The first lot of bailout hearings have been going on while I’ve been sleeping and sifting through the initial coverage it doesn’t look like there’s much of direct interest for Saab-watchers. This dog and pony show is all about GM North America.
For those who are interested, the Detroit News has the best play-by-play coverage I’ve found so far.
The day didn’t start that well for GM:
General Motors Corp.’s driver of the “show car” version of the Chevrolet plug-in hybrid electric Volt nearly was arrested when he couldn’t roll down a window at the request of a Capitol Hill police officer. A GM spokeswoman helped smooth things over.
In many respects it didn’t improve:
Sen. Richard Shelby, R. Ala., isn’t pulling any punches. He told the three CEOs that there plans were full of “scattered facts” and little else.
“They contain few concrete details about how your companies would return to profitability,” he said. “I suspect that any sensible banker would summarily dismiss your plans.”
He asked for more detailed financial projections, which all three said they would provide.
Mulally took issue with the senator’s suggesting that Ford’s plan would not pass muster. He said what Ford provided Congress is exactly what it provided the banks when it borrowed $23.5 billion in 2006.
Have I mentioned that I really like Alan Mullaly? One thing I know from my job (where I basically spend all my time reviewing the work that others do) is that they know their job better than I do. It’s the same with these CEOs and the senators questioning them. It’s one thing to be accountable to the, but when they start spouting crap at you, it’s alright to let them know. Mullaly’s just done that, and good on him for doing so.
Of course, Wagoner and Nardelli need the money a bit more, so they’ll take one for the team and plan their revenge later.
The Detroit News noted the following about Shelby:
Sen. Richard Shelby, R-Ala., now wants to know if the three CEOs did all their own driving. You can bet he has a driver, but that is not the point. Shelby is once again emerging at the biggest enemy Detroit has in this committee – and with good reason: As we reported last month, his state is home to more foreign auto factories than any other in the United States, and it has attracted those companies there by offering those companies billions in taxpayer dollars.
Shelby aside, there were some seeking to see things with a degree of common sense and understanding:
Sen. Sherrod Brown, D-Ohio, just hit the nail on the head, exposing the double-standard inherent in this process: “We didn’t ask the CEOs of the banks to drive here in Wells Fargo armored cars … We didn’t ask them to appear before us … We didn’t ask them for a plan on how they’re going to spend the money.”
——
I’m sure the media will start prognosticating on the Big 3′s performances soon enough. It’s hard for me to tell just slashig through commentaries. I guess you really needed to see things for yourself.
——
What’s evident to me from the Congressional stuff, the Saab coverage from Europe and the chat I had with Eric Geers is that there really are two games in play for Saab right now.
Saab Sweden’s job is to come up with a plan that secures their funding for continued operations over the next 18 months or so, whilst they roll out their new model range. Their end-game is to obtain guarantees so that they can show the corporate parent that they’ve got a genuine chance at getting through.
They need the Swedish government or a consortium of other partners to replace the corporate funding that’s previously come from Detroit or GM Europe. That funding will get these cars finished and ready for market, after which the plan says they’ll be able to actually make money and provide a return to their investors.
I think we’re all pretty fortunate that the new Saab 9-5 and 9-4x are so close to coming to market. If they weren’t then GM’s options with Saab would be much clearer and the decision that much easier to make.
If Saab Sweden can obtain the guarantees that they’re looking for, then the ball is back in Detroit’s court – and that’s the second game that’s in play here.
Detroit have given an undertaking to the US congress that they would put Saab under review as part of their restructure. The options for that review include the much-covered sale of Saab, but they also include selling a stake in Saab to a partner or obtaining bridging finance for Saab via the Swedish government until the new models roll out and Saab can finally start realising some of their potential.
To give Saab a pass is going to require a locked down, watertight set of guarantees, most likely from the Swedish government. GM have have a whole heap of future finance for their North American operations riding on them fulfilling their commitments as documented and presented to Congress.
I think that’s about it in a nutshell. Saab can do all they can on obtaining guarantees, but at the end of the day, GMNA call the shots and Saab’s fate will be up to them.
–
History repeats itself and nobody ever learns anything. Saab-Scania sold 50% of Saab Cars because it could not afford to finance new model plans. GM now needs to do much the same.
Investors in Saab need to secure control of the brand by buying a controlling stake, or it’s just like handing money to those bozos in Detroit.
No telling what Congress may do, but in the hearing today (which I watched live), the Detroit Three were pointedly asked if they would submit to government-mandated cost cutting targets before March 31, 2009, confirm that any bailout funds would not go overseas, and (in the case of GM and Chrysler) agree to merge if the feds made that a condition for receiving bailout money. They all agreed. The actual auto bailout amount, including money for technological innovation, now appears to exceed $100 billion. It looks like the Senate may be inclined to parcel out funds incrementally only after benchmarks have been met at specified intervals. Failure to meet the benchmarks would, as discussed today, lead to denial of further funding and immediate bankruptcy for the debtors. In this environment, Saab appears to be on its own in the search for funding.
Swade,
Here’s a wacky trip down memory lane (or is that a 8-lane highway) for you, and for all TS-ers. I was bored, so I hopped into my De Lorean, hit 88mph, and went back to the TS of February 2005, hehehe:
http://www.trollhattansaab.net/archives/2005/02/gm_considering.html
http://www.trollhattansaab.net/archives/2005/02/augustsson_on_t.html
I like Richard Shelby. He gives EVERYONE the hard questions. I think that asking who drove was a bit much, but he’s not afraid to ask the tough questions.
You’d think OPEC countries would give the money to GM as a rebate for all that gas consumption in the 1990′s…by the time congress can do anything, GM will be bouncing checks.
I’m having trouble getting into the comments, so want to thank Mike C. for his sympathy over Beck in Yonkers in an earlier string. I split my time now, and mostly use Pioneer Volvo/Saab in South Deerfield, MA – great people. Still miss the great team at Reinertsen Saab in Denville, NJ.
The ONLY reason Saab sales are down in U.S. is GM. Now they are screwing Saturn too, which has a very devoted customer base. Why don’t they say anything about Opel?
There not going to say anything about Opel because the last thing these guys want to mention is foreign manufacturing. I don’t disagree with you Karen, about GM being the cause of all of this. I was just thinking why it is that when fuel prices were at $4.50 gallon GM didn’t bring the TTid that gets 55 miles per gallon over here to bring higher sales for Saab? I can’t for the life of me figure out why the CEO of GM didn’t scale back or stop production of all these Hummers and SUV’s when fuel was going through the roof? They must have known that these things were going to wind-up sitting on some poor dealers parking lot!
They must have seen this coming when fuel prices were out of control? Why isn’t someone asking Rick Wagner about that? In addition why it is that they didn’t bring the TTid over here when we desperately needed it?
We have many unemployed people here now and much of it could have been avoided, just my $.2 worth….
Saabboy1 – exactly! I’m tired of the excuses. The facts speak for themselves. They have been sitting in their ivory tower running business as usual, while BMW and VW are bringing diesels over here to the US. That TTid should have been here a long time ago.
It’s like the Big 3 have been sitting in a SUV passing the same old stale gas. Instead of opening the windows for a breath of fresh air, they just keep farting away, making it worse.
Shame on them. Let them ALL go down.
The US Senate hearings showed how much some in Congress want the Detroit Three to spend bailout funds in the US, to forego overseas plant expansions (in favor of US plant expansions) and to merge Chrysler into GM if need be as a pre-condition for getting any loans. GM agreed to go that route if necessary, as did Chrysler. I’ve never seen auto execs talk turkey like this before, or look so desperate while doing so.
One sour note: It seems that a good chunk of any bailout money will be earmarked for the development of more fuel efficient, less polluting cars. However, there is a very strong sentiment in Congress against doing that work outside the US. So, one major strength of the Saab brand may have just lost its relevance to GM.
I think all this is pointing to another possible scenario. GME, as I understand it is profitable, and they make some very nice cars, from very pleasant super-econo to our beloved Saabs. Isolating GMNA from GME would be bad for the bottom line, and there needs to be some quid-pro-quo. What about . . . ?
- GME and GMNA and GM-the-rest keep their technical connections, i.e., the research, development and manufacturing sharing that are decently distributed across the US, Canada, Germany, etc.
- Separate the marketing, sales, and service by this same division
- Let GME decide if it wants to sell cars in NA (why not? VW, Mercedes, BMW, all do well here) and do so on its own under its own brand names. It could be a string of Opel-SAAB dealers, or if they want to call their Opels Saturns, there is indeed a loyal owner base and excellent dealer reputation to go with it. Maybe Opel-Saturn-SAAB and let the Opels be the smaller econoboxes. There is some memory here for when that is what Opels were. This would establish a clearly European store with everything from the Corsa to the Astra (change that to Opel) for the economy range, consider calling the Saturn Sky the Opel GT that it began as, and bring the diesels; Saturn as the brand for family vehicles Aura and Vue (Opel’s Antara anyway) including the mild Hybrid versions, and SAAB for the performance-luxury models (smaller-sized 9-3 line including the AIR convertible–a 4-seater to go with the 2-seater, 9-4x–is it a souped up Antara?, and the 9-5 head-turner). This could give a VW Audi dealer a run for its money, and not confuse European panache by giving it a NA name. Let everyone know that Opel-Saturn-SAAB is a premium line with the best of an excellent Euro line-up, and not confuse it with local brands.
For our friends down under, just drop the Saturn tag and bring in an Opel Vector or whatever it is now called (if it isn’t already there): Opel-SAAB. Let them compete without tethers. They would not steal Chevy, Caddy, Holden, or other sales in NA and OZ-NZ; then it would be really clear whom they are going after. The fact that Malibus and Cobalts and Impalas might have similar chassis and motors does not matter a twit. There are few crossover sales; they will move up to the remnants of Buick or to Cadillac. Then GM NA would indeed be down to 3 or four domestic brands, and we get our SAABs from GME stores. Notice the reference in the GM “plan” to a different relationship with Saturn dealers? That’s Saturn-SAAB dealers in most of Canada. The prototype is there.
Is this crazy? I’d love to take my 9-5 to a Euro store that isn’t surrounded by Pontiacs. And the bottom line would not hamper GMNA.
Bruce
by george. Bruce i think you got it
An 8 page article in Forbes today outlined the situation for GM and particularly Wagoners role. Eight pages. Not one mention of Saab. Or Opel for that matter. Its clearly a case of
“bring the wagons in tight boys. It won’t be fun and the devil take the hindmost. If all us good ol’ boys stick together we might pull through. Can’t say what might happen to those folks with the funny accents up the back though.”
There is a picture on page 17 of the Financial Times showing GM chief Rick Wagoner arriving at the Senate hearing yesterday with Michigan congressman Sander Levin in a car I cannot figure out but bolted with steel rims without mags – it is a bit late to show that they care, is not?
Rick Wagoner is again quoted as saying bankruptcy is “not our plan.”
Perhaps the Detroit Three should remember this Swiss phrase: “God rules in heaven; on earth, even the Devil dances for money.”
The director for GM Europe, Carl-Petter Forster, sent an e-mail yesterday to all Saab employees in Europe, which has been published on the website to http://www.automotorcar.se
*********************************************************************************
December 3, 2008
Dear colleagues,
As you are aware, on December 2, General Motors Corp. submitted a plan to use Federal bridge loans to create a leaner, more competitive company, one that is profitable and self-sustaining for the long term. Please know that this is a plan for the US. Of course, it is important for all GM employees around the world, not in the least because the plan needs to convince the US Government to grant GM bridge loans to ensure our mother company has sufficient liquidity to work its way through the financial and economic crisis.
In the plan it is also stated that GM will immediately undertake a global strategic review of the Saab brand. A ‘strategic review’ means GM will evaluate all options for the Saab brand. This could include anything from modifications to the current product line-up and sales distribution to a partial or complete sale of the brand. I understand that this announcement creates a lot of uncertainty, especially for everybody working with the Saab brand here in Europe, but it’s essential that we evaluate all of our options. Saab is a very desirable brand globally and we believe in it’s future, but we need to develop a solid plan to fund our product portfolio renewal and expansion in this uncertain environment so this study makes sense. In the next 12 to 18 months, Saab is planned to launch multiple new products. Those products remain in the product portfolio today and we expect to go forward with the launches as recently announced with a 9-5 sedan toward the end of 2009 and the 9-4X in mid-2010. We will of course keep you closely informed.
This is how the US plan impacts us. And of course, we have to continue executing our own measures here in Europe in an even weaker market. I realize it is sometimes tough to remain focused with all the uncertainty and speculation. It’s hard for all of us, but please stay positive and confident. I have full belief that we will come out of this as a stronger company.
Carl-Peter Forster
Thanks Bruce for the GME/Opel/Saturn/Saab ideas. Makes so much sense.
I had not known that Saab/Saturn dealerships are the norm in Canada.
Does anyone know how many U.S. dealers are standalone Saab or Saab/Volvo, or at least NO TIES to a GM dealer?
How ironic is it that the socio-demographic stereotype of the American Saab driver is the PBS-watching Democrat?
when I hear about bailout of big tree I just want to xxxxxxxxx , read this : http://bigthreeauto.procon.org/
It does sound as though GM Europe is beginning to see that they had better get their finances in order as GMNA is most likely not going to be passing on any (if any) of the cash that Congress doles out. And it looks as though Congress is going to play the protectionist game with their money for these three companies that have global operations.
Reading between the lines of Swade’s most recent interview with Eric Geers yesterday, it certainly does sound like GM Europe realizes that they may be somewhat on their own once Congress makes a decision – one way or the other. And this may be the best thing for Saab in the long run – if European governments can agree that some kind of stimulus and shared financial support should be made available in the short term.
Wagonner has just admitted in Congress today that Chapter 11 may be an option. So things are looking quite grim in Detroit at the moment – particularly with GM. The sooner GM Europe and Saab itself secures some finances for continued operations and to get 9-4X, 9-5 and 9-3x into production – the better it will be for our favourite little brand.
Let me first say that I love old AND new SAABs. I have a 1990 900 SPG and a 2004 9-5 Arc wagon.
My question in reaction to this post is this –
I understand that SAAB fans are excited about the new 9-5 and 9-4X, but does anyone think that there will be enough excitement in these two models to woo anyone away from other makes?
I know the 9-7X outsells the 9-5, and I can’t remember if it outsells the 9-3, but will the fact that SAAB now has a smaller crossover and a new executive car save the company?
Will it buy enough time for SAAB to actually put the biohybrid and air concepts on the road? How much more R&D needs to be done to get that to happen?
In order for SAAB to survive past this hanging-on stage, it’s going to have to be allowed to put some innovative product on the road that will actually PULL PEOPLE AWAY from other models, not just satisfy those who already know what SAAB is.
How difficult can this be? Why is it that SAAB sells fewer cars than just about any manufacturer in the world? If it creates some innovative product instead of just offering a “new” executive car and crossover, there can be no where but UP for this company.
But will it have the chance to do this?
Markac – I agree, and whoever calls the shots needs to have an understanding of Saab (in terms of it’s design philosophies) if the company is going to survive. Saab’s product strategy was correct in the first place and was derailed by GM’s homogenization process (and SUV obsession) back in 2001. Despite their current predicament and pressure from the US congress to produce more fuel-efficient cars, I don’t believe GM will ever comprehend or embrace the basic tenets of Saab’s design philosophy. Efficiency and forward thinking engine technologies are a part of Saab design, but Saab always managed to wrap fuel-efficiency, the highest levels of safety, excellent road holding, and huge cargo hauling capacity in a car with gobs of personality (totally preaching to the choir here I know). I’m worried for Saab in any event, but I’m hoping GM will have to relinquish (at least some of) it’s control over Saab. I don’t pretend to know what the best solution is, but GM deserves a swift kick in it’s collective posterior for the opportunity it squandered with Saab!!
did some posts
vanish????
Are the 9-5 and 9-4X REALLY that safe considering what is going on here?
I just wish Saab would give the world a look at what I am sure is going to be a stunning 9-5.
zippy: Any possible buyer of Saab is unlikely to want to accept two cars built in other GM factories.
I suggest GM will do a deal to supply the new 9-5, but because of it’s longer lead time and smaller market potential, I’m guessing the 9-4x will not appear as a Saab.
the scrutiny for the proposed auto “loan” (bailout) is merely an adjustment to the “guvmint’s” gaffe for the financial-industry’s loan/bailout, in terms of oversight, or lack thereof.
and in terms of gm’s options, i think 100% ownership of saab, or at least a controlling-interest stake, should be the focus. if gm chooses to liquidate saab, a) it loses the potential to recoup its investment, especially on the cusp of a new-product offensive–making the lost investment all the more poignant; and b) its thrust into the european market will become stunted, or at least more awkward, at best.
has anyone edited this web site ??
Are the 9-5 and 9-4X REALLY that safe considering what is going on here?
Well, according to the email by Carl-Peter Forster:
In the next 12 to 18 months, Saab is planned to launch multiple new products. Those products remain in the product portfolio today and we expect to go forward with the launches as recently announced with a 9-5 sedan toward the end of 2009 and the 9-4X in mid-2010. We will of course keep you closely informed.
So, unless they run out of money, it seems like they stick to these new launches.