United States
Share | 
Same-Day Analysis
GM Disbands Saab Management Board
Published: 1/13/2010
IHS Global Insight Perspective | |
Significance | GM has disbanded Saab's management board as part of its ongoing preparations to wind the Swedish brand down. However, Spyker and Genii Capital both remain hopeful that a deal can be done. |
Implications | While bidders and staff at Saab do not want the brand to be closed, there could be several benefits in doing so for GM. |
Outlook | Despite an influx of new models expected over the next couple of years, it remains to be seen whether there is a business model suitable enough to see Saab as a viable independent concern. |
General Motors (GM) has announced that it has disbanded the management board of its Swedish brand Saab as it continues down the road to winding down the automaker, reports Automotive News Europe. The changes will be effective immediately. A spokesperson for GM said that former managing director, Jan Ake Jonsson, would remain at the company to assist the recently appointed supervisors to the process, AlixPartners (see United States – Sweden: 11 January 2010: GM Signs Up AlixPartners to Wind Down Saab; Further Details Emerge of Genii Capital Bid). The spokesperson added that GM was unsure what roles other key, long-standing members of the management board would take in the company going forward.
With the growing momentum towards Saab's closure, chief executive officer (CEO) of GM's European operations, Nick Reilly, has told Autocar that the main stumbling block for many of the bids so far has been the ability to provide a robust business plan. He reminded the enthusiast publication that Koenigsegg managed to provide one which backed the approval of loans from the European Investment Bank (EIB) and the Swedish government, but added "it is still not clear why they pulled out." Reilly also said "We're not trying to get any money for Saab, it's costing us to keep it open," before adding that the closure would cost 50-100 million euro (US$72.5-145 million). However, he said that it would require a solid buyer as GM did not want a collapse happening within the next couple of years, stating "We have a large car parc of owners that we need to support… If we sell to a 'fly-by-night' type operation and they collapse, the owners are going to come back to us. We need to sell it to someone who can keep it going." Reilly also denied speculation that if Saab was closed that the 9-5 model and the next generation 9-3 model would be resurrected under a different brand, telling the publication "If Saab closes, the new 9-5 and 9-3 will go, and the cost absorbed in the winding-down charge."
Elsewhere, bidders for Saab remain hopeful that they can reach a fruitful conclusion for their proposed takeovers of the automaker. CEO of Spyker Cars, Victor Muller, told Automotive News Europe said that he hoped that an agreement could be reached within "days, not weeks." He told the trade publication that "there is a point in time where we would say 'This is not for us'... [but that] the last time I looked… we were in the midst of the process." Muller also reiterated his aims for Saab if his company succeeded in its acquisition, stating to Dow Jones Chinese Financial Wire that "We would very much like to re-launch Saab." He added that "Saab is an iconic brand. Its business can be viable and very, very sustainable" with strong customer loyalty, but noted that Saab "has lost its DNA," referring to its dependence on GM architecture and components. Muller also said that he planned to increase Saab's headcount in order to increase the production capabilities of the automaker, and that a new company would be formed to combine Spyker and Saab, called Saab Spyker Automobiles, which would be listed on the Dutch stock exchange.
As well as Spyker, Genii Capital's joint bid with Bernie Ecclestone, CEO of Formula One Management, the commercial rights holder of the Formula One motor racing championship, also remains in the running. Lars Carlstrom, a Swedish investor who is co-ordinating the bid, told Reuters "Genii hopes to improve its bid so that it becomes more attractive for GM," before adding "One has to sweeten it to be a part of the bidding, that's the message we've received [from GM]."
However, with doubts over the company's future hanging in the air, workers at Saab have taken matters in to their own hands and conducted protests outside the Trollhättan (Sweden) facility. According to Autocar, up to 3,500 people gathered to show support for the automaker's plight. The employees also presented a letter that will be sent to GM's chairman and interim CEO Ed Whitacre, which urged the company to sell Saab rather than close it. This took place against the background of the first convertible 9-3 model rolling off the production line at Trollhättan, as part of a previously announced strategy to bring all its vehicle production in-house.
Outlook and Implications
The concurrent running of the bidding and winding down processes is producing increasing uncertainty for all those not directly involved in the process. This was not helped by GM's Whitacre telling journalists at the 2010 North American International Auto Show taking place in Detroit (United States) that "We're closing down Saab… We're winding it down." (see United States – Sweden: 12 January 2010: GM Continuing to Wind Saab Down as No Viable Bids Submitted, Say GM Executives). Despite this, the winding down process is not as clear cut as one could initially conclude, but it certainly has its advantages. Not least would be to cut out the potential for future issues if the bidders ran in to financial troubles, which could leave GM liable both to current owners, which to some extent it already is, but also to component suppliers dependent on Saab for sales. Also, there would not be the worries about intellectual property rights, which have proven to be an obstacle to previous bids. Future competition could also well be a factor, particularly in markets where demand for premium brands are increasing, such as China and Russia, and where GM fears that it could lose sales to a rival using its own technology. However, when looking at the business plans, if one of these stands out as having a long-term chance to return the business to profitability, this in turn could well be beneficial to GM. Saab has been hamstrung by a combination of an ageing model in the shape of the 9-5, aligned with other vehicles to broaden its portfolio which have generally disregarded the ethos of the Swedish brand (these being the Saab 9-2X and 9-7X, which were effectively just a rebadged Subaru Impreza and Chevrolet Trailblazer). The latest generation 9-5 seemed to offer a glimmer of hope that the company had finally rediscovered itself, and any buyer is likely to try to capitalise and expand on this theme. The results of this could be seen in possibly the 9-4X, but more likely in the next generation 9-3, set to be launched within three years, and in turn attract former customers back. However, Saab is only expected to have sold a little over 40,000 units in 2009. This leaves it uncertain whether any bidder can return it to the 130,000-unit level that it sold at the beginning of the century, or more, and even if this does take place, whether this will be a sustainable business model in the current global environment. With this is mind, it is unsurprising that GM is taking this two-pronged approach, but as can be seen this is doing very little for the continued morale of the workforce.Most Viewed Articles
- Key US Data Releases and Events
- US January Employment Report Is Far Stronger Than Expected
- Global Economic Impact of the Japanese Earthquake, Tsunami, and Nuclear Disaster
- Preliminary Figures on Russian 2011 GDP Growth Surprise on the Upside
- Argentina Shows Mixed Response to Falklands Tensions
- Key US Data Releases and Events
- EU Member States Agree On Fiscal Treaty; UK and Czech Republic Refuse to Sign
- Fitch's Six Rating Downgrades Spare Triple-AAA Euro Sovereigns But Highlight Restricted Reserve Currency Benefits
- Bank of England Policy Decision Heads up UK Economic Week for the Commencing 6 February
- Deal Signed on Burgas-Alexandroupolis Pipeline; Construction to Begin in 2008
