was unable to get the necessary approval, the agreement has since been terminated with immediate effect.

The 2 companies however will continue their discussions although it is no longer exclusive on any possible tie up which might be a cooperation deal. It seems that much of the blame has been put on the Chinese government and its strict regulations what with a similar deal involving the Hummer brand also fell through recently.

It would have been a good deal for Saab but it seemed that it has been in talks with other manufacturers from China too which they claimed to be either niche players or the big boys. It would have helped Saab financially as well as to further establish their brand presence in China where the deal if succeeded would have a Euro 30 million loan deal included.

The fall through meant that Saab now has to find other investors where it is rumoured now that Great Wall, another Chinese automaker involved with SUVs is being linked. Saab needs funding to pay its overdue bills as well as to restart their production lines. It was earlier agreed that Hawtai would have a 29.9% stake in Spyker, the owner of the brand with an investment totaling to 120 million Euros. In return, Hawtai would produce the Saab vehicles in China for its market with production expected to start in 2013. The first model to be rolled out would have been the new 9-3 model.

With the latest development in this situation, Saab would now have to find another long-term investor to help it stay afloat amidst the highly competitive market. Saab had recently left the GM stable when it was bought over by Dutch-based company Spyker. But even if they managed to tie up the deal with Great Wall, they might face another problem which is the regulations imposed by the Chinese government.