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When the Whitehouse picked up where the US Congress dropped the ball and decided to bailout General Motors and Chrysler with bridging loans, they set a deadline of March 31, at which time a Whitehouse appointed supervisor (car czar) would assess the progress of the companies in restructuring their businesses. At that time, March 31 became the deadline for Saab.
Automotive News have a snippet of information in one of their stories today that makes me think the deadline might be sooner than that.
March 31 is still the date by which the Car Czar can call in the loans if he or she is not satisfied with the outlook for GM or Chrysler and that call would most likely send either company into a controlled Chapter 11 bankrutcy proceeding.
What I didn’t know until today is that that decision will be based on detailed restructuring plans that GM and Chrysler have to submit to the Whitehouse by February 17.
Automakers receiving emergency loans must file plans by Feb. 17 describing how they will restructure to become viable for the long term. Unless agreements are changed by the Obama administration, a president’s designee, or car czar, is to decide by March 31 if an automaker’s restructuring plan is sufficient. If not, the first loans will be called in, possibly forcing the company into bankruptcy.
We may not be told the details of the plans that they submit at that time, but having already told the government that they’ll be doing a ’strategic review’ of Saab, you can bet your bottom dollar that the Feb17 plan will have results and outcomes from that strategic review included.
——
I had a good chat about this future ownership issue with a few other Saab nuts over dinner last night and here’s my thoughts. These are just my own prognostications and not based on anything other than educated guesses and hunches.
My forecast is that there aren’t enough cashed up companies out there looking to take on a small volume carmaker like Saab, especially with the economic conditions we’re likely to face in 2009. Due to that fact, I think the Swedish government will step in and take an equity stake in Saab, partnering with GM as a bridge arrangement to get the new range out there and either make or break the brand. It might be a 3 or 5 year thing, during which time the expectation is that Saab will get the 9-5, 9-4x and a new 9-3 and they’ll have to get to a volume that’s profitable and sustainable (which they say is around 175,000 vehicles a year).
That’s just my take, and whilst I’d rather see Saab separated from GM completely, I think the stability and increased independence that would come with a Swedish equity stake could be a very good thing.
We’ll see what develops. It may come sooner that we first thought.
21 responses so far ↓
1 Markac
// Jan 3, 2009 at 9:04 am
I hope other parties take at least a 51% share in Saab. That could include the Swedish government, and I still wouldn’t rule out Investor AB coming to the party. I know they have downplayed any interest in Saab, but it doesn’t make good business sense to publicize your intentions.
Saab still seemed to have a good future with so much potential when it was only half owned by GM. After 2000 when GM bought the remainder of Saab, that future became increasinly cloudy.
2 SaabKen
// Jan 3, 2009 at 9:29 am
Interesting theory, Swade.
Markac, yeah it seems to me at least that GM was “more” behind Saab in the mid/late 90s when the 9-5 was launched and work had already begun on the new 9-3 range (Project 440).
Seems after 2000, the momentum slowed drastically when the new SUV/CUV proposed to be on the same Sigma platform that underpins the Cadillac SRX was nixed by Cadillac. There was also rumor an “all-road” CUV variation of the 9-5 was designed and again nixed by GM. And other versions of the 440 (9-3) family such as the 2-dr coupe was cancelled, and the all-road CUV (now confirmed as the 9-3X coming in ‘09) was severely delayed.
3 zippy
// Jan 3, 2009 at 11:42 am
Love the theory Swade, I just hope to see the new 9-5 as I expect it to be achingly gorgeous.
4 Karen
// Jan 3, 2009 at 1:19 pm
A key issue for any viability plan will be the assumption of annualized sales, NOT the abyss of October-November-December due to the credit freeze. Likely any schedule will get postponed if January sales perk up with the credit thaw at GMAC this past week.
If GM can figure out how to free Saab in order to let Saab thrive, I go farther than Markac in seeing private equity stepping up rather than the Swedish government. Norway’s Trust Fund could step in. Plenty of private investment $$$ still sitting on the sidelines.
Zippy – have you seen the 2009 9-5 Griffin Edition?
5 Swade
// Jan 3, 2009 at 1:24 pm
If you knew Zippy as well as I do, Karen, you’d know not to ask that question
6 Mailr
// Jan 3, 2009 at 2:10 pm
I think it’s highly unlikely that the swedish state makes any direct investment in Saab. But loans are very possible.
And I don’t think you should rule out FIAT, as they have economic interest in Saab production, as they partially (?) source all Saab diesels.
7 Karen
// Jan 3, 2009 at 2:54 pm
Here is the URL to see the photo that made me swoon “2009 Saab 9-5 Griffin should appear in Saab dealerships about the time it debuts in Detroit mid-January 2009, with base prices listed at $42,775 for the sedan and $44,045 for the SportCombi….gather ye Griffins while ye may. The 2009 Saab 9-5 Griffin is a worthy alternative for those who like worthy alternatives.”
http://www.examiner.com/x-572-Auto-Review-Examiner~y2008m12d23-2009-Saab-95-Griffin-debuts-as-new-top-trim-level-for-the-95
8 wfg
// Jan 3, 2009 at 4:00 pm
I have already posted this one time but after some research I am even more positive that a takeover of Saab by Magna might be a home deal for both. In Europe Magna is the main producer of Chrysler cars, thus is under hugh pressure to let their manufactury running even under condition of a rather likely an unfortunate collaps of Chrysler (at least massive step back in Europe). Perhaps it can be in alliance with the Swedish government um ensure the survival of “our”beloved Saab. Eh’ I forgot um mention that Magna war considering some years ago um take over Chrysler but they didnt because of the contracts with other automotive producers-contracts that have been partially canceled lately as far as I read in the news.
9 Jan
// Jan 3, 2009 at 8:49 pm
really nice theory, Swade! I hope something like that is gonna happen. The Griffin looks great by the way.
10 John in Bismarck
// Jan 4, 2009 at 2:18 am
I like your idea, Swade. It would be a real shame if the new Saabs on the horizon didn’t have a chance to make it to market.
What about Valmet, that used to make the Saab convertible (and that made my 2005 Boxster)? Are they in a position to be a player in a Saab rescue? Porsche will move its Boxster/Cayman production to Magna Steyer in 2012. Maybe Magna is a more serious contender, as wfg says.
I also like the 2009 9-5 Griffin Edition, by the way.
11 Michael Micone
// Jan 4, 2009 at 2:52 am
The future for Saab isn’t looking great. I live in Toronto, Ontario and the Roy Foss Mid-town Saab dealership closed and their Thornhill Saab dealership has been combined with GMC-Pontiac. I have 2 Saab’s so I know the staff well – they believe Saab will not be part of the GM portfolio. What is scary is that Roy Foss is one of the largest volume Saab dealership’s in Canada.
12 zippy
// Jan 4, 2009 at 6:49 am
Karen you should have listened to Swade! My eyes havent stopped bleeding since I set eyes on the ‘facelifted’ Dame Edna 9-5 in 2006.
13 albert
// Jan 4, 2009 at 8:03 am
When everybody is repeating himself, I can too.
In my view there are three possibilities:
a. the sentence about the review of saab has been put there for cosmetic reasons only. Senators read papers too, you know. And when all the journos start yelling that saab should go, you have to mention it one way or the other.
b. the review is real and the result is that saab ceases to exist.
c. some third party will come and buy saab. And I agree fully with wfg that the only candidate is Magna. But to do so you need money and all suppliers are in trouble, maybe more than the OEM’s, so this outcome is highly unlikely.
Personally I still believe that the best option is staying within GM. GME boss Forster has shown to be a supporter of Saab.
Keep my fingers crossed.
14 Karen
// Jan 4, 2009 at 9:49 am
@albert: I haven’t read any American journalist yelling that Saab should go, but am now reading that GM hopes to drop 400 U.S. dealers just by selling Hummer and Saab. I actually believe senior GM management bought Saab because they lost out on Volvo almost twenty years ago and the mantra was ‘go global’ and GM wanted a prestige European car. Never a true love.
Successive management has never known what to do with what seems to be a niche brand (marque). My former career was in non-durables, but when I worked for Philip Morris, the marketing people did NOT EVEN know we made niche luxury products like English Ovals, a steady seller with a devoted following, no marketing required. So, they dropped it until those devoted consumers wrote letters. None of those marketing people even smoked cigarettes, hopefully GM’s product managers drive cars.
I believe the review is real, but still do not understand how GM can keep Opel out of any review that involves Saab. Maybe Saabistas need a big rally around GM HQ…
The other consideration is that Germany and Sweden are involved, which means the State Department gets involved, because the U.S. does not want to antagonize Germany and Sweden.
This review could leave Saab wholly owned by GM, but with only stand-alone Saab dealers in North America who may have to merge with Volvo dealers.
I cannot imagine that Saab costs GM enough money to be totally sacrificed.
Now that Toyota stopped construction of their Prius factory in Missisisippi due to low sales, the whole discussion will be based on getting people in jobs so they can get car loans. This is no longer whether GM (or Chrysler) has a viable longterm business plan. Toyota did everyone a big favor. Southern Senators see it isn’t about legacy costs or the UAW. Environmentalists see it isn’t about not enough hybrids.
The biggest problem is that members of congress have to drive U.S. cars for political reasons.
15 Markac
// Jan 4, 2009 at 1:08 pm
Karen: GM bought Saab because it lost out to Ford to buy Jaguar. It grabbed Saab as a second prize and underbid Fiat at the time. Fiat’s bid was considerably higher but meant that Fiat would immediately take a controlling interest in Saab, something the Wallenbergs weren’t happy with at the time.
Volvo did not come up for sale until much later. In fact Volvo was interested in accquiring Saab in 1989 but a feud with the Wallenbergs meant that no serious discussion ever took place.
Staying with GM as it now stands could likely be fatal for Saab. In the past it’s have shown little dedication to the brand and I think if it kept Saab, it’s dedication would be even lower. It certainly won’t focus any attention on the brand, something Saab needs so much. The only good thing is that if GM were shutter Saab it would cost probably a billion or more. Selling Saab for even just half a billion would at least bring some money in.
To be honest, Saab as it exists now would only be worth somewhere between $500 and a billion anyway. It is believed that GM eventually paid around $1.3 billion (in total) to accquire the whole of Saab. Saab now has considerably less infrastructure and unfortunately no longer has an engine plant, so it’s net worth would be quite a bit less.
16 Karen
// Jan 4, 2009 at 2:17 pm
@Markac – thanks for the historical corrections as you have done before. I agree GM is not a good fit, but still am not clear on how Opel survives in Europe without Saab.
Where do you get the estimate of one billion to “shutter Saab”? I would think most costs would fall on Swedish government, which I understand has a very excellent submarine fleet…the Vikings had a naval advantage in their day…
Do you include intellectual property, assuming it can be assigned to Saab, in your net worth calculation?
One billion dollars can be found if Saab is perceived with actual enduring value. No other car like a Saab. Is there a more devoted customer base?
I do believe the whole review WILL be reframed and deadlines extended from Feb 17 to at least mid-April, based on how the credit freeze has lowered auto sales everywhere in Oct-Nov08.
U.S. gov won’t spend a dime on auto jobs outside U.S. Even Canada had to step forward with loans before the U.S. took action, though most Canadian production sells into U.S.
My dilemma is I have not much confidence in U.S. politicians – too many lawyers, no auto mechanics. 30 years of de-industrialization by both political parties. Cannot imagine who decides what a viable auto industry looks like, especially after reading the Op-Ed future of autos in the Sunday NYT, 3/4 of which was about computers, 1/4 about solar hybrids.
17 Markac
// Jan 4, 2009 at 2:49 pm
Karen: In 1989 Saab owned several factories including a large new one at Malmo. It had it’s own R&D Centre and It’s own engine plant.
Now it has Trollhattan and R&D is in Germany with Opel. Not a whole lot compared to what it once had.
I think GM paid approximately $700 million as it’s final payment in 2000 to complete it’s purchase of Saab. Something it left to the very last minute BTW. I think it had considerable misgivings about completing it’s purchase and that’s something that seems to have proven correct.
The $1 billion + figure to shutter Saab isn’t my calculation. I read that on another site which was comparing it to the shuttering of Oldsmobile which they said at the time cost maybe $3 billion? Saab is much smaller, but paying out world wide dealers etc. could prove more costly than it did back then.
I doubt if the Swedish government would be expected to contribute to GM shuttering Saab. I for one, would tell GM to go to hell if that was it’s intentions.
I don’t think GM necessarily needs to find a confirmed buyer by mid February, but if it can show that it has some definite interest, I’m sure that will suffice for the time being. I have a hunch that Saab will be sold much like GM bought into it. Half will be sold by mid year and the other half perhaps several years down the track. My earlier hunch about Saab being sold seems to be proving correct so maybe I’m on to something!
18 Karen
// Jan 4, 2009 at 3:01 pm
Markac – the Swedish government would have to cover all the costs of unemployed Trollhattan workers, unless they would be making Cadillacs and Opels? Like any European would buy a Cadillac if Saab were gone…
19 Markac
// Jan 4, 2009 at 3:11 pm
Karen: Certainly not any Swedes! I think it’s in the Swedish governments best interest to make sure that Saab is sold, even if it has to become a less than willing part owner for a time.
If Saab was killed as a brand and Trollhattan became an Opel factory I’m sure there would be considerable ill feeling towards GM, and that would last a long time.
We can only hope for the best.
20 Troll96
// Jan 4, 2009 at 3:25 pm
If GM ownership means more delayed product introductions, more disinvestment and more siphoning off of Saab’s technological expertise, then the sooner GM cuts the cord the better. The current Saab USA advertising blitz comes amid public announcements of an impending sale. Talk of working at cross-purposes! This chaotic situation destroys confidence in the cars and the company.
When I think of what Saab was able to accomplish on a shoestring back in the 50’s and 60’s, it makes me mad to see how so much talent and heritage are being frittered away.
21 Nico
// Jan 6, 2009 at 12:57 pm
I was just wondering if anybody has mentioned “Fuji Heavy Industries” (the owners of Subaru). Wouldn’t that be a great fit. All those Asian companies have a low end and high end, based on the same model. Subaru and Saab could do the same. (I know it reeks of treason)
I am not impressed with the 9-7X or the 9-2X, yet Saab needed those models, and Saab still does need to be active in those segments. And the proposed 9-6X did look rather okay. How is Subaru doing during this economic down turns? I still see a lot of new Subarus, and the old ones seem to hold on as well. Actually, in the news today, Subaru increased its US sales by 0.3%, the only major car player to gain sales. Now that could be a great partner. Besides, the Asian carmakers at least produce what they build as concept. That is appealing to me.
The only downside of Subaru is that they almost go after the same demographic as Saab, yet in a different spending class. And they have the same footprint in New England. Now what is Subarus footprint in Europe? Are they big over there? Otherwise this could mean a grand entry, right, which would make a merger with Saab even more desirable.
They tried with the 9-2X, going forward, Subaru would love the 9-x BH/Air, the 9-4X and all its potential, Plus the XWD and Air roof mechanism. Plus maybe the Aero-X could finally get build.
And because Fuji is diversified (Aircraft heritage) they might be the ones that have the cash, and the ties with GM to make a smooth transition possible.
Anyway just a thought,
Nico