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Saab struggles for survival

Date: 24 June 2011

Saab could be on the brink of collapse after admitting it does not have sufficient funds to pay its 3800 employees' wages.

The carmaker's owner Swedish Automobile is trying to finalise a deal with two potential Chinese partners, Zhejian Youngman Lotus Automobile and Pang Da Automobile, to secure short term investment of £218m to keep the business afloat.

Saab has already suspended production at its factory in Sweden because it could not pay its suppliers.

The company said in a statement that it was also trying to raise money through the sale and leaseback of real estate.

Swedish Automobile, formerly the Dutch-owned company Spyker Cars, bought Saab from General Motors last year with a £356m loan from the European Investment Bank but has struggled to breath new life into the brand, which sold just 30,000 cars in 2010, just a quarter of the number analysts reckon it needs to break even.

With long replacement cycles for its two models, the 9-3 and 9-5, Saab has lagged behind its rivals in the prestige sector.

Fellow Swedish brand Volvo, which was formerly owned by Ford, has already been snapped up by a Chinese carmaker, Geely.

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