Saab Decision Coming Soon; Two Possible Options

[nsap]

Saab Decision Coming Soon; Two Possible Options
GMI sources state the GM Board is meeting Monday about Saab.
www.gminsidenews.com
November 24, 2009
By: Nick Saporito

Earlier today General Motors made the bombshell announcement that their proposed deal with Koenigsegg Group AB to sell the Saab brand has fallen through. This coming just weeks after GM's planned deal to have Penske Automotive acquire one of their other "bad assets," Saturn, failed as well. Thus far today GM has been tight-lipped about what will happen with Saab going forward, but GMI sources have enlightened us on two of the most likely scenarios for the Swedish car marker.

A source very close to the situation has told GMInsidenews that the GM Board of Directors will be meeting next Monday to discuss today's developments regarding the Saab division. This source cited the fact that the decision to divest Saab happened under former GM management and Board and that the new Board's sentiments toward Saab are very much unknown. Saab fell into bankruptcy in it's home country back in February and was included in former General Motors Corporation's "bad assets" during it's recent bankruptcy. The brand is currently under the ownership of Motors Liquidation (or "Old GM").

One option that rests on the Board is to allow Saab to fall into liquidation while it is in bankruptcy. GM is the debtor in possession (DIP) financier for Saab while it is in court, so if GM were to cease funding the brand it would fall into liquidation just as Motors Liquidation is here in the United States.

The other option that the GM Board has is to retain the Saab brand, which is slated to have nearly an entire new product line by the end of 2010, all of which were designed/engineered under GM. If this option were selected we're told GM would likely elect to shutter the Trollhattan, Sweden assembly plant so that GM could further leverage their other global manufacturing facilities across Europe. At the moment GM is finalizing their restructuring plan for their other European unit, Opel, which encompasses three German factories. Opel's "home" plant, Ruesselsheim, is currently the sole plant building the Epsilon II-based model, the Opel/Vauxhall Insignia, that Saab's new 9-5 is based upon. GM's original pre-bankruptcy plan was to build the 9-5 in Ruesselsheim too, and with the 9-5 not yet officially on sale and in full-scale production, this seems to still remain the option.

At this point no decisions have been made regarding Saab at GM. Today's developments were a shock to GM management and they are assessing the situation currently and throughout the rest of this week. When they report to the Board of Directors on Monday it is expected that a decision will be made and that one of the two above options are the most likely cases.

GMI Poll: What do you think GM should do with Saab?

[jmlee0695]

Best option is to keep Saab. The new 9-5 is amazing, and the 9-4x looked promising.

[zete]

I still don't see how Koneigsegg thought they could do this. It's like a minnow trying to swallow a whale.

With all those new cars already designed and ready to go, that puts GM in a very interesting position. Do they just keep Saab or just keep the cars?

Ironically, the statement that the decisions were made by the prior board means everything can be up for discussion going forward, including Saturn and Pontiac. If GM opts to keep Saab and relaunch it, then I'd believe this is Whitacre at work much like I believe the decision to keep Opel was his as well. He's not at GM to disassemble it, but to grow it based on his prior modus operandi.

[Muhammad]

Pretty unfortunate. I hope, however, that the GM board resists the temptation to keep another brand. We don't to repeat the fiasco of having too many brands to support.

[nsap]

Originally Posted by zete

I still don't see how Koneigsegg thought they could do this. It's like a minnow trying to swallow a whale.

With all those new cars already designed and ready to go, that puts GM in a very interesting position. Do they just keep Saab or just keep the cars?

Ironically, the statement that the decisions were made by the prior board means everything can be up for discussion going forward, including Saturn and Pontiac. If GM opts to keep Saab and relaunch it, then I'd believe this is Whitacre at work much like I believe the decision to keep Opel was his as well. He's not at GM to disassemble it, but to grow it based on his prior modus operandi.

It's probably worth noting that Fritz is a Saab fan as well. He personally has a 9-3 in his garage.

[dindak]

Kill it... it's a looser brand that will NEVER make money.

KILL IT

[nadepalma]

This could get messy. On one hand I can't see GM reversing themselves to keep the brand in light of their current momentum in revising their own operations. Yes Saab has good stuff coming in the pipeline BUT they will need further allocation to keep this going in the long term. Can GM afford this when the have so many other mouths to feed?

However, I can also see Saab becoming a kind of bargaining chip in their push to revise Opel and get funding for their European restructuring.

Honestly, I wouldn't be surprised if BAC is already pulling an offer together to buy the brand now that the deal has fallen through.

It's an interesting scenario and wonder what the new board will be thinking over the Thanskgiving break...

[Quickening]

Or K-egg playing MAJOR hard ball?

Some are wondering if its GM reluctance to BAIC being apart of the deal. The technology issue. But doesn't GM already do business with SAIC in producing the SLS over in China? If the Chinese wanted technology, they have that. Also, its not like some Chinese company couldn't just buy a 9-5, tear it down and figure everything. Car companies do this all the time.

It seems crazy to close the brand, after all the progress. The progress with the unions, Sweden and EIB. The reduced dealer network and the 9-3x (which is doing very well in reviews), the 9-5 and 9-4x all ready and launching within the year. Progress on the 9-3 is well underway also. Also, everything was being consolidated to Trollhattan, the 9-3 sedan, convertible (which Magna was building in Austria) and 9-5.

IF GM was to retain, how would that work since Motor Liquidation Company technically is in charge of Saab? Would the Auto Task force even allow it?

And gah the shouts for killing it. Killing of any brand. It saddens me, I wish for diversity in the marketplace not the same cars left and right.

[Bravada]

It's probably worth noting that Fritz is a Saab fan as well. He personally has a 9-3 in his garage.

BTW, if they would close Trollhattan just as-is, it would make a hell of a problem what to do with the 9-3. For the timebeing, it is the lifeblood of the brand, and even with high expectations for the new 9-5, it's hard to imagine Saab going on suddenly deprived of the 9-3 with 9-5 yet unproven and 9-4X apparently not ready for production yet. I believe for the time being GM needs to keep Trollhattan running as the Saab 9-3 Epsilon is incompatible with pretty much anything else, and retooling any other plant for it would nix the short-term cost benefits IMHO.

I guess it would rather mean closing the plant once the 9-3's life ends, which could be nigh (after all, the current model debuted in 2002), but with a hastily cobbled replacement.

Or, OTOH, GM might go for a huge gamble and jettison Saab upscale ditching the 9-3 in favour of the pricier 9-5 and 9-4X.

Some are wondering if its GM reluctance to BAIC being apart of the deal.

The deal fell through because the EIB and Sweden said they won't finance it. That's all about it, no hidden agenda.

[zete]

Originally Posted by Quickening

Or K-egg playing MAJOR hard ball?

I doubt it. They're just a bit player and this is just too much to absorb. I think they finally awoke and realized it was just nuts, especially in this market.

IF GM was to retain, how would that work since Motor Liquidation Company technically is in charge of Saab? Would the Auto Task force even allow it?

I'm pretty sure whatever Whitacre wants the ATF will just cave and give in on. Or, to look at it my way, Whitacre is the Auto Task Force now.

I do wonder if GM is thinking this: Saturn + Pontiac + Saab = new Saab.

In this way. Saturn had moved upscale, but that failed. Pontiac tried to move upscale and into a performance niche, and that failed. Saab, well, it just didn't have the reach nor the actual focus required to succeed. Claiming a brand is all about "quirkiness" is retarded. However, how about an upscale performance brand? That would work. And with the dealer network in place and some platforms already ready to go (9-5, 9-4) it becomes possible to create a performance division. In fact, it also allows GM a place to put a Zeta and an Alpha car, moving Saab into a pure performance brand. Ironically, it'd be a great way to break into both the east and west coast markets. An upscale next gen Commodore as a Saab might actually work, as would a properly executed Alpha-based 9-3. Sell both only in AWD trim and make the 9-5 AWD as well. An excellent lineup, methinks.

[mgescuro]

GM should allow the brand to die. I hate to say it.

Saab can still slide into a niche at GM, but it's a night one between Buick and Cadillac at the moment.



Sad to say not a single one of my favorite GM cars has made it through this bankruptcy.

[rueben44]

I am so torn on this because part of me says kill it!!! Just like Jaguar has been nothing but a drain until Ford sold it Saab has been the same way. Then there is the other part of me that says well they do have a new line up coming. Is it worth the gamble? Do you keep them afloat until the new models come out then sale? This is a really hard decision! Logic says kill it and quick but there is that little hope...........kill it.

Gm has Opel that is more than enough just put he out to pasture.

[Quickening]

Originally Posted by mgescuro

GM should allow the brand to die. I hate to say it.

Saab can still slide into a niche at GM, but it's a night one between Buick and Cadillac at the moment.



Sad to say not a single one of my favorite GM cars has made it through this bankruptcy.

If GM retains, they have a HELL of a job in front of them to clean up this disaster. Especially in Sweden. Have to insure confidence, and a marketing blitz. Get product out to the dealers and allow for decent leasing (as its non-existent at the moment). Saab can be the premium that Cadillac can not achieve in Europe. At least for the time being, and unload Saab down the road.

O and I believe the hold up on the 9-4x is purely the lack of a diesel since GM killed the upcoming 2.8 or 2.9 diesel they were developing. Saab knows launching it in EU without a diesel would be a mistake. Otherwise its good to go.

[mgescuro]

Originally Posted by rueben44

I am so torn on this because part of me says kill it!!! Just like Jaguar has been nothing but a drain until Ford sold it Saab has been the same way. Then there is the other part of me that says well they do have a new line up coming. Is it worth the gamble? Do you keep them afloat until the new models come out then sale? This is a really hard decision! Logic says kill it and quite but there is that little hope...........kill it.

Jaguar's drain on Ford's pocketbook was really Ford's own doing. It was their idea to go with a 100% retro lineup, that really lasted about 2-3 years.... and persisted with it for 8 years.

How could Ford have screwed up Jaguar so badly and yet succeed so exceedingly well with Land Rover? LR's successes, unfortunatley, were not enough to offset the losses at Jaguar.

[nsap]

Originally Posted by Quickening

If GM retains, they have a HELL of a job in front of them to clean up this disaster. Especially in Sweden. Have to insure confidence, and a marketing blitz. Get product out to the dealers and allow for decent leasing (as its non-existent at the moment). Saab can be the premium that Cadillac can not achieve in Europe. At least for the time being, and unload Saab down the road.

I have not heard for certain, but I would not anticipate GM keeping Saab in North America if they keep it. I think it would come down to the Euro market only.