GM have released their third quarter financial results and as predicted, they were pretty bad. We can get to those in a moment.
What about Saab?
The word “Saab” was mentioned once in the entire press release, as follows:
Although the timing of several vehicle programs will be revised, key product and technology programs remain on track. GM has a robust pipeline of competitive new vehicles over the next two years. In GM’s largest markets, U.S., China and Europe, 22 new vehicles will be launched in 2009, and 19 in 2010. In the U.S. alone, GM will launch 15 new vehicles through year-end 2010, 14 of which will be fuel-efficient cars or crossovers, including the Cadillac CTS wagon and SRX crossover, Chevrolet Camaro Coupe and Equinox crossover in 2009, and Saab 9-4x crossover, Chevrolet Cruze small car in 2010. Spending levels for the extended range electric Chevrolet Volt and other fuel-economy improvement initiatives to meet increasingly aggressive global fuel economy standards have been increased.
So what we know for sure is that the 9-4x, which was expected to debut some time in 2009 as a MY2010 vehicle will be seen by the end of 2010. I think it’s fair to say that’s a delay.
GM have already announced that the Ohio plant that makes the 9-7x is to be closed in late December. There is a 2009 9-7x and it has been assumed that enough 2009 model would be produced prior to this closure to carry demand until the release of the 9-4x. With the 9-4x release delayed a year, this is going to leave a hole in the portfolio.
Saab’s other option is the anti-SUV, the 9-3x, however Djup Strupe has mentioned that this is now off the table, a move that a GM rep denied in conversations with a Dutch magazine, but we’ve heard nothing further.
We’ve got nothing official in today’s GM news about delays to any other Saab models.
Leftlane News have reported that the 9-5 has also been delayed and it may or may not be the case, but it hasn’t been announced by GM. Included in the GM release was this news, which may or may not include Saab:
GM is reducing its capital spending for the calendar year 2009 from approximately $7.2 billion to $4.8 billion. The reductions will be achieved by retiming select vehicle programs in North America and Europe by three to 12 months, and deferring capacity expansion projects. Every automaker is having to adjust portfolios and spending plans to some degree, due to the rapidly changing business conditions and increasing challenging regulatory requirements. Lengthening product lifecycles is a common response to these pressures.
LLN are taking the practical line based on previous inside info that was first published here at TS about the 9-5 delays. I can confirm the validity of the source of that story, so whilst GM might like to leave the 9-5 shrouded in mystery, I can tell you that our source has put it back a matter of months.
I’ve written to Saab guys in Sweden and the US this morning to see if there’s anything more they can tell us about today’s news announcements from a Saab perspective. I’ll let you know if there’s anything from them as soon as it comes in.
I can also tell you that I’ve heard nothing further from Djup Strupe about all this.
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GM have also fired a shot across the US government’s bow with the following:
Even if GM implements the planned operating actions that are substantially within its control, GM’s estimated liquidity during the remainder of 2008 will approach the minimum amount necessary to operate its business. Looking into the first two quarters of 2009, even with its planned actions, the company’s estimated liquidity will fall significantly short of that amount unless economic and automotive industry conditions significantly improve, it receives substantial proceeds from asset sales, takes more aggressive working capital initiatives, gains access to capital markets and other private sources of funding, receives government funding under one or more current or future programs, or some combination of the foregoing.
i.e. where bankruptcy was previously considered to be “not an option”, it’s now a distinct possibility without near term help:
GM has taken a host of aggressive “self help” actions to improve its business, but additional support from the U.S. government to aid the auto industry during this industry downturn is essential. The company has engaged in discussions with various U.S. federal government agencies and Congressional leaders about the important role that the domestic automotive industry plays in the U.S. economy, and the need for immediate government funding support given the economic and credit crisis and its impact on the industry, including consumers, dealers, suppliers and manufacturers. Many in the government have acknowledged the important role of the industry in the national economy and the discussions are ongoing; and at this point, their outcome cannot be predicated with certainty.
You may have already heard that the US government approved $25billion in low-interest loans to the Automotive industry in the US. That initial funding won’t help here.
a) it was tied to efforts the carmakers must make for more fuel efficient vehicles.
b) they’ve had to introduce some new measures to speed up the funding – and it still might take six months to materialise.
GM need lunch money just after Christmas, not luxury money in a year.
Consequently, the big automakers have already headed to Washington, with Automotive News reporting as follows:
The CEOs of General Motors, Ford Motor Co. and Chrysler LLC met behind closed doors today with Congressional leaders to make personal appeals.
Aides who helped plan the meetings described a two-part request: An infusion of an unspecified amount of money from the Treasury or the Federal Reserve to get through, or “bridge,” the current economic crisis and $25 billion in new low-interest loans to fund retiree health-care benefits…..
…..Pelosi, D-Calif., and Reid, D-Nev., both issued prepared statements that failed to indicate the prospects for the requests.
Bottom line: GM need cash and they need it now. Without it, they’ll be approaching minimum operating cash this year and will fall under that amount in 2009, and that’s despite the “self-help” measures announced today.
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Nowhere does the GM press release state the 9-4X has been put off until end of 2010. It just states in 2010, which could mean a MY10, e.g. we could see the vehicle next spring/summer.
Nothing definitive about the new 9-5 either. Let’s hope the car has advanced so far in development it will not take much to finish it off.
I think we absolutely need a Djup Strupe to kindly e-mail Swade and clear a few things up.
That’s a very optomistic line, Kroum.
A 2010 release would at best be a MY2010.5 car. Best guesses would put it as a MY2011 release that would occur mid-to-late 2010.
One thing’s for sure: we’re not likely to get the date pinned down any further than what they’ve already offered, which isn’t going to help customers make decisions about vehicle purchases.
Swade, go to bed………nothing will change in hours, jejejeje
cheers
Barack Obama is about to give some sort of press briefing in Chicago at 14.30 PM EST (about 10 min from now – check BBC). The topics seems to be the US economy. Guess he has to say something about the state of the US carmakers.
I’ll post this again from another thread:
Let the american car companies fall on their @sses. Seriously. For years they have done exactly (what Alex stated above). The Volt should have come out 5 years ago. Shame on them for not developing new, better technologies.
Business 101 people. Capitalism at it’s finest. If your product isn’t good, your business goes under. Why should the government bail everyone out? Either run with the big boys our get out of the way.
Let them fail.
Kroum & Swade,
In the press release line: “In the U.S. alone, GM will launch 15 new vehicles through year-end 2010, 14 of which will be fuel-efficient cars or crossovers, including the Cadillac CTS wagon and SRX crossover, Chevrolet Camaro Coupe and Equinox crossover in 2009, and Saab 9-4x crossover, Chevrolet Cruze small car in 2010.”
I only see reference to “U.S. alone” and not globally. Now I’m sure they meant to say “North America” when they say “U.S.”. But what this line tells me is while the 9-4X may be slated for showroom debut anytime within the 2010 calendar year, it DOESN’T implicitly say the 9-4X will also be launched in 2010 globally. Turn that around ….. it doesn’t say the 9-4X will be delayed in its launch outside of US/North America.
I just wanted to point that out.
Waiting for Djup Strupe to surface.
I just got off the phone with Jan-Willem Vester from SaabUSA, who was guarded in his responses (to say the least). When I asked if the 9-4x was being delayed, his initial response was to the effect of “not necessarily”. When I pressed him on the logic of a car expected for release some time in 2009 now being slated for some time in 2010, we got down to the conclusion that yes, it would appear some time between January and December.
They’re giving away absolutely nothing that wasn’t covered in the release. Understandable, I guess, but I wish there was something more specific that could be passed along to Saab owners and potential owners.
I dont know if you saw Mr. Obama’s press confrence on the economy over on the other side of the globe, but according to what I heard… the automotive industry WILL get money if not from Bush beforehand than Obama seemed pretty confident that his stimulus package and economic plans would go ineffect within 100 days of taking office.
Swade,
Thanks for spending so much effort to cover todays news. I agree with SaabKen that the press material could be interpreted in different ways. For myself, I can’t really believe that a car like the 9-4X that has been developed on a global platform, shown as an almost production ready concept, and then tested out in the open for months would be delayed at this late stage. What do they actually gain by that? The car would sell in Europe.
It will be interesting to see if the first 9-5 teaser pics are still on for December. The 9-5 is desperately needed in Europe.
That’s true, for this reason I put the whole message, I need to read that statement many times, and everytime I read it I consider a new conclusion.
There is another thing to think about. Its the difference in lead time about launch between Europe and USA and different regions. Usually in USA there is a delay compared to europe.
regards
ctm, you’re welcome. I set my alarm for 5am but woke up at 4.30am all by myself. The body clock does amazing things.
About the 9-4x. The key thing to remember here is that GM are deperately, desparately short of cash. Talk of funds coming in within 100 days of Obama’s inauguration etc, may literally be too late. They’re down to 16b in reserves and need 14b of that a month for normal operating expenses, and they’re running on much lower revenues. They’ve said themselves that they may be in danger of running low on operational cash by the end of this year.
Add to that the fact that Volt and other vehicles are non-negotiables for GM. They see these as essential. Saab – not so. If they’re trimming even the very smallest pieces of fat at the moment, Saab will most likely be considered one of those.
For that reason, I think they’ll delay the 9-5 as little as possible and the 9-4x to a reasonable degree.
This is going to get rough. Unless GM declares bankruptcy, all the money in the world from the government isn’t going to help them. They will just burn through it.
It has to be done, so they can cut out GMC, Pontiac, Hummer (sad), at least. I could see a case for Chevrolet, Buick, Saturn, Saab and Cadillac. But…if they have the chance, I see Saturn disappearing. And if GM cuts out all those “volume” historic brands…I really don’t see Saab lasting, at least not in the NA market.
They have to get out of all the contracts from these unions.
Sigh.
It would be interesting to see what delays are being suggested for Opel/Vauxhall models. This would relate more closely to the new Saab 9-5 and 9-3 replacement. It has to be remembered that GM Europe is relatively profitable compared to GM America. Perhaps as some have suggested, the degree of separation between the two entities needs to be markedly increased?
Swade and Drew: I have just noticed that us “Aussies” can access the SaabHistory site again.
Maybe he got the message I sent. Anyway it’s interesting as he is quoting Eric Geers as saying the 9-3 crossover is still on target.
CTM and Eduard,
CTM said:
“For myself, I can’t really believe that a car like the 9-4X that has been developed on a global platform, shown as an almost production ready concept, and then tested out in the open for months would be delayed at this late stage. What do they actually gain by that? The car would sell in Europe.”
Eduard said: “There is another thing to think about. Its the difference in lead time about launch between Europe and USA and different regions. Usually in USA there is a delay compared to europe.”
Agree. I won’t be surprised if 9-4X bows in Europe in ’09, and in North America and other global markets in Q1 of 2010.
Now what it would happen is a bigger and faster consolidation of the industry, from the suppliers to the manufactures, including the distributors.
But this is going to happen in general in many sectors, now everybody take care that the “capital” as many other resources are limited, and the only way to go is to increase productivity and efficiency.
cheers
You also have to remember that there is probably politics involved as well. If you are going to negotiate with the state, wouldn’t you want to tune the information you reveal to support your case in the best possible way?
Sooner or later, the car market will pick up speed. All cars will need to be replaced sooner or later. I don’t think it will stay as low as -50% for very long. During the winter of 1920/1921 Ford forced it’s dealers to buy cars and parts they didn’t order if they wanted to keep the franchise, maybe the same will happen again?
Also note that the Swedish goverment has and probably will continue to support Volvo and Saab if at all possible. If one of them falls over the unemployment rate in the western part of Sweden is likely to triple.
That said, of course the situation is very serious.
The 9-4X will be old-hat by the time IF IT EVER hits the market in two years time or whenever GM decides. The 9-4X is ready now so why on earth would GM hold off of releasing it? My guess? GM is washing its hands of Saab.
Well, I think we’re just starting to see what’s under the top of the ice berg. GM hasn’t treated SAAB very well over the years, and now with a sinking GM and financial crizes all over the globe I am afraid that SAAB soon will be history. What ‘s in SAAB’s pipeline as we speak? Yes, a SUV and a 9-5 in the luxury segment. No one wants cars like that anymore! Let’s be realistic. Even the Americans have finally slowly started to realize that heavy trucks and expensive cars are out of fashion, or reach.
I am a dedicated SAAB enthusiast, but I realize that this is really bad times for our beloved Swedish brand. I have one hope though: SAAB is one of the worlds smallest car producers, and because of that they might be somewhat easy to sell. The SAAB brand has after all still a high value in the automotive world, and that is not thanks to the American owner GM.
As mentioned above GM doesn’t care about SAAB anymore, let’s face it, and now they have no more dollars left to support SAAB. But still GM is focused to launch the Camaro and SAAB’s 9-4X sistership from Cadillac, both politically incorrect cars for Americans only (Europeans won’t have them)……. GM doesn’t have a clue about how to do things correctly both politically and globally.
GM is totally out of focus like the rest of the US car makers, especially seen with european eyes. What have GM done to strengthen SAAB? The ‘making’ of SAAB 9-2X and 9-7X is a real joke and a clear symbol about how serious GM’s strategy has been about the swedish car maker. Not to mention the Cadillac BuLlShit……. GM has been insulting SAAB since they for some strange reasons bought SAAB nearly ten years ago. It’s not enough with just coming up with some fancy concept cars from time to time.
Let’s pray that SAAB will survive this storm, and if they do they will survive anything in the future. But as mentioned, I am afraid that this is the end of one of the greatest carmakers on earth.
I asked my wife previously about what car to choose next time if SAAB disappears. She wasn’t surprised about the question because here in Scandinavia rumours now are hot about the death of both SAAB and Volvo. When we bought our 2005 9-5 Vector Sportwagon brand new I have to admit I did that because I feared it would be the last chance to get one of the latest ‘original’ SAABs. We both really love our SAAB, the fifth in row. Actually, our family is flooded with SAABs and everyone loves them!
I think I’m gonna keep that extremely nice 9-5 for the rest of my life, as a memory of one of the worlds greatest carmakers. And, I am actually as we speak also in negotiations about a SAAB 900 Aero from around 1990. I must have that as well in the garage before SAAB disappear…….
Have a nice weekend all!
Rgds
-Olav-
Always choosing the longest way home when driving my SAAB.
This is distressing, but I suppose that GM could rebound in better shape. I’m not sure about the logic of delaying models — I’m not 100% sure what you gain in the short term that would make it better than moving forward. There are some costs, but in the scheme of things, not huge costs.
Ken, it makes no sense to launch the 9-4X in Europe first as it will be manufactured in Mexico. Unless I am missing some part of the big picture, like a favourable exchange rate or tougher government standards on emissions et al. I still believe it is highly plausible we see the 9-4X in showrooms next summer/fall as a 2010 model.
Kroum,
I guess the favorable exchange rate is one of the main reasons for building it in Mexico. The plant is already there. It will build the 9-4X’s sibbling next year. Shared parts are already ordered. How much would it really cost then to also build the 9-4X?
Also, do not forget the big picture. I know that there is an economic crises. But people are still buying cars. In Western Europe alone, 1,2 million cars were sold in September. That’s 9% less than a year ago, but till over 1,2 million cars. Why should not Saab with a modern lineup be able to account for only 1% of that? Also, 2006 and 2007 were record years. Sales figures so far are in line with 2005 and higher than those of 2003. For companies that bring smart products to the market, there are still ample opportunities.
“Auch die Konzernmarke Saab, die in Europa und den USA verkauft wird, steht bei GM zur Disposition.”
seen at financial times germany: http://www.ftd.de/unternehmen/autoindustrie/:US-Autoindustrie-GM-will-Chrysler-rasch-schlucken/428031.html from
GM is thinking again of selling saab
damn for the delay of 9-4x
this was my planned next saab
I think the governments should stay away from the car manufacturers. If they are not able to operate in a sound way, they need to go bancrupt. It’s of course pity, but that’s how the reality is for all businesses. Except financial institutions.
Yes, jobs will be lost and a lot of despair. But on the other hand, there is always a demand for cars. The surviving brands will most likely be able to expand in US, with a lot of new jobs to be found.
I think many of these reports about a possible sale of Saab origins from Swedish “auto industry expert” Matts Carlsson at something called GMI (Göteborg Management Institute). For the last five years or so, he has regularly (seems like every six months to me) predicted the immediate sale of Saab and/or Volvo to some Chinese car makers. For some reason, the main stream media alway quote him. Looking closer to what his “expert” opinion actually consists of, one can see lots of similarities to that of a cold reading. They are often very vague, with open ended statements that holds true no matter what happens. He also know that like most other expert opinions about the future, hardly no one will ever go back to check if there were any substance in them at all.
I think the sale of Saab is unlikely. The reason is money. Frankly, what would Saab be worth on the market? No Asian car maker has any interest at all in a small plant located in Trollhättan of all places. The sales volume of Saab would hardly show a dent in the overall figures for them. The only way would be to start all over again by putting the Saab logo on some Chinese cars headed for Europe. But by doing that, the sales figures in Europe would fall to zero and it would all be wasted money. And Saabs presence in the rest of the world is so small that it doesn’t make sense to do it anywhere else. For GM, Saab has cost a load of money. But after all the down-sizing and cost cutting, they are now on the brink of break-even. The value of just holding on to the brand for future use is much higher than what a sale would generate. Saab work force only count for less than 10% of GM Europe and less than 2% of GM globally. It’s nothing, and the only thing it would generate is unwanted attention from the media and badwill.
Now I start to realize that Saab may be doomed. But I believe that Opel can be Saab’s salvation. Can the US afford GM going bankrupt? I think not. GM will be saved by the US government, but the conditions will be that GM sells Opel and Saab. Maybe European investors will buy Opel and get Saab as a bonus. Then, if we are lucky, Saab can survive as Opel’s premium car.
ctm said (quote):
I think the sale of Saab is unlikely. The reason is money. Frankly, what would Saab be worth on the market? No Asian car maker has any interest at all in a small plant located in Trollhättan of all places.
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Why not? Don’t forget that Sweden is close to the european markets, and the Russian and the Eastern European markets. The eastern markets are ‘new’ markets, and especially the Russian market is h u g e, and it is now growing pretty fast.
Besides; I think SAAB will lose some of it’s important value or identity if they’re not Made In Sweden. Designed In Sweden and Made In China (or USA for that sake) isn’t what will help SAAB. It’s not that important though where the money comes from (but I guess we’ve been through that discussion
)