Plan coming – plus US sales data

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A press release just came into my inbox, literally 1 minute before I started writing.

Here it is:

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A conference call will be held on Tuesday, December 2 at 5:30 p.m. ET to provide an overview to media of the plan for long-term viability that General Motors submitted to the U.S. Congress. The call will conclude 60 minutes later at approximately 6:30 p.m. ET.

A copy of the plan and a press release will be posted on the GM media and investor sites at approximately 5 pm, as soon as it has been received by Congress.

Rick Wagoner, GM chairman and CEO, and Fritz Henderson, GM president and COO, will host the call. Participants can listen to the presentation live via conference call.

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I’ll be at work and won’t be able to listen in, but a download of the plan will be made available, so I guess I’ll be looking for that.

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I can’t remember a time in the last 4 years where US sales were only in three digits for the month. Maybe it happened once after the Employee Pricing sale in 2005, when they were giving cars away and dealers literally didn’t have any stock left.

For November 2008, SaabUSA sold 852 vehicles in total, down over 50% on the 2,003 vehicles sold during the same month last year.

There were 606 units of the 9-3 sold, down from 1,432 last year.

There were 111 units of the 9-5 sold, down from 261 last year.

There were 135 units of the 9-7x sold, down from 310 last year.

Saab sales were own by 57.5% over all for the month, and are down 32.6% so far for this year in the US.

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Let’s get this executive pay discussion over with

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According to CNN and other news sources, the CEOs of the Big Two and a half have agreed to salaries of $1 for 2009 if the government hands over the $25 billion in aid that they seek. As Swade and others have said, this won’t be a difference maker in the long run, although it’s nice of them to make the gesture.

Rick Waggoner made $15.7 million in salary in the last complete GM fiscal year.
Alan Mulally made $22.8 million in salary in the last complete Ford fiscal year.
Robert Nardelli’s salary isn’t publicly known since Chrysler is, ostensibly, private.

Even if Mr. Wagoner forgoes his salary, and Maximum Bob Lutz and all of their cronies over at GM took $1 million pay cuts in 2008, how much would that help? For argument’s sake, let’s assume that about 20 or so executives at GM (other than Mr. Wagoner) make enough money each year that they could pony up a $1 million pay cut in 2009. That would be $35.7 million returned to the coffers next year. For the 74,000 UAW employees in GM’s employ, that amount would buy another 6.3 hours of pay for each UAW worker at the current rate of $77 per hour. It doesn’t even buy another day of operating cash!!

Even if we expand the executive pay cuts and reduction in executive privileges to $100 million in savings for 2009 (a number that likely exceeds reality), that only buys 17.6 hours of employment for all UAW workers employed by the General. Just over two additional days of operation.

On the other hand, if the UAW cuts to the same pay structure that Toyota workers in Georgetown, Kentucky or Honda workers in Marysville, Ohio enjoy, that’s a $30 per UAW employee per hour savings. Multiply that by a standard 40-hour work week year (2080 hours), you’ll derive over $4.6 Billion in additional cash for the corporation. As a point of reference, I estimate that Saab’s annual sales are just below that amount (about 125,000 vehicles at $35,000 per car*). The delta in UAW vs. Toyota pay is, for GM, larger than Saab’s entire budget.

Do I agree with exhorbitant executive pay and privilege? No, I don’t. I don’t think that Rick Wagoner or Alan Mulally are worth anywhere near the amounts that they get paid. For that matter, I hope that the GM board gets their come uppance for steering this company into the rocks in the first place, and those rocks include this inflated executive pay and lifestyle.

However, my point is this: the cost of the UAW is so huge that other cutbacks pale in comparison to the reductions needed there. Yes, cuts are needed across the board, but unless the UAW cuts to a competitive wage, everything else is for naught.

* – Remember that you have to consider that Saab only makes money on dealer cost, not selling price, so I feel that $35,000 per vehicle is about right.

Over to you…..

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It’s sleepy time for us Aussies.

I’ve covered as much of the speculation as I can, and as you can see from that link, the pundits are expecting that GM’s plans will include a sale of Saab.

I’ve tried to call Saab Sweden a few times today but they’re all “in a meeting”. Oh, how I’d love to be a fly on the wall there. Unfortunately, I’ve had to rely on email rather than getting whatever information might be forthcoming over the phone. That means we’ll all have to wait for a reply.

I don’t know if the automaker’s submissions to the US Congress will be made public today or not. It may be that the public portions of those submissions are held over until the committees start their meetings on Thursday (Senate) and Friday (House).

If details are made public, then it’ll probably happen while I’m asleep. In that event, Eggs may be busy working and therefore it’ll be up to you to keep each other updated using the comments section.

Have a good day. I’m off to get some Z’s.

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NOTE: If you’re going to leave a link to a story in comments, make sure you only leave one link per comment. More than one link will see your comment go into the moderation queue and it won’t appear until I give it the all-clear.

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NOTE 2: If you’re sick of all this bailout stuff and just want some Saabology to read, I can highly recommend the Taras Czornyj Q&A.

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The headlines as they appear

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First of all let’s take a deep breath…….

Better?

GM are going to submit their plans for the future to the US congress today and every news service in the world is writing up its thoughts as to what’s going to happen. One thing I’m not sure of at this point is whether or not the public section of those documents will be made available straight away, or whether we’ll have to wait until the hearings later this week.

I guess we’ll find out soon enough.

I’m going to present those reports here in the order that I find them. No opinions or conflicts with other stories, just a quote and a link. The newest will be at the top. I’ll keep posting them for as long as I’m awake. Keep checking back.

And in case you don’t notice, there’s a definite trend as to what they’re predicting with regard to Saab.

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NY Times via the Dallas Morning News:

For the Detroit Three automakers to win over Washington lawmakers in their bid for federal aid, they will have to address a key question in the business plans they present Congress with today.

Just how serious are they about shrinking their vast lineups of brands and models to match the harsh reality of the market?

All told, General Motors, Ford and Chrysler sell 112 car and truck models through 15 brands in the United States.

By contrast, the top three Japanese automakers – Toyota, Honda and Nissan – have roughly half as many choices, with 58 models sold through seven brands.

Shutting down a brand is a complicated, costly effort that requires buying out dealers protected by state franchise laws, as well as scaling back vehicle production.

Shrinking dealer networks may be a key component of the business plans that GM, Ford and Chrysler will present in an effort to show that they have viable, long-term strategies.

GM, for example, has about 6,700 dealers in the United States, compared with 1,200 for Toyota.

A thorny question, for GM in particular, is whether it can cut the number of dealers without incurring huge expenses to buy them out.

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Edmunds (not bailout, but relevant, covering incentives in November):

Comparing all brands, in November MINI spent the least at $79 followed by Scion at $195 per vehicle sold. At the other end of the spectrum, Infiniti spent the most, $5,015, followed by SAAB at $4,860 per vehicle sold. Relative to their vehicle prices, Mercury and Kia spent the most, 15.4 percent and 13.9 percent of sticker price, respectively; while MINI spent just 0.4 and Scion spent 1.2 percent.

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EnG here….From CNN:

Local United Auto Workers leaders from across the country will hold an emergency meeting in Detroit on Wednesday to discuss concessions the union could make to help auto companies get government loans.

UAW leaders called the meeting Monday night in an e-mail, obtained by The Associated Press, to local union presidents and bargaining chairmen.

Presidents from union locals for General Motors Corp., Ford Motor Co. and Chrysler LLC will attend the meeting, according to the e-mail. A separate meeting for GM union officials will follow.

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Spiegel:

“Lots of auto firms have been selling the wrong kinds of cars,” Swedish Prime Minister Frederik Reinfeldt said last week. “When someone thinks the state should come in and fix the situation, then I think they’re crazy.”

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Trading Markets:

Shanghai Automotive Industry Corporation (Group) (SAIC) was reported to participate in the merger with General Motors (GM), which is on the verge of bankruptcy now, but the Chinese automaker gave a denial immediately…..

….experts forecasted that GM was likely to sell part of its assets in the near future, attracting several Chinese peers.

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Wall St Journal:

…..vehicle sales in November are expected to come in at an annualized pace of just shy of 11 million vehicles, according to Barclays Capital, a slight improvement from October’s depressed rate of 10.6 million. That rate would be five million vehicles below the year-ago seasonally adjusted annualized rate of 16.1 million. All auto makers, including even normally recession-resistant luxury brands such as Mercedes-Benz and BMW AG, are expected to post big declines, with the Detroit three suffering drops of 30% or more, according to analyst estimates.

The dire news, however, could help the Big Three make their case in Washington for federal aid. Big declines for stronger rivals like BMW, Toyota Motor Corp. and Honda Motor Co. would support Detroit’s argument that the financial crisis is a major cause of trouble across the auto industry, and that GM, Ford and Chrysler just need a “bridge loan” to help them hang on until the economy improves.

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Forbes:

…..judges cannot make workers accept lower wages and they cannot order customers into the showroom. A GM bankruptcy could drag down hundreds of suppliers and redouble existing worries about whether warranties will be honored.

GM’s crisis is so dire that the company might well be able to achieve significant concessions without having to file for bankruptcy. This assumes, however, that management sheds its business-as-usual mentality.

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Globe and Mail:

The most radical surgery is expected at GM, analysts said yesterday. It could include the end of the line for Pontiac, Saab and perhaps Saturn.

One industry observer suggested that Saab is almost certain to go, given that its sales are poor and it is not a core GM brand.

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BNET:

Pushed by the same market forces, the car companies tend to move in a pack. Ford and GM bulked up on acquisitions in the late 1980s and early 1990s, and now they’re shedding those acquisitions. With GM fighting for its life, can it afford to keep hanging onto Saab for a rainy day?

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The Straits Times:

STOCKHOLM – THE Swedish government has ruled out a takeover of the country’s beleaguered automaker Volvo Cars if its owner, US group Ford, decides to sell it, daily Dagens Nyheter reported on Tuesday.

‘It’s not in our industrial policy to own carmakers and we will not jeopardise taxpayers’ money,’ Enterprise and Energy Minister Maud Olofsson told Sweden’s newspaper of reference on the sidelines of a meeting in Brussels.

The centre-right government has on the contrary pursued a policy of selling state assets since it came to power in 2006.

‘We need to look at what the government can do without jeopardising taxpayers’ money,’ she added.

Among possible buyers seen for Volvo are Germany’s BMW and France’s Renault.

‘But selling car companies in the midst of this financial crisis is hard,’ Ms Olofsson acknowledged.

Prime Minister Fredrik Reinfeldt recalled that Volvo and Sweden’s other carmaker Saab, owned by General Motors, have appealed to the government for various forms of state aid.

‘We are not an emergency bank where companies can get money when things take a turn for the worse. That would just be a misappropriation of taxpayers’ money,’ he told Dagens Nyheter.

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Associated Press:

GM will outline efforts to negotiate swapping some of the company’s debt for equity stakes in the automaker, either shares or warrants for them, said two people briefed on the company’s plan.

With eight separate brands, GM will also discuss efforts to shed brands but it would prefer to sell them instead of shutting down Pontiac, Saturn or Saab, said one of the people briefed on the plan. Killing off brands, like GM did with Oldsmobile in 2004, would require cash the company doesn’t have, the person said. The people briefed on GM’s preparations didn’t want to be identified because the plan hadn’t been completed.

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Financial Post (Canada):

FordMotorCo. and GeneralMotors Corp. could dump their Swedish brands as the Detroit companies press U. S. and Canadian lawmakers for emergency aid that may hinge on keeping jobs in North America.

Ford said yesterday it is weighing whether to sell Volvo Cars, its Swedish luxury unit. A person close to GM confirmed the company is reviewing whether to sell or drop at least three brands, including Saab Automobile AB.

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Los Angeles Times:

But saying a brand is for sale and actually selling it are two different things, said Robert Schulz, an auto industry analyst for Standard & Poor’s. With lending for corporate acquisitions all but frozen, there may be few takers for even a prestige marque such as Volvo.

“There’s no obvious candidate to offload these assets to,” Schulz said.

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Detroit News:

The business plans GM, Ford and Chrysler have prepared for Congress include seeking additional givebacks from the UAW as one way to cut costs, according to sources with knowledge of the plans.

A person familiar with one automaker’s plan said a variety of topics are being explored. Key issues include reopening the contract, eliminating the controversial jobs bank that still pays workers even when they are laid off, and how much and how quickly the automakers will contribute to a trust fund to be run by the UAW that will take over responsibility for retiree health care beginning in 2010.

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Business Week:

GM is trying to work out a sale of Saab, BusinessWeek has learned. For several months, GM has been shopping the brand to Chinese, Indian, and Russian carmakers, as well as to the Swedish government, sources familiar with the talks said. Saab Managing Director Jan Ake Jonsson and GM-Europe President Carl-Peter Forster have been leading the efforts to find a buyer, or at least get someone to take the company off GM’s hands.

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Bloomberg:

In GM’s case, the Detroit-based automaker needs to shed brands including Buick, Pontiac, Saab and Saturn as it no longer can afford to keep developing products for each, Noble said. People familiar with GM’s plans said the automaker has studied shedding Saab, Saturn and Pontiac. Hummer is already for sale.

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More on the AFP story: Swedish govt helping Saab

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I covered a story earlier today mentioning that a spokesman for the Swedish government confirmed that they would “guarantee that we will have car manufacturing in Sweden because it is an important part of our economy,” also saying that they would “support the carmakers” (the plural is important there).

That initial report was a short one from an Australian newspaper.

The full AFP story is now online and contains more details. Here are a few quotes:

….no matter who ends up as the owner, the government is committed to supporting the industry, well aware that Volvo and Saab and their hundreds of suppliers are “big employers” in Sweden with “lots of know-how,” Nilsson said.

“We want to keep that here and to protect it,” he said, adding that Enterprise and Energy Minister Maud Olofsson had developed “close connections and a close dialogue” with the Swedish manufacturers and their US owners, General Motors for Saab, and Ford for Volvo…..

And a little more Saab specific stuff:

Saab, fully-owned by GM since 2000, has tried to avoid lay-offs at its Trollhaettan plant in southwestern Sweden, which employs some 1,200 people, by reducing its two shifts to one.

“We have held intense negotiations with the Swedish government,” Saab spokesman Eric Geers told AFP, adding that the centre-right government planned to increase its subsidies for research and development.

According to Nilsson, these subsidies will amount to 450 million kronor (55 million dollars, 43 million euros) annually for 2009-2012, compared to 430 million this year.

The government also has other measures already in place — since 2007, it has given car buyers a 10,000 kronor rebate if they buy an environmentally-friendly car, an offer that is scheduled to expire at the end of 2009.

“It is extremely important for us to get demand going. So anything that would increase demand like (incentives to) scrap old cars” would help, Geers said, noting that Sweden “has one of the largest old car markets in Europe.”

I’ll keep digging………

I’ve left a message at Eric Geers’ office. He was in a meeting at the time of my call, but i’d love to ask him (a) about the nature of these government guarantees, and (b) about the Business Week story claiming the 9-5 has been shelve as GM look for a buyer for Saab.

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Saab UK goes VAT free in December

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The UK government has just reduced the value-added tax (VAT) from 17.5% to 15% as part of an economic stimulus measure.

Quick on their feet, Saab UK have launched a VAT-free campaign, discounting their cars by 15% to effectively cut out the VAT effect to the customer.

Right now, choose a new Saab from our range and you can save thousands when we cut the equivalent of 15% VAT off the price, making your budget go further. But it must end 31 December. Simply select a car above to find out more.

For a Saab 9-3 Vector Sport with the brilliant TTiD engine, this means a saving of £3280 and a price to the customer of £22,043 instead of the usual £25323.

Not bad if you can get it.

Check out Saab Offers UK for all the details. The offer ends December 31, 2008.

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Thanks David S!

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Business Week: Saab 9-5 shelved

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Before you read this, bear in mind that this flies in the face of the interview I did wth Eric Geers from Saab just last week, but be that as it may, Business Week are reporting the following in the lead up to GM’s homework being handed in to the US Congress in the next 24 hours or so.

GM is trying to work out a sale of Saab, BusinessWeek has learned. For several months, GM has been shopping the brand to Chinese, Indian, and Russian carmakers, as well as to the Swedish government, sources familiar with the talks said. Saab Managing Director Jan Ake Jonsson and GM-Europe President Carl-Peter Forster have been leading the efforts to find a buyer, or at least get someone to take the company off GM’s hands……

…..In a statement issued on Monday, the Swedish government said it was willing to consider its options and was talking to the carmakers. “The Swedish government has to be worried about this,” says David E. Cole, chairman of the Center for Automotive Research in Ann Arbor, Mich. “In the case of Saab, they won’t want to lose that facility in Trollhattan [Sweden].”

GM has about 5,000 employees in Sweden, most of whom work in the Saab factory in Trollhattan, where the 9-3 and 9-5 models are built. GM has shelved plans to build the 9-5 at its plant in Russelsheim, Germany, since the brand’s future is under review…..

…..GM started shopping the brand more aggressively during the past several months, after Chairman and CEO G. Richard Wagoner Jr. announced plans in July to save or raise $15 billion in cash through cuts and asset sales. So far, there has been some interest, but the global recession and credit crunch makes it tough to get any kind of deal done…..

……Saab would be the easiest of GM’s brands to ditch. Many of its dealers are already paired with Cadillac franchises.

Let me take you back to the interview I did with Eric Geers a few weeks ago.

Eric had this to say about the Saab 9-5 at that time:

Eric Geers: First of all, we never officially indicate when we’re going to launch new products, but as I said earlier, there were so many speculations that in the end, dates end up almost living their own lives. So as long as a car hasn’t yet made it to market, it’s very difficult to talk about a delay.

There are always re-timings when you are developing a product. There are always timing issues for various reasons. What we did say is that the 9-4x has been delayed a little bit but the 9-5 is currently completely on schedule.

TS: So the 9-5 is on schedule from your perspective?

EG: Yeah.

We went on to chat about the 9-5 in a context that I can’t share on this site, but let me tell you that at no time was there a mention of the 9-5 being delayed, and there was certainly no mention whatsoever of it’s production at Russelsheim being shelved.

Ths Business Week article says that they’ve been shopping Saab around for some time, which would indicate that the plans for the 9-5 to be removed from Russelsheim’s forward planning would have also been around for some time. I’m sure that Eric would be familiar with this, yet I can assure you there was nothing of the sort mentioned in our conversation.

It’ll be interesting so see which way this one goes.

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Thanks Tim!

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Cars.com on the Wagon’s Last Stand

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Four staffers over at the aptly named cars.com rate the Saab 9-3 TurboX SportCombi alongside the Audi A4 Avant Quattro and the Volvo XC70 T6. Surprise — the Saab loses and I’m thinking that’s probably correct given the circumstances.

To begin with, this comparison isn’t really what you’d call an in-depth report. It’s more of a summary of all three vehicles with some cutesy categories chosen to allow the writers (all four of them) to write witty little comments about each car in each category.

The categories:
- Non-grocery getter (this is the styling competition — one mustn’t look too frumpy driving a wagon!)
- Sporty driving experience
- Gas mileage
- Cabin luxury
- Ride comfort
- Driver comfort
- Back seat roominess
- Cargo utility
- Overall value
- Editor’s choice

The scoring:

Audi A4 Avant Quattro 2.0T wins non-grocery getter, gas mileage, cabin luxury, back seat roominess and overall value with a sticker price US$5,000 less than the Volvo and US$8,000 less than the Saab. As the smallest of the three the Audi loses in the cargo utility category.

Saab 9-3 TurboX SportCombi wins for sporty driving experience and loses (gets ridiculed, really) for the lack of cabin luxury and for the lack of value given the TurboX sticker price. The Saab gets kudos for a strong second in the cargo utilty comparison despite smaller dimensions than the Volvo.

Volvo XC70 T6 wins for driver comfort, ride comfort and for cargo utility.
It handily loses the sporting driving experience category, brings up the rear in the gas mileage comparison and finishes with the editor’s choice award for being exactly what the editors expect in a wagon.

Overall, I think that it’s an OK comparison — at least the three vehicles are similarly equipped, nothing out of the ordinary, etc. It’s simply a line up of comparisons that doesn’t really play to the Saab’s strengths, and I think that we’ve all realized by now that the TurboX package isn’t exactly price competitive (according to the article: “The outdated Saab seemed woefully overpriced.”). This “compliment” for the Volvo in the editor’s choice statement says it all:

When Americans think of wagons, they remember spacious people-haulers. That’s exactly what the XC70 is. With all its family-friendly features and a comfortable ride, it most resembles that classic wagon ideal, modernized for the 21st century.

I, for one, am glad that the 9-3 SportCombi can’t be described this way. In a context where the mundane is valued over the sporting character of the car, I’m glad that the Saab doesn’t win. If I wanted to remember the “spacious people haulers” of the American past, I’d buy a 1976 Buick Estate, for crying out loud!

However (and there has to be a however or there wouldn’t be a post in this), I am disappointed at the way that the 9-3 TurboX SportCombi loses two categories: the cabin luxury comparison and the editor’s choice.

In the cabin luxury comparison, the TurboX wagon is characterized as “A much older design” and judged “not luxurious enough for [US]$40,000-plus”. As if to rub salt in the wound, the editor’s choice segment squashes Saab again:

While it may be the most fun to drive and offers a sizeable cargo area, the 9-3 fails at just about every other step. Throw in the high price tag and we can’t imagine why people would choose it over the competitors here.

Ouch.

We need new product. Warmed over “much older” designs interiors (thanks Kroum!) from Vauxhall and Opel can’t cut it in today’s market. It’s getting downright embarrassing when your flagship product is panned like that.