Since the gauntlet has finally been thrown down, I’ve let myself think about the possibilities for Saab if GM does, indeed, sell or spin off our favorite automaker. I still think it’s a big if. As I and others have said, GM seems to want Saab and Saab is pretty well integrated with other GM organizations with both product and organizational ties. It will pretty tough to separate them.
After all, the 9-3 shares parts with Opels and Vauxhalls, while the 9-4x will have a number of GM brethren. The new 9-5? Who knows, but at one point, it seemed so tied in with Opel that the Russelheim union reps claimed it for their own! Ditto the North American distribution and service model — all GM. (I know that some of you will say that there are plenty of independent dealers left. However, they order everything from GM. Period.)
With that being the case, I think that it really only makes sense for a prospective buyer to assume only partial ownership of Saab for the short run. After all, to pull anything off successfully, the new ownership absolutely must have GM’s cooperation for a long time to come. If I were an investor looking at Saab, I certainly would want GM’s help. What better way to make that happen than to keep some of GM’s skin in game?
Secondly, any new owner of Saab will need some of the government assistance from Sweden and maybe a helping of the government assistance from the United States through the GM connection to get things up and going. Therefore, the prospective buyer will have a stake in keeping a great portion of Saab’s operations in Sweden.
Finally, we all know that Saab, at 125,000 units per year, will have a very difficult time competing with larger volume OEMs with their greater buying power and greater marketing footprint unless they are joined with another automaker.
All of this adds up to something that really only comes into focus when you realize the Ford is in the same straits, albeit less dire.
Any entity that buys Volvo should surely also buy a controlling stake in Saab and merge the two into one.
Let that one sink in for a while.
Saavo? Volaab?
This is not just idle banter. Think about it — Volvo moves about 400,000 units each year. The combined company would move more than a half a million and wouldn’t have excessive product overlap. The synergies would be significant — Saab would gain some of the operations support that it would otherwise get from GM since Volvo is more autonomous and has presumably retained those resources. Volvo would gain access to a pipeline of new products that they will need in the near future. The overlap that exists could be jettisoned. The ultimate buyer would reap the Swedish government support for both companies and yet could choose the choicest portions of both organizations to save. To top that all off, the buying company wouldn’t even have to buy all of Saab, just enough to give GM a little shot in the arm in the present.
The synergies don’t stop there. Travel costs would be slashed for many, and with only one owner to answer to, both companies would be working together to develop suppliers and to use manufacturing space. Ditto labor agreements, transportation costs, etc.
And, then, there’s the really big deal. The one that clinches it for me. Every Volvo dealer will automatically become a Saab dealer. And vice versa. Naturally, the total would have to be whittled down to about one-third less than the current number of dealers, but there are huge benefits to the Swedish car buyer in terms of dealer access and dealer support. The two automakers have always skewed to the same demographic here in the US, so I believe that their level of service would be similar to Saab or perhaps better.
It would work on a purely business level. It would really work. I’m not sure that I want things to go that direction, but it’s got possibilities.
That makes this thing all the more prophetic, doesn’t it?
Merging Saab and Volvo has been looked at many times in the past, and sure the economies of scale would add up, but the fear has always been that Saabs would merely end up as re-badged Volvos.
Creating Volvo-Saab would likely require a staged separation of Volvo from Ford at the same time as a similar thing was happening with Saab and GM. It would probably be around five years before Volvo-Saab could present something close to being an independent product that wasn’t reliant on Ford or GM.
Ford is asking an inflated $6 billion for Volvo and I’m guessing that Saab would be worth about $1 billion? That’s $7 billion to create a new Swedish car company. I’m not sure anyone other than the Chinese would be capable or willing to do that at the moment. It’s probably too much for the Wallenbergs to consider even though it’s said they’ve considered it in the past. Still the idea has some merit. We can only wait and see….
I thought we referred to that other Swedish car company as ovloV around here. How times have changed huh?
I cant see any synergies from combining ovloV and Saab, personally. People keep mentioning Porsche and BMW. Porsche, well they are big shareholders in VW who have Audi – case closed! BMW, whats in it for them? I personally think Fiat or PSA would be a good mix for Saab as neither of these companies have anything that is, well, Saablike.
I reckon Renault will buy ovloV if the price is right!
my 2c worth
PS I think we should petition Saab until the show us the new 9-5!! I SO wanna see the car but have this awful feeling I/we never will!!
PSS Can we please have a ban on the word `Chinese` here at TS!?
PSSS Does anyone else here think Ford is bonkers for wanting to sell ovloV? I think they are nuts!!
Dont’t worry zippy, the Ch****e (SAIC or Dongfeng) are more likely to buy Volvo than Saab, but they are really waiting for one of the big 3 to collapse so they can buy on of them.
Anyway I’ll have a look in the crystal ball…. It’s cloudy… Just a moment, here it is “ 2011 Saab 9-3 Hatch Shaolin edition just released. Built on the (newly exhumed) Rover 600 platform and featuring a new turbocharged version of the Rover K series engine. Perfect for carrying your Butterfly knives, Bamboo rods and other martial arts equipment to and from training.”
Sorry just kidding!!!
We recently test-drove Saab & Volvo back to back and concluded:
Volvo: Cyldesdale
Saab: Thoroughbred
There are some great thoughts here Eggs and I really like how this could work at dealer level. One problem is that the cars are very similar when you compare them to the wider market. But perhaps thats a strength in that a really consistent group of customers can be focussed on.
The 500,000 cars/annum is a VERY good place to work from with lots of efficiencies to be found. And after all, Gothenburg is just down the road from Trollhattan. They probably already share suppliers.
I’d buy an Audi long before a Volvo. My thoughts go to Trollhatten ( the city. ) All new models are buildt elseshere ( yes, I know about the new 9-3 ). What about the new Opel Astra ? Made in Trollhatten ? Someone has to say something real about Saab. It’s just news from the tabloid, and we all know how close to the the truth they are. Give is some facts, give us a new modell , give us hope. Please make my Saab feel ok .
Best regards from someone in the country that just made the stupid mistake of chosing the JSF before the JAS.
1+1 is not always 2. No way all customers would continue buying the brands (Volvo or Saab) if they merged. They go after the exact same segment. In Sweden, the whole notion of them is competition. Saab is an easy stake to take, Yes, it is smaller but it is also extremely lean and effective. Volvo is no. Plants all around Sweden and generally a complicated structure of the operations. A new buyer would want to close plants and save costs, and that would be such a huge bad-will that it’s not worth buying the brand in the first place. So Saab should actually stay away from Volvo and I’m pretty sure no owner see both of them together as a good deal.
I agree with some of the comments above, especially the Clydesdale/Thoroughbred comment.
I still think that the Volvo buyer would be nuts to ignore this possibility.
And, yes, I think that Ford may be a little crazy for selling Volvo, although they’ve not been overly successful of late. I’ll wager that they don’t have a good pipeline of new cars, either.
zippy: It gets confusing fast. The “ovloV” thing I mean.
As a fresh reader of this blog, I quickly surmised that the name was reversed. Then in the article about Taras Czornyj it was mentioned that he owns an “ovloV” and I was so perplexed that I thought “oh, maybe it is actually a real name after all?” and tried to find it in wikipedia…
A major brain fart on my part (thinking “ovlov” might be a real entity), but who collects ovlovs? Very confusing.
“The overlap that exists could be jettisoned.” You know, some people would argue that the overlap would be the whole Saab line. Not that I totally agree, but what does Saab make that Volvo doesn’t? Seriously, mid sized four dour sedans and wagons with front or all wheel drive, impeccable safety histories, and an occasional AWD offering? This could describe either company. Now, add in the C30, XC60, XC90, XC70, and Saab only competes in a future hypothetical with the 9-4x, the 9-3x, and (maybe) the future 9-1.
I guess I see a lot of overlap.
I don’t think it’s a completely terrible idea, though, but it’s a lot different than even BMW, where one offers rear-drive, the other front drive. And, I don’t see BMW being a realistic option.
Time will tell, huh?
~Peter