Saabs Divided

A Few Words In Defense of Saab’s Brand (apologies to Randy Newman)

I’d like to say a few words
In defense of Saab’s Brand
Whose people aren’t bad nor are they mean
Now the leaders they had
While they’re the worst that we’ve had
Are hardly the worst this Auto industry has seen

Let’s turn history’s pages, shall we?
Take DeLorean for example
Engineer turned Jet-setter
Sold a Vega, last forever, and rusted away
Then build a car company that nearly put him away.
That’s like Cocaine trafficking, money laundering, or something

That’s not a very good example, is it?

But wait, here’s one, Cerberus Capital
Robert Nardelli put people at Chrysler in a terrible position
I don’t even like to think about it
Well, sometimes I like to think about it

Just one year ago, December something recall
Tollhattan closed, nothing at all
Assembly lines rusted
Dealer families busted
And customer calls ..well the phones went dark too

Just a few words in defense of Saab’s brand
Whose time in Sweden came to an end
Now we all know the stories
And respect for Victor at this point is pretty much out of the question
But in times like these
The unemployed sure could use a friend

The end of a car brand is messy at best
And Saab’s brand well its fading away
Just like all the rest

Goodbye. Goodbye. Goodbye.

Less than a year ago, Chinese Youngman invested who knows how many millions of dollars ($45+ was reported) into what is now the defunct Saab organization.

I guess Youngman’s original millions are floating around somewhere?

Reminds me of God Father II, “if the money is on the table I have a partner, if its not, I don’t.”  No one knows for sure if any of Youngman’s money got on the table, or if there’s a huge cancelled check out there, but in any event Youngman’s millions are in the news again.

Autoblog reports: Spyker has transferred the licensing rights of the Phoenix platform (the architecture that was to underpin the next 9-3) to… itself. According to Youngman’s CEO Pang Qingnian, “We have felt all along that cooperation with Spyker had to be pursued, even after we both unjustifiably lost the opportunity to restructure Saab,” he continued, “with this agreement, many of our original intentions with the Saab brand will take shape.”

But wait a minute … the same person who is suing GM for $Billions over licensing rights is now transferring his own rights back to himself?  I hope the district court in Michigan is keeping up on all this nonsense.

Back to Youngman.

Another $12.5 Million to Muller for stock and $31 Million to launch the new Spyker D8 P2P and some type of ownership in the Phoenix platform (less no engine because that’s another law suit). It’s fair to say the Phoenix platform has made more money for Muller as a static display then it will ever make in production.

From my point of view, till Chinese businesses adopt American and European type accounting principals and investment disclosures – we can only imagine what we are reading in the press is indeed factual.

But yes, I do find it entertaining..

“Pang, we’re bigger than US Steel, pass the cake around and enjoy.”  mazltof

Yes,  Saabsdivided went dormant for a few months, mostly because what we predicted came true and honestly there was nothing more to say.

But now this – “Spyker’s $3 Billion lawsuit against GM” call it “Victor’s Pussy Fit (Riot).”

Now, I’m known to be critical of GM, but in the case of blocking the sale of Saab to the Chinese – I support GM.

First and foremost, no one, including the silly insiders at SU, know the specific terms and conditions Spyker signed.  Thus to comment on the outcome of such a lawsuit without fact is nothing more than sensational reporting.

Ok I can’t resist..

Defense Exhibit A

“In China, the GM platform Muller wants to sell to the Chinese is already being built in China – by GM.”

This case won’t make trial folks.

Hearsay, fairness, opinions, premeditated push to bankruptcy, great drama for SU fans, but in the final analysis, a license is a license (GM’s legal team likely left no room for post signature interpretations).

Expect GM’s legal response will poke reference to Muller’s fantasy world of buyers, recalling most of what he provided was nothing more than Letter(s) of Intent (and there were many – some likely fabricated just to buy time – remember North Street Capital?).

It’s also likely Muller never materialized specific business plan, financing, and Chinese Government arrangements needed for GM to even consider assigning licensing rights to someone new.

 “Ever since we were forced to file for Saab Automobile’s bankruptcy in December of last year, we have worked relentlessly on the preparation for this lawsuit which seeks to compensate Spyker and Saab for the massive damages we have incurred as a result of GM’s unlawful actions, said Victor Muller.

GM didn’t block the sale of Saab, they didn’t force Saab into bankruptcy, GM simply stated they wanted no part of Muller’s nonsense any longer.  Luckily GM had agreements in place, others weren’t that fortunate.

Indeed capitalist are driven by power and money, with this action, Muller has proven he has neither.

Although entertaining, the drama surrounding Saab has finally concluded.

Sure you will read silly articles discussing a new ‘deal’ for Saab, but in reality Saab passed sometime in 2008.  It was then GM provided notice they had no further interest in supporting Saab operations. Born from Jets was scuttled, advertising ended, leasing was over and sales went in a violent tail spin.

Over the next few years exclusive Saab dealerships were declining quickly, and continued during Victor Muller’s fiasco.  A Saab dealership became a ‘tuck in’ franchise, meaning if you had room within other brands you placed Saab in one of your buildings with few dedicated resources.  It had been (and continues to be)  impossible for stand-alone Saab franchises to stay in business.

No really, GM helped.

In reality Saab products were fair in reliability and as good, if not better, than Volvo.  From 2004 the new 9-3 held up well and represented a fine value under $30,000.  GM also provided a disproportionate amount of healthy  dollars  in support of a poor performing brand.  Under GM’s ownership, sales support (incentives) and advertising costs exceeded any consolidated gross profits realized from each Saab produced.  Anyone with clarity about the auto business knows the cost of new vehicle manufacturing in Sweden is the most expensive of any home base, including Germany.

GM sought to close Saab for good reasons.  It made clear business sense to conclude that boutique manufacturing in Scandinavia could not compete globally.

The late (and talented) GM Board of Director Jerry York knew this in 2005, Sergio Marchione knew this  in 2008 and Muller’s bank accounts discovered this quickly as sales continued a downward spiral with the loss of GM’s incentives and advertising support.

The new 9-5 (and to a certain degree) new 9-4X, were comical executions for the brand, and only compounded losses.

Some say without Victor Muller, Saab would have died in 2010 – so credit is due.  Well if that’s true, I guess the same can be said about GM in 1989.

Either way the show ends.

Saab loyalists are left with re-runs.

If you believe someone really wants to start up Saab again in Tollhatten ….. please shut off your PC, remove SaabsUnited from your browser and get some fresh air.

Let’s be pragmatic.

Youngman wants whatever is left just to get some return on the $45 or so Million they were silly enough (now embarrassed) to give Muller during his twilight hours. If Youngman wins anything there’s no way they are going to build cars in Sweden (ref: ‘You Had Me at Hello’).

Sure Youngman will bluff the prospect of running the assembly line, but it’s only to win the opportunity of buying assets to ship to China.

And what would Youngman build?

BIAC is already building comical versions of the 9-3 and 9-5,  so think a Proton based Saab AERO, designed to raise the bar on their already low priced carlines sold in China (hey they already build Lotus’???).

BMW, Volvo, _____ (fill in any name you wish) – have interest in Saab’s production tools and equipment, likely to export because this stuff is real expensive new. Bid 10 cents on a dollar to walk away with some advanced engineered modular assembly components and it’s a win-win.

The mission of Saab’s receiver is to sell off assets and raise cash, not build another car company.  The sooner folks realize this the quicker everyone can “carry on.”

So anticipate Saab’s ‘auctioneers’ awarding many items to many interested parties (think a garage sale and you have the idea). Larger $$ blocks going to  biggest players, and then anyone else with cash in their checking accounts.

Unfortunately Saab’s physical buildings, like most dated industries, will likely remain idle for sometime till some developer configures a viable business opportunity.

It’s a mess, and if you think Victor Muller cares what happens, remember he’s the second largest creditor behind the Swedish Government and likely to see some cash returned to help fund his trip to LeMans this June.

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Still believe Saab’s assembly plant will build Saab’s again?

Ok …  I had a call from an unnamed source who’s grandfather knows someone at the security desk where the mother of one of the receivers works.  I hope Bloomberg News doesn’t pick up the story because as you know SaabsDivided can’t reveal sources!

Thanks Top Gear!

Enjoyed your chapter on Saab last week, learned a lot as well. I believe you did a great job summarizing the ridiculous of what was (and continues to be) Saab.

However at the very end, I couldn’t help feel Jeremy had just one more final comment concerning his feelings on Saab’s demise – possibly edited from the B roll because a humorous punch line would have been … well… inappropriate?

I guess like the Soprano’s final episode .. we will never know.

“Just the sheet metal, and the badges”, I just love those guys.

Mr. Ahmed’s 15 minutes of fame ends, the hopes of despair compounded by   sen·sa·tion·al reporting.. 

>>>>>>>>>>>>>>>>>>>><<<<<<<<<<<<<<<<<<<<<<<<

From Turkishpress.com today.

“The Turkish private equity firm Brightwell Holdings has withdrawn a bid to buy bankrupt Swedish carmaker Saab owing to GM’s refusal to transfer licences tied to the brand, a Swedish daily reported Tuesday.

“We have withdrawn the bid… We cannot continue due to GM’s attitude,” Brightwell Holdings board member and spokesman Zamier Ahmed told financial daily Dagens Industri.”

>>>>>>> >>> See original Saabs Divided post dated Feb. 9 <<<<<<<<<<<<<<<

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Post-Mortem Learnings – The New 9-5

Clearly the auto industry has learned post recession, and after the collapse of GM’s orphaned brands, badge engineering (for the most part) doesn’t work.

Or as they say, “You can fool some of the people some of the time, but not all of the people all of the time.”

Enter the Second Generation 9-5. Conceived in the rush to satisfy dealers’ cry for new products.

Enter the Global Epsilon platform (Buick LaCrosse USA / Opel Insignia Europe).  Planned 2008, the 9-5 would be built in Sweden with a (new) 2.0 Liter 4 Turbo and 2.8 Liter V6 Turbo.

Enter Muller, the 9-5 looked great on paper. Consolidated gross profits were substantial at inflated MSRP’s.  Dealers finally had product to look forward to and  Saab loyalist promised to rush the showrooms.

Terminal Launch

The 2010 9-5 Aero arrived as nothing more than a “try-out” car missing features as; no sunroof, no remote start/entry, plastic trim without grain, no spare tire, etc.  Priced at $53,000+ MSRP.

Initial dealer concerns were brushed aside by Muller’s management team (mostly GM folks stating .. it was just 900 vehicles).  At the hastily prepared dealer launch meeting, the trainers stressed the importance of a “wrap around” aircraft windscreen, aircraft heads-up display and brushed alloy aircraft styled door handles.

Note: Ironically with all these aircraft references, someone aborted the 8^th most popular North American automotive slogan “Born from Jets” and launch the new 9-5 with “Move Your Mind.”

But what really impressed me was the complete lack of carline development; it was like no one cared about Saab’s brand values or (more importantly) the customer.

The horribly printed new 9-5 brochure (globally produced to save money) positioned Saab as a brand focused on the environment “green leaves and trees” type of  visuals.  However upon opening the booklet the consumer found no hybrid offerings or 35MPG champions – just a gas propelled, turbocharged, 18 inch alloys, large sized sedan.  It quickly became obvious Saab’s first independent product launch was going to be dishonest from job one.

Poor Showroom Dynamics  

The product offerings (standard equipment, options and packing) was pure GM menu nonsense, too many choices, options, packages, and ladder pricing going into the stratosphere. Overall the new 9-5 was $10,000 more than the car it replaced.  No matter how you contented the new 9-5 the Buick LaCrosse was hands down the better value at $28 – 32,000 (more luxury for less).

Can’t blame Muller ?

CEO’s are charged with the responsibility of making decisions.  Muller, although being new to the job, should have completed a top to bottom review of all products and communications.  Did he miss this one? or Did he simply say good enough?

Example of carline leadership.

Wolfgang Reitzle was the CEO of the Premier Auto Group (Ford’s Volvo, Jaguar, Land Rover and Aston Martin bundle of upscale cars). When Mr. Reitzle came on board his first stop was the design studios. His mission, assure that each and every carline is true to the brand’s DNA.  Mr. Reitzle was a master. With one walk around he could point out the most obvious of product flaws relating to content, fit/finish, high touch / high feel materials. He challenged everything from segments, customers, price ladders, offering mix, launch phases. But what he really offered was the leadership to invite conversations that core values must transcend and live in every product  execution.

Looking at the lack of heavy incentives and healthy sales noted today on each carline he touched, I give Mr. Ritzier an A+ on a job well done (even though the Premier Auto Group failed as a sub-brand of Ford).

Muller’s Saab was distant and arrogant, allowing no atmosphere to suggest what he was about to launch was indeed wrong.

Selected 9-5 executions:

Widely promoted as the first “aircraft inspired – wrap around windscreen”, is nothing more than a Buick windshield with blacked out A pillars.

Try-out materials are obvious.  Glossy & cheap feeling plastic trim components are throughout, missing production grain & finish.

First view from a driver’s entrance point – large gaps and loose materials.

Second view from a driver’s perspective – large gaps and flimsily hard plastic glove box.

Flat no grain “mouse grey” dash panel.  Sharp eye piercing green display is 1980′s.  Center button on far left is for “night panel,” most mistake this for the start button.

Front seat passenger and driver belt has exposed steel; first thing you feel when you put your seat-belt on. Missing trim covers.

GM’s Chevy Cruz steering wheel, stalks, controls, hard plastic- manual steering wheel adjustment, all reinforces “Move Your Mind” requires some creativity.

Bland and exposed door sills – presents a less than upscale feel. Again hard / no grain plastic is used throughout the car. No branding on door to “welcome” passengers is disappointing.

Hard plastic headrest covers are obtrusive, cheap and invite occupant concern of hitting one’s head in a rear crash (although designers know a belted customer can’t).

I think these rear door strikers cost around $.70 cents each.

Missing center passenger head rest. Core values?

Missing door safety lights, no reflectors. Core values?

First impression – fender holes that mount to no where.

Try and explaining this to a customer. No spare, no run-flats (and now.. no road service).

Cheap and very thin “card-board” type material floor mats.

Misaligned gaps and over-all poor fit and finish greet the passenger.

The potent 2.0 Liter Turbo looks lost in the cavernous engine bay that formally housed a 5.3 Liter V8.  Saab’s engine appears in-adequate for the sheer size of the car. Additional engine trim components would have helped express more engineering and branding appeal (seek BMW, Audi, even Hyundai examples).

And these are just the few, we can discuss plastic front end sway bar links in other postings.

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Lesson learned

Be true to your brand and your customers.  Build honest products.

In the case of the new 9-5, GM and Muller fooled no-one because the car never sold.

Maybe now, we know why.

Many e-mails received from readers suggest issues from older posts.

Favorites include:

“Managing the Ridiculous,” insider view of being a Saab dealer

“Muller’s Wind Tunnel, ” an interesting Saab profile

“McDonalds,” dealer hypnosis

Enjoy