The Australian car industry nearly croaked last week.
Autodom, a parts supplier to all three local manufacturers, went into administration and were only saved by Ford and Holden coming together to bail them out. Toyota sat on the sidelines as they already had an adequate reserve of spares and didn’t feel compelled to intervene, a move that I’m sure won’t be forgotten in the future.
As I was reading this recap of what happened, there was one part of the story that resonated with regards to NEVS and their possible plans to rebuild the petrol driven Saab 9-3 (a plan that’s caused me even more confusion than their regular plans to build EV’s in Sweden and sell them in China).
It has been revealed this week that Holden and Ford may have been forced to shut down for up to 18 months if it were not for their swift response…..
….Industry insiders report that 18 months is the time it would have taken for the car makers move their tooling equipment out of the old factories and refit them into new ones and then undergo the battery of engineering tests required to ensure the equipment meets their standards.
That’s an 18 month shutdown for a company that makes hinges and other minor bits and pieces.
Now imagine re-designing an older car like the Saab 9-3 to meet new pedestrian safety rules as well as re-engineering it to take a new powertrain. There’s all sorts of re-tooling, re-supplying and factory organisation to be done with that, too.
My concerns with NEVS remain as follows:
- Why build in Sweden when China’s your #1 target market?
- Why rebuff Jason Castriota’s designs for the Phoenix based car when starting from scratch is only going to cost you a bucketload more in terms of time and money?
- Why burn cash on something other than your game-changing vehicle, the ‘ev-2’? Every dollar spent and day delayed pushes back your best hope of staying alive – new, innovative product.
- Why deviate from your stated business plan of EV’s only to consider rebuilding a petrol driven 9-3 in a climate where your markets have all but dried up, the product’s quite outdated and highly unlikely to generate any profit whatsoever?
The Australian case shows just how delicate the balance can be in the car industry, and just how long it can take to get something designed, tested and out to market. Those suggesting that NEVS can just “get an engine from XXXX” need to fully consider the business case that has to be made for whatever option NEVS might choose.
The BMW/Mini option, for example, was going to be massively expensive. It was a path that Saab took with a massive lump in its throat because it was going to substantially push the market price of the 9-3 replacement upwards. It was considered worthwhile, however because Saab had to go upmarket in order to survive as a small manufacturer. The BMW name added sufficient currency to justify the cost for Saab in 2010 because it was a long-term strategy they were embarking on, but would it make the same sense in 2013 with NEVS heading in a vastly different EV direction?
The old joke of “losing $$ on each car but making it up in volume” was/is just a joke. You can’t do that in real life. NEVS must have an ocean of cash behind them because right now, the path they’re treading just doesn’t make economic sense.
To those who’ll feel inclined to criticise me for not appearing to support a new Saab venture, please understand this: It’s not that I don’t support them. I simply don’t understand them. I make no claims to knowing it all, but I’ve gained an understanding of what’s involved in this industry and just how hard it is to exist in it. Even revered boutique brands with outstanding products like Aston Martin are threatened constantly with being sold off to bigger players.
Because it’ll be damn hard to be a small player in the car business in 2012 and beyond. The only reason Saab was a saleable commodity back in 2009/10 was because it had three new products either ready for release or in the pipeline. Trying to start from next-to-nothing in a high cost country just doesn’t make sense with the little information NEVS has provided.
I wholeheartedly support the idea of Saab activity in Trollhattan, but I’m also an experienced realist who’s covered Saab for 6 years and worked for them for one. I understand the brand and the markets well enough to know that this is going to be a mighty uphill struggle and that the route currently being considered just doesn’t make enough sense to be real. I just hope they’ve got a massive rabbit they can pull out of their hat.
I only ask questions because I want it to make sense, for me and for the friends of mine who might be investing themselves in the idea of a new Saab product.
Unfortunately, NEVS don’t seem to want to answer. Their PR guy hasn’t even responded to my email with an acknowledgement that he received it.