Earlier this week, we invited readers and Facebook fans to submit questions to Saab for responses. We now have responses for most of those questions, provided below.
- A big proportion of Saab’s future is contingent upon an approval process currently underway in China. Our Chinese partners, Pang Da and Youngman, are seeking approval for their proposed investments into Saab Automobile. The process is going very well and we remain very confident of a positive outcome, however the decision is not final until it is made by the NDRC and other agencies involved. This Q&A has been prepared with a positive outcome in mind – i.e. a return to (relatively) normal business conditions.
- There are some aspects of our business, e.g. forward product planning, that we cannot comment on in detail. I’ve tried to provide general responses where possible, but details cannot be made available. That’s just the nature of the business.
- Time has been my enemy. I wanted to answer all questions by today, but there are some people that I just haven’t been able to get to in order to get responses. I will do that, and compose answers for the remainder of those questions. They will be posted in approximately two weeks from now (I will be away from the office for a week between now and then, hence the delay)
I’m pretty sure this was asked by a US-based customer, hence the bankruptcy reference. It’s important to note here that Saab has not been through a bankruptcy procedure at all in its history. The process we are undertaking right now, reorganisation, is a process under Swedish law that is quite separate from a bankruptcy under Swedish law. This is not just me being pedantic here. It’s a very important distinction for reasons that will become clearer below.
The basic similarities between a Swedish reorganisation and a Ch11 bankruptcy in the US do not mean that the words are interchangeable. Saab is in reorganisation under Swedish law. Remember that as you read on and please be mindful of the distinction, especially if you are accustomed to using the US terminology.
To the center of the question, then. What are we going to do in order to ensure this doesn’t happen again?
Saab went through a reorganisation in 2009, when it was being sold by General Motors. We emerged from that with a clear plan to carve the company out from GM and re-establish ourselves as an entity under new ownership. We brought the company out from liquidation and in what was actually a very short time, we started production of the new Saab 9-5. What we didn’t count on was just how hard the carve-out from GM would be. We had to re-establish some markets, as well as trying to communicate our survival (against a flood of news reports that continued 12 months into our sale from GM, that simply referred to us as ‘discarded’) as well as trying to communicate new product.
Bottom line – our business plan called for more sales than what we achieved. We made huge inroads into carving our business out from GM’s back-office but we didn’t make all the structural or operational changes that we could. Our sales were on an upward trend with key new models set for imminent release (low emissions 9-3 TTiD SC, 9-5SC and 9-4x) when we had to stop production.
So what do we do now?
We’re making the structural changes to our business that we didn’t make a few years ago. Those new models are still imminent pending the re-start (9-4x is already out there) and, of course, we have to use our limited resources very effectively in terms of marketing the brand and reaching out to customers, both the current and potential future kind. We still have excellent products with a host of new innovations coming, we still have a great brand that speaks to people, and we will have solid backing from our partners, which we will be able to build upon to instill some confidence into the marketplace.
The short, idealist answer is that we’d like to start producing again as soon as we can. The longer (and more real) answer is that it’s a complex process with a number of milestones that need to be reached before we can communicate a date publicly. We have internal plans in place as to how and when the re-start should be commenced. We can’t communicate those plans publicly at this time, however, because the preliminary steps that we need to complete are still ahead of us.
For example, we still need to present our business plan to our creditors and have them approve it as part of the reorganisation process. This is a formal part of the reorganisation process and we cannot proceed without it. We also need to have a cohesive plan in place with our suppliers for payment and delivery and it isn’t possible to communicate a date publicly until those steps are completed.
Production of the Saab 9-4x is a slightly different matter, but is still subject to the same financial constraints as the rest of our business at this time. We do have a planned starting date for 2012 model year production but that will be subject to payment arrangements being made, which are once again dependent on our dealings in reorganisation and the approval of our Chinese partners.
This is one of the instances where it’s important to note that Saab are currently in the process of reorganisation under Swedish law. This is not a bankruptcy procedure.
Under reorganisation, your warranty remains in full effect and all of the terms and conditions of that warranty remain the same as the day you drove the car from the dealership.
The original question asked was “What happens to my warranty in the event of Saab bankruptcy?” That’s a complex issue that I’m still trying to find an answer for that I can communicate here in a simple manner. I simply don’t have access to the right people to provide that answer today. We’ll look to address that in Part 2.
Bear in mind that Saab has absolutely no intention of going bankrupt. This is a worst-case scenario question, but here goes……
Saab Automobile Parts AB (Saab Parts) is a wholly owned subsidiary of Saab Automobile AB responsible for the sales of Saab spare parts and accessories. It is important to note that Saab Parts, whilst being owned by Saab Automobile, is a separate company under law and is not part of Saab’s reorganisation. Saab Parts is a profitable and cash generating business.
The shares of Saab Parts are currently pledged to the Swedish government as security for the EUR 400m loan facility granted to Saab by the EIB. Under the security requirements from and controlled by the Swedish National Debt Office, Saab Parts operates under strict rules. i.e. it keeps its own accounts, it has minimum working capital requirements etc. If there were to be any future insolvency event, Saab Parts will continue to operate as an independent entity for many years supporting Saab customers with parts and accessories.
We are aware of, and very sorry about, the difficulties people are having obtaining some spare parts at the moment. My understanding is that Saab Parts is currently able to supply around 90% of the Saab parts catalog, however that does leave a proportion of common parts unstocked.
The current problems are mainly with parts produced in a “production line type” environment, i.e. they are normally produced in bigger volumes that support both aftersales and the vehicle production line at the factory. Suppliers in general don’t want to run such a production line every day or week, just for the small aftersales volume. This means that delivery times for such parts are currently longer than customers are used to.
Some parts have begun to be re-stocked (e.g keys for the 9-3, just recently). We would anticipate that all parts will begin to be more freely available once again when parts suppliers are producing parts at full capacity once again, i.e. when the production line is due to re-start.
Mr Antonov’s business intentions are not ours to comment on. We have enjoyed wonderful support from Mr Antonov, however it is clear to all that he cannot become an investor in Saab whilst we still have the EIB loan in place. When that loan is eventually cleared (see below) it will be up to Mr Antonov and his board as to whether his companies invest in Saab.
We would definitely like to pay back our EIB loan when circumstances permit. Once our partnership with Pang Da and Youngman is confirmed, we should have better access to banking options that are available to them, options that will likely be explored in order to repay our EIB obligations.
When I used to write about Saab on my own independent website, I used to get very angry about this issue – or more precisely, the lack of real commentary about it.
Selling diesel vehicles in the US is a bit different to selling them in Europe. In the US, they concentrate on NOx outputs, whilst Europe concentrates on CO2 output. The engines that Saab use to great effect in Europe will not pass emissions testing in the US without significant modification, a process that would require investment that Saab simply cannot prioritise at this point in time.
Diesel sales, whilst growing in the US, are still quite small. The number of diesels that Saab could sell in the US is very small indeed, given our small marketshare and the need to educate customers there. It just doesn’t justify the investment required at this point in time, especially given our resource levels and priorities. Of course, future models with new engines could make this possible, but for the near term, the likelihood of Saab diesels in the US is quite remote.
Whilst you never say never, the likelihood of this happening in the short-medium term is pretty remote. The Saab 9-4x was built with the North American market as the #1 priority, which warranted a 6-cylinder petrol engine for satisfactory use in terms of vehicle performance and NVH. A diesel option for the Saab 9-4x would be very desireable, of course, because this is the prime engine choice for the European market. We didn’t have access to a diesel engine for this architecture that we felt would be suitable for this vehicle.
In the future, we plan to build an all-new Saab 9-4x using the Phoenix platform. Such a vehicle would have many more powertrain options available to it.
This is one of those damned-if-you-do/don’t questions, isn’t it?
One of the strong selling points of the Saab 9-4x is that it comes very well equipped as standard. My first time driving the 9-4x saw me so impressed by the equipment level that I wrote a post specifically on this subject. The fact that there are only three options for the Aero model is indicative of the high level of equipment that comes standard on the car.
I’m not sure what the vehicle line managers have in store, but I don’t see a “Saab Individual” program getting the green light in the next 12 months or so. The thing about equipment is that it has to be available at a certain volume or it’s going to cost an arm and a leg. We think we have the 9-4x equipped and priced to really hit a sweet spot in the North American market and right now, in our situation, that’s the main priority.
More exotic options? Never say never, but I would suggest that it’s not our focus right now.
Unlike the sedan version, the U.S. Saab 9-5 SportCombi will only be offered in one body style; Aero, and with one powertrain; the 220hp 2.0T with XWD and 6-speed auto. There are several factors that have gone into this decision but the bottom line can be summed up with one word: volume.
First, the wagon segment is a very small segment in the U.S. market and typically represents only about 10%-12% of the 9-5 volume and less than 3% of total U.S. volume for Saab. Having several variations of a model with such low volumes presents inventory issues for dealers, as having the “right” car means stocking more cars than can realistically be sold, and all this expense just to have all of the variants available for a test drive. It’s an impost that we can’t ask our dealers to carry at this point in time.
Price: Having an attractive price point is very important and the powertrain is one of the most expensive components in the vehicle. The V6 turbo is considerably more expensive than the 4-cylinder turbo and would thus have a significant effect on the price point.
Economy: Again, the 4-cylinder turbo has an advantage and achieves better figures than the V6. (Offering the V6 in the SportCombi could also negatively affect the figures for the Sedan, which is not a desirable result.)
FWD/WXD: The U.S. has a wide variety of weather conditions at any given time of year. While XWD may not be a priority in Florida, for example, it is definitely a preferable piece of standard equipment for our strongest regions in the US (traditionally, the north-east).
6-speed auto (with manual shift mode): This makes the most sense for most buyers of this type of vehicle. Again, it’s about volume. Would it be nice to offer a manual transmission? Yes, of course, but at this point in time the automatic will be the only transmission available.
The wagon market in the US is already a niche market. I’m sure most of you have seen that many of our competitors have either severely cut, or completely dropped wagons in this segment. All of the factors mentioned above reflect back on this same primary issue – the 9-5 SportCombi is a low volume car. Saab has to work with its US dealers and consider sales data and customer profiles to determine which choices make the most sense in a buy-off-the-lot market.
Our performance tuning partner, Hirsch Performance, will have a tuning option available for this model. The timing of US availability is not something we can confirm at the moment (and I haven’t had time to speak further with Hirsch about this).
Ever since the sale from GM, comments have been made that Saab would love to develop a smaller car, but that it was not part of the current business plan, it was not funded, and that we would require partnerships for the development of such a vehicle.
It’s still something on the most-desired list, but the good news is that our partnerships with Pang Da and Youngman will see this dream become part of a documented plan.
When we announced our deals with Pang Da and Youngman, we included the following:
The New Product Joint Venture (NPJV) will be 50 percent owned by Saab Automobile and 50 percent by Youngman Passenger Car, and forms the foundation for an expansion of the Saab product portfolio with three models which until now did not form part of Saab Automobile’s current and future product portfolio. As such the NPJV will focus on developing three completely new Saab vehicles: the Saab ’9-1′, Saab ’9-6′ and Saab ’9-7′.
Within the development process of these three new vehicle lines, Saab Automobile will be responsible for controlling and managing the design, the development and testing process to the start of production and providing other necessary technical and quality control support.
The Saab 9-1 mentioned in that release will be the smaller Saab asked about in this question.
As you can see from the question above, our priorities under the New Product Joint Venture would be the development of a 9-1, 9-6 and 9-7. None of these are likely to specifically be an Aero-X type halo car.
We need to solidify our place in the market and that will be done through great product based on outstanding design. What we aim to achieve is Aero-X style distinctiveness in our product range, but with real-world product.
As for higher performance, Saab have our official relationship with Hirsch Performance and they provide an outstanding product for people who want to tune their Saabs for greater performance and still maintain their full warranty. We need to build on partnerships like this from a position of strength, which we intend to do.
Turn up at the museum around 10:30 with great coffee and a pack of Tim Tams (otherwise known as the most wonderful, tasty chocolate biscuits in the world), and the staff there will be like putty in your hands. You won’t get to drive one of the original Sonetts, but you’ll get an even-warmer-than-normal welcome 🙂
Orders placed so far in 2011 still remain, unless cancelled by the customer. There have been some cancellations, which is inevitable given our circumstances this year, but we still retain a very healthy order bank of around 10,500 vehicles, awaiting our re-start.
Our business plan definitely takes our current order bank into consideration, as well as the new products we’ll bring to market as soon as we re-commence production (the low emissions 9-3 TTiD SportCombi, and the 9-5 SportCombi).
The new Saab 9-5 SportCombi was just weeks away from commencing production when the line was stopped back in April. In fact, we had 9-5 SportCombis on the production line at the time of the stoppage that were due to be used in drive events for the official launch. That’s how close things got.
The 9-5 SportCombi is a very important product for us, especially in the more wagon-centric European markets. We aim to get the Saab 9-5 SportCombi rolling off the line and into dealer forecourts as soon as possible when the factory re-starts.
And we’ll get that vehicle launch done, too.
The 2011 model year production of the 9-4x was completely allocated to the US market. MY2012
will see production for markets outside the US (and for the US as well, of course). As mentioned above, we cannot give a hard date for the re-start of 9-4x production, however we do expect that in the normal course of events, production there would resume prior to production in Trollhattan. Deliveries to non-US markets will come some time after that (timing will be different for different countries).
We can’t talk too much about the 9-3 replacement vehicle. What’s been disclosed publicly is the following:
The vehicle was originally scheduled for release in the last quarter of 2012. That date has been pushed out to some time in 2013 due to our circumstances this year. Development of the vehicle has continued during our factory stoppage, but at a slower pace due to funding constraints. We are 100% committed to getting this vehicle out in a timely manner, but we are also 100% committed to making sure it’s ready for market when it’s released.
Jason Castriota spoke to a group of journalists at the Geneva Motor Show earlier this year and at that show, mentioned that he had been working on different body styles. The exact makeup of that range is something that you’ll just have to wait for, but we don’t think people will be disappointed.
We know that there is a large contingent of people missing certain traits that used to be fundamental to Saab design, traits that we became very well known for. Saab hired Jason Castriota so that he could lead our design team in building Saab Saabs again, and that’s exactly what we intend to deliver.
The V6 engine was eliminated for the Saab 9-3 in all markets in 2010 (except for the singular exception of Poland, to the best of my knowledge). This was when the Saab 9-5 came out.
The V6 comprised a very small percentage of Saab 9-3 sales worldwide and while it was good to get it into the car back in 2006, the arrival of the Saab 9-5 made the 9-3 V6 somewhat redundant (plus, there were the aforementioned pricing issues of having the V6 that pushed what was our lowest priced car into much higher priced territory).
The petrol version of Saab 9-3 Griffin now has the direct injection 4-cylinder engine from the Saab 9-5 available and this engine is incredibly smooth and enjoyable to drive. It has a vast torque curve and is very elastic, pulling well from very low revs. Those who want a bit more power from it will find the Hirsch 260hp upgrade pushes what we initially offered with the V6, but without the weight or fuel economy penalty that comes with the V6.
And for the future? Saab have already announced their deal with BMW to use the 1.6T petrol engine. That will be in the replacement for the Saab 9-3. Will there be a V6 option as well? There has been no information to that effect.
One of our brand pillars is Scandinavian Design. This implies elegance, utility and simplicity. We want more than ever to get back to being a design driven company and the delivery of high quality, well designed interiors is a big part of that.
The interior of the 9-3 Griffin range retains the 9-3’s recent layout but with better materials and execution. The Saab 9-5 interior is also going to get additional materials to add to the character of the interior that was in place when the vehicle launched last year. And as you might know, the replacement for the Saab 9-3 will see the launch of Saab’s IQon vehicle information and entertainment system, which will be a benchmark in the industry and typical of where we want to take Saab interior amenity in the future.
I guess you’d never say never, but there’s nothing on the cards that I’m aware of in terms of actual vehicle development.
Saab and Volvo already participate in some smaller technology development projects. Sweden is a small place and when government funding is available for developing technical efficiency projects, it helps to secure the project when both companies are on board.
Volvo are now involved with the Så Nätt project that I reported on earlier this year, looking at ways to build lighter, more efficient vehicles. Saab is still involved, but to a lesser extent due to our circumstances.
I do believe it will.
The emergence of the internet as a marketing and information tool has made it essential for companies to secure their presence online. Inside Saab is one of the ways Saab is doing this. We have other social and web strategies in place, too, and were just weeks away from commencing the rollout of new web platforms when we had to essentially freeze expenditure a few months ago.
Inside Saab plays a role that other car companies will find difficult to replicate – interacting with customers on a personal level, direct from the factory. We’re small enough to do it, but big enough to keep it interesting. We have some great stuff in the pipeline.
Achieving sub-120g CO2 emissions for the 9-3 TTiD wasn’t simply a matter of just the engine. There were quite a number of changes that were made to the Saab 9-3, each resulting in an incremental increase in efficiency. Weight reduction, changing some electronic functions, brakes, airflow – all were involved. We are working on lower emissions for the 9-5 as well and have made significant progress.
Given the importance of emissions to our fleet customers, you can’t put enough emphasis on how important this is. The low emissions Saab 9-3 TTiD models gained signficant traction in the marketplace in a very short period of time and we can’t wait to take them to the marketplace once again.
We would absolutely love to. No question about it.
There are no plans to revive the old Saab propeller logo as a prominent feature on future cars. It’s use on the wheels of PhoeniX was merely for effect (though I agree it looked good!).
As with the 9-3 Griffin, the Saab 9-5 and the Saab 9-4x, we plan to place a lot more badging emphasis on our actual name – SAAB. The Saab wordmark now features prominently on the front grille, the steering wheel and on the rear of our vehicles and it’s likely to remain this way for some time.
The griffin logo remains on the hood of the car.