Saab output stopped again, to restart Wednesday

Ailing carmaker Saab, which was shut for most of April and May after it ran out of cash, had to halt production again on Tuesday, though the company said it would be up and running the following day.

After a sales shortfall last year, Saab, owned by Dutch group Spyker, only restarted production at its Trollhattan factory on May 27 after a deal with Chinese auto dealer Pangda to buy €30 million worth of Saab cars.

"We will start tomorrow again," said company spokesman Eric Geers. His colleague, Gunilla Gustavs, added that a disruption in the flow of components had affected its just-in-time production system on Tuesday.

Spyker shares fell 10.5 per cent on Tuesday, trading at their lowest level in more than eight months. Spyker is to change its name to Swedish Automobile from June 15.

Spyker CEO Victor Muller told Reuters that he had not heard of any stoppages, but added: "It's possible that not the full capacity is used to make cars. Many suppliers did not make parts during the shutdown, some for almost two months. If you run out of parts it can impact production," Muller added.

Swedish news agency TT quoted the head of the FKG auto suppliers association, Svenake Berglie, as saying that not all suppliers had been paid yet and had not managed to get their own production going again.

The Pangda deal, which allowed Saab to restart production at Trollhattan in late May, is still pending Chinese government approval. Pangda will be able to purchase vehicles from Saab either way but Beijing could prevent Pangda from investing in Spyker and becoming a minority shareholder.

"It's tough for me to predict but I think everybody expects it to come through," Saab President and Chief Operating Officer Tim Colbeck said at a media luncheon in New York.

If it it approved, the Pangda deal could be a midterm solution to Saab's financial woes, Colbeck said. "Midterm" means at least through the end of 2012, he said, adding that Saab's message to dealers right now is to focus on the company's long-term potential.

"If this deal fails, it's on to the next one. There are a lot of people looking to invest in Saab," he said.

There is no timeline for a final decision from the Chinese government on the Pangda deal, he said.

Besides the financial component of the deal, Pangda and Saab aim to set up a manufacturing venture in China within a year and have 50 Saab outlets in China before the end of 2011.

China in 2009 surpassed the United States as the world's largest auto market, but the market remains fragmented. There are currently more than 100 automakers in China and some experts have said the government may block Pangda's investment in Saab on the grounds that it wants to limit its home-grown brands to just a few, which can compete globally.