SAAB Australia placed in administration as car industry continues to suffer

The local subsidiary of luxury car company SAAB has been placed in administration, following a tumultuous series of events which include SAAB’s Swedish parent filing for bankruptcy in December 2011.

That bankruptcy has not affected the financial well-being of the local branch, but it has still made an impact – the company confirmed shortly afterwards that local SAAB owners would not have their warranties honoured.

The development is only the latest hiccup in the Australian automotive sector, with a number of parts manufacturers having collapsed in the wake of problems with larger manufacturers.

Ferrier Hodgson administrator Stewart McCallum told SmartCompany yesterday the administration comes as luxury companies continue to struggle in the wake of the global financial crisis.

“It was probably the final straw for SAAB,” he says.

In a statement yesterday Ferrier Hodgson announced Stewart McCallum and Peter McCluskey had been appointed as administrators on January 2.

The collapse will result in six job losses, and the closure of the company’s operations in Port Melbourne, the duo said.

“SAAB drivers can be confident their vehicles will be kept on the road and they should have no problems accessing parts over the short to medium term,” said McCallum.

“Once we have a better understanding of the level of interest in the business we will be in a position to post a longer-term view.”

“With regard to warranties, we are working with the dealers around Australia to minimise any potential impact for SAAB owners.”

The structure of the luxury car company is a complex one. SAAB Cars Australia is a subsidiary of the automobile business in Sweden, which was placed into bankruptcy. It ceased to manufacture new vehicles, although a separate entity, SAAB Automobile Parts AB, is operational and sits outside the bankrupt entity.

SAAB Australia had been in discussions with SAAB Automobile Parts AB in order to buy the business, but those discussions broke down. McCallum says the administrators’ main focus is now ensuring an entity can be set up to distribute SAAB parts for existing customers, whether that is a third party or otherwise.

IBISWorld senior analyst Suzannah Rowley told SmartCompany this morning SAAB was a victim of both a downturn in the luxury market, but also its brand positioning.

“The company was marketed as selling cars with high quality parts, but it also wasn’t in the luxury car market quite enough to raise prices,” she says.

“With regard to the Australian operations closing down, it’s just another reflection of the decline in car manufacturing in Australia.”

In the last year, several car parts manufacturers have collapsed, including Autodom which put 400 jobs at risk. APV Automotive was also placed in administration earlier last year.

The key group representing car parts manufacturers, the Federation of Automotive Products Manufacturers, warned jobs would continue to be lost following layoffs at Ford.