Is the clock ticking?

This ain’t Saab specific, yet it could have profound consequences for the little car brand we know and love.  Consequences that some will welcome, whilst others will fear.

Jerry York doesn’t have a seat on the GM board……yet.  He’s Kirk Kerkorian’s ‘advisor’ and he’s just given a speech to the Society of Automotive Analysts (Jan 10).  Automotive News have a full transcript of the speech that you can read by clicking here

In short, the bit that effects us as Saab owners is the unsurprising plan to sell Saab, as York and his boss, Kerkorian, see it as a non-core asset of GM’s.  York observes that GM still has a mountain of cash, therefore having the resources to dig itself out providing management do five things, preferably within the next 1,000 days – after which he forecasts GM’s cash will burn out (that’s $24 million a day, folks):

  1. Be realistic about market share and revenue
  2. Cull the lineup.  Offer fewer, better focused offerings.
  3. Take a ‘clean sheet’ approach to the business, no sacred cows (even in India?)
  4. Make the tough decisions (which I thought would have been involved in 2 and 3)
  5. Generate a sense of purpose within the business

York cites his previous experiences at IBM and Chrysler and draws several similarities between those situations and GM’s. 

When he finally gets to the specifics of addressing Saab, York is brutally brief:

Saab: Why does GM still own Saab?  Forthy thousand units per year in the US.  Less than 150 thousand units per year on a worldwide basis.  Unless what I see in the press is wrong, it has pretty much been a money loser.  So why not get rid of it?

That’s it.  Saab’s future in a nutshell if Kirk Kerkorian and Jerry York have their way.  And they’ve got a fair bit of weight to throw behind it.  KK currently owns 7.8% of GM even though he recently sold 12 million shares for tax reasons.  He’s indicated already that he plans to buy those 12 million shares back, and has even said that he’s interested in another 12 million if the circumstances line up how he thinks they should.

So, the jury’s still out on this, but you get the feeling that the verdict is only a long lunch break away.  GM’s been talking Saab up quite a bit lately and it’s been pretty encouraging.  Was it truthful or a fattening of the lamb prior to selling?

Time will tell. 

————————- 

please, please, if someone’s going to buy Saab – let it be Porsche!!! 

You may also like

26 Comments

  1. Thanks for the update. I’ve made no secret of my desire for, and expectation of, a sale all along. I sure hope along with you on Porsche, which as you’ve reported is looking at having foreign holdings for the first time, likely beginning this year. The timing seems just so coincidentally right. Like you said, man, “please, please” let it be. PLEASE!

  2. Yes, i’m also “please, please”ing! But, I think it’d be a good idea to contrast between “why”s the “why not”s at this point. Other than that, “please, please” let it be. PLEASE!

  3. Mhhh,
    I would appriciate Porsche as well – but they recently bought a huge amount of shares from Volkswagen… So I’m not sure whether they have still money left for this type of adventure. Let’s hope so!

  4. I’m hoping that Investor the previous owner buys it and starts a joint venture with porsche and maybe volkwagen. That could produce wonderful cars that could share parts.

  5. How about Saab buying it back? Or Scania? Do they have any cash?
    Forgive my ignorance but who owns them these days? whats they business looking like/turning over?

  6. How about Saab buying it back? Or Scania? Do they have any cash?
    Forgive my ignorance but who owns them these days? whats they business looking like/turning over?

  7. Porsche buying Saab is as unlikely as GM making a profit year 2006… Scania focuses on their core business which is trucks and they’re doing very well so I doubt they want to buy a company that looses $. The most likely buyer to Saab if GM sells is probably a Chinese car company that wants the brand and a foothold in Europe. I also think that would be the best thing for Saab…

  8. “Its very narrow minded to look situation only as units sold and profit…”: But that’s how bean counters think. Personally, I think GM is talking Saab up like a baseball team showcasing a player they want to trade. I just hope the deal is with Porsche–what a great combination! But please, oh please, no Chinese investors. No disrespect, they’ll be making freat cars someday, but it just doesn’t fit well with Saab’s heritage, just like GM didn’t fit well.

  9. Yes, Porsche would be great!

    However, I would also include either Honda (bottomless pit of money, engineering excellence, passion, a lack of a true premium brand and a history of working with European based manufacturers);

    Or the Fiat Group (Flair, passion and history of working with SAAB and acknowledgement of where each others’ strengths lay).

    As for Kerkorian, he is a well known takeover artist and previously joined forces with infamous Iacocca for a hostile takeover for Chrysler before it was sold several years later to Daimler-Benz.

    P.S Have a feeling we have already been Telling GM About It…?!!

  10. Interesting and informative comments. Although I realize hoping for Porsche is highly unlikely at best and pure fantasy at worst, I would be interested in hearing what specifics Mat may be seeing in the business equation. I agree with Ted Y that GM has been “talking SAAB up” for a sale, but I’m thinking a Chinese buy could prove positive to say the least. Keep this in mind: after handling Lotus about as poorly as it handled SAAB, GM sold the British company to deep-pocketed Asian investors — in Malaysia or Singapore, I believe. I don’t know how profitable, if pofitable, Lotus is these days, but it has completely new models and I don’t see bad news about it’s business as we do regarding SAAB and Jaguar. Ownership by Fiat would be nice for the reason’s HAL_9000 points out, but given Fiat Group’s financial problems, that is difficult to imagine.
    By the way, last I heard VW owned a major stake in Scania after an unfriendly Volvo takeover failed. I don’t know where Investor AB stands with Scania or SAAB air and space, but have heard Volvo is quite sorry — “kicking itself,” actually — for having sold a profitable and successful little car business to Ford. Volvo realizes it could have done shared ventures — such as SAAB/Fiat Group and Renault shared ventures. With SAAB having no profit and no sales to speak of, I’d be stunned if Investor came calling. I would love to see all the SAAB pieces plus Scania back together again to recreate the world’s most powerfully synergized transportation company. SAAB suppliers and consultants told me some years ago that when GM came in, even at just 50 percent ownership, technical sharing from the aircraft side fully ended. Of course, so has work with Scania, which once manufactured the SAAB car engines.

  11. I don’t think GM will ever be a company that makes great cars, and I think Saab will be better off without them. Saab used to be an innovative leader and it seems they are just following the crowd.

    I think Saab engineers still have it, but they are hampered by a morass of suits at GM.

  12. Kirk Kerkorian is right — GM can’t survive with the current state of things. Additionally, I agree with several comments above that Saab’s value to a single investor would be nil; Saab isn’t making a profit with GM’s huge buying power, so how can a single investor make the numbers work? The logical buyer for Saab would be a company that wants the brand cache and/or the technology (turbocharging) for their offerings. And again, Chinese, Korean and South African manufacturers all would make some sense from that point of view.

    However, I don’t think that GM will sell Saab in the near future. For the time being, each Saab sold allows GM to offset the fuel economy numbers from a hugely profitable SUV in the CAFE game here in the US. Additionally, Saab gives GM something that the other GM brands do not have: a global brand. I say that they stay put for the next couple of years or so.

    And Porsche? Dream on!

  13. Some comments about Scania, ´VW and Investor. Investor has something on the move. They have sold of some of its shares in for example SEB Astrazenca and have very strong bankaccount.

    I think they are getting redy to buy out Scania from VW and if it is necessary also from the market. Once again combine Scania and Saab is not likley. Saab dont make money and wont do for the next 5 years either. Scania can’t afford to push that kind of money in the company and what about dealer-network?

    I must say it is a tuff sell, getting rid of Saab (and saab living on)

  14. Saab is not using “buying power” of GM fully or anywhere near. Saab worked alone, avoiding sharing much as possible.

    Next generation of Saab will share parts with GM.

  15. Kirk Kerkorian has just stated a very simple rule of business. A company that is loosing money should divest of those business units that are losing money and invest in those making money.

    This should not sound negative to SAAB owners. SAAB lovers should be very happy about the prospect of the company being sold. As long as SAAB is owned by GM there will be very little funding for the brand.

    The only way SAAB will become the SAAB we all know and love again is for a very profitable company (ie Porsche, BMW…) to buy it and pour money into it.

    If you believe in buy low, sell high, now is the perfect time for a company like Porsche to buy the battered division, and build it up to return it to profitablility.

    On many levels it makes sense for Porsche to purchase SAAB (turbo history, very loyal customer base…) not to mention the fact that Porsche would be expanding into a market segment where they do not currently offer any products.

    SAAB would benefit from the Porsche name, performace technology know how, engine shareing, and build quality (have you seen Porsche reliability ratings by J.D. Power! lets just say they are slightly higher than the ratings for SAAB).

  16. interesting train of thoughts & info.

    JYs (KKs) thoughts are pretty basic. Be honest about the company’s position and then make a fresh start.Woohoo – you sure need an MBA to come up with that! If jerry can make a living being paid for that kind thing then here’s my offer – free of charge.

    1) Business is about selling things for more than they cost you. If you cannot do this, you will soon be out of business.

    2) If you sell anything at a loss, you’d better have a bloody good reason as well as a watertight financial model to support it. Otherwise – refer to Point 1.

    Now without being too silly, one of the big problems GM may have is a “mountain of cash” safety net. Anyone who thinks that a loss is ok because “there’s plenty more where that came from” is living in la-la land. No matter how impressive their CV, press releases,website, suits etc..etc…….
    However, I do not personally know how much cash is in the coffers and so leave this thought to idle speculation.

  17. TuuSar, you’re wrong. The NG900 (also called GM900 for a reason) and the 9-3 are built on a Vauxhall platform; the 9-5 shares a great deal of parts with an Opel; the 9-7x is almost all Chevrolet; the 9-2x is, of course, a Subaru; virtually all Saabs are or will be built in an Opel plant in Germany. I could go on about cost savings on things like pens, computers and wrenches, but I think that you get the idea. Saab is using GM’s buying power all the way down to the bottom of their dealer network.

  18. I love my Saab, but I can’t believe they can be a premium global brand when they have a stigma of being a “quirky” car.

    I know I’m going to get bombarded with criticism, but I agree with the Kevorkian’s strategy. GM is losing 20 something million dollars per DAY! Other than a fringe niche market player, when has Saab shown potential in terms of growth or market share (other than the UK)?

    I’m hoping Saab is sold to another company that would implement a proper strategy.

  19. You’ll get no criticism from me Dan, only praise. SAAB would work best as the “sporting car” niche division of a major player; take your pick: Porsche, Volkswagen, Renault, a deep-pocketed Chinese or other Asian automotive investor, or even semi-major Volvo if it can some day escape Ford. As Ted Y noted above, “GM didn’t fit well” with SAAB, and never will in my opinion. Aside from rather curious growth in the UK, a small market, continental Europeans have told me directly that SAAB is now widely viewed as a cheapened GM product. The GM image is also hurting sales here in the US. I know, or know of, a number of people who’ve left the brand because of GM’s involvement. I will do the same once I can no longer get a Trollhattan-engineered engine like the “4” in my 9-5 Aero. I understand and appreciate Swade’s argument for SAAB to stay with GM a few more years to finish vehicles now in development. Unfortunately, SAAB can’t afford to stay under GM a few more months, let alone years. It will either cease to exist or continue as a GM vehicle carrying a SAAB emblem that no one reading this blog will ever want to buy. For anyone who refuses to believe that statement, read Stefan’s recent comments on why he chose an Audi A6 Quattro over a GM-cheapened 2006 SAAB 9-5.

  20. “Saab is using GM’s buying power all the way down to the bottom of their dealer network.”

    Wrong, please read some angry Lutz interviews past few years how Saab worked alone.

    There is no Saab car production in Germany and Epsilon is GM global platform. (although customized in Saab)

    And 9-2 9-7 are considered something like Saab 600, that is not even mentioned in Saab model history.

  21. Gents, Saab has recently implemented a whole lot more parts sharing and synergies within other areas of the GM network, but TuuSaR is correct in that the development costs of the 9-3SS (and the lack of parts sharing) was a prime reason why the proposed model range got canned a few years ago.

    One thing that’s always interesting to me is the reference to the 9-3 being built on the Vauxhall/Opel platform used for the Vectra. To my knowledge, the 9-3SS was actually the first car to come on Epsilon. All those after should be referred to as the one made on the same platform of the 9-3SS!!

    Eggs, you were a little premature in saying that Saab car production is in Germany, but right in saying it will be. And it’s not too long before it happens, either.

    Ah, the Saab 600. What an impressive looking beast (not!)

  22. All right guys. One last thing here:

    1. Saab IS using GM buying power ‘all the way down to the bottom of the dealer network’. TuuSaR, I don’t think that you live in the US and you probably aren’t aware of the fact that quite a number of Saab dealerships here are open today only because they are mainly GM dealers (Chevy, Pontiac, etc.) with Saab as a ‘second’ line at that location. Saab therefore gets dealers at little or no cost.

    2. Saab USA doesn’t exist outside the GM network anymore. The Atlanta Saab USA headquarters is gone; Saab USA is now a division within GM HQ just like Saturn.

    3. It doesn’t matter which Epsilon car came first — everyone shares the savings when it comes to parts production.

    4. I understand that the 9-2x and 9-7x aren’t ‘real’ Saabs, but we’re not talking about Saab in a vacuum here — we’re talking about Saab as a business. 9-7x sales help Saab to generate revenue with VERY little investment in product. To me, that’s the ultimate use of the buying power of GM.

    5. And, I said that the production ‘is or soon will be’ in Germany. If we’re talking about the projected revenues and financial health of Saab, this is an important part of the equation. Again, a direct indication of the use of GM buying power to control costs (albeit in the near future).

    I’m not trying to be argumentative here, but I want people to understand that GM gives a lot more to Saab than most of us would like to admit.

  23. Eggs, you’re absolutely correct. I think yourself and TuuSaR are talking about slightly different things.

    There’s not as much commonality in parts between the 9-3 and other GM cars as there is with, say, the new facelifted 9-5 and other GM cars. Hence TuuSaR’s reference to an angry Lutz (and the loss of the 9-3x – sob sob).

    The cost cutting and resource-sharing with regards to dealerships and spare parts etc etc is a more recent phenomenon too and you’re right in pointing out that it’s most significant impact is probably on Saab’s US presence. It’s the same here in Oz too, where the number of individual Saab showrooms has dropped dramatically (including our own here in Hobart).

    And the Epsilon thing had nothing to do with anything – I was just making an observation.

    I don’t think anyone’s under any misconception about GM’s contribution to Saab’s continued existence, though there seems to be some disagreement between TuuSaR and yourself about the timeline. From my knowledge, you’re both right about what you’re saying, it’s just the issue of ‘when’, which is not overly important anymore (imho anyway).

Leave a Reply

Your email address will not be published. Required fields are marked *