After a Wooly Weekend, Saab Still in Play
November 30, 2009
Thanksgiving week saw the blow-up of yet another deal for a cast-off General Motors Co. 
brand, but unsurprisingly, nobody's yet declaring Saab Automobile a dead turkey.
A Bloomberg News report from China early Monday had Beijing Automotive Industry Holding Co. (BAIC) president Wang Dazong insinuating his company is considering its own play for Saab after Sweden's Koenigsegg Group unceremoniously dropped its bid for GM's perennially money-losing Swedish auto division. BAIC was part of the consortium led by Koenigsegg that originally planned to take over Saab.
And yes, venture capital - the reddest of flags for flailing auto companies - appears to be involved, too.
"Stay tuned," Dazong said in the Bloomberg report in response to questions about whether BAIC will seek to buy Saab. BAIC's continued interest in Saab proves that although access to the kind of blank-check capital needed to run an auto company remains limited and any sensible business metric indicates taking on Saab is bad call, it's still remarkably tough to kill an auto brand these days.
Wang and BAIC indeed seem to have some gambit in mind, with the Wall Street Journal reporting at least one of two U.S. investment groups "is open" to working with BAIC to buy Saab.
"I can't control GM's timetable," Dazong told Bloomberg early Monday. "We want to move fast," he added.
GM has a scheduled a board of directors meeting Tuesday at which the new development surrounding Saab reportedly will be addressed.
Another Intellectual-Property Choice, But Money's Involved, Too
Now, the ball again appears to be in GM's court.
The automaker reportedly was surprised by Koenigsegg's eleventh-hour decision to drop its deal for Saab for which loan guarantees were being backed by the Swedish government. In recent financial reporting that covered its first 90 days after emerging from Chapter 11 bankruptcy July 10, GM said that as part of its bankruptcy procedure, it had acquired the Saab investment from the "old" GM that continues to sell off unwanted assets of the former company in order to pay creditors.
GM said in that report its accounting lists Saab's assets and liabilities as "held for sale," and in the period from July 10 through Sept. 30 actually recorded "a favorable adjustment" of $59 million from its stake in Saab, which it had planned to sell to the Koenigsegg-led consortium but commit an unquantified amount of future support. BAIC reportedly was bringing $400 million to the deal.
Thus the reason to believe the deal - or at least the fabric of one - may still be alive: if GM was willing to support a new owner group that included BAIC, is there any difference now if BAIC becomes the chief, or only, bidder for Saab?
The specter of brokering access to choice intellectual property is the same prickly issue that repeatedly cropped up with GM's now-aborted plan to sell its European Adam Opel AG unit to a consortium led by Canadian supplier Magna International and included Russia's Sberbank, a financial institution closely tied to the country's second-largest automaker, GAZ.
And the potential for corporately sanctioned technology transfer is one that will not go away in the still-pending deal for GM's other orphan brand, the Hummer SUV-making unit. GM has terms of agreement to sell Hummer to China's Sichuan Tengzhong Heavy Industrial Machinery. There have been objections in both the U.S. and China that may sour the deal -- a deal that seems improbable from a business.
Coincidentally, BAIC's rival in China, Geely Holding Group Co., which is in talks to buy Ford Sweden-based Volvo, said last week Volvo would retain ownership of its technology following a sale.
Equally key for GM, however, will be the question of the requirement for ongoing "support" of whoever might buy Saab. GM has serially lost money on the Swedish automaker, and its board could decide that enough is enough - and that the cheapest option is to let the brand finally slip under the waves that have eroded its presence in the world market for the last decade under GM ownership.
New Models Ready for Launch
Meantime, Saab has two new models that have completed development and both rely heavily on GM architectures and powertrains, necessitating a high level of GM engineering support and manufacturing under some type of license arrangement.
Saab's new 9-5 flagship is ready for showrooms. Based on GM's global midsize platform, it effectively is a clone of GM's Opel Insignia and new Buick LaCrosse and Regal. Saab's plan is to build the 9-5 at its plant in Trollhaettan, Sweden.
Saab also is readying the launch of the 9-4X crossover, an all-new model for Saab that employs GM's so-called Theta Premium underpinnings, the same front- or all-wheel-drive stuff on which the 2010 Cadillac SRX relies. When the Koenigsegg group was the anointed buyer, GM was to build the 9-4X at the same plant in Ramos Arizpe, Mexico, that assembles the SRX.
GM management and its board have insisted, though, that the new company will resist money-losing indulgences of the past. But few near-term scenarios could see GM benefiting from handing over Saab to a new owner (never mind one with geopolitical baggage). The fact was the original sale to the Koenigsegg consortium would have ended up being subsidized to some degree by GM, anyway, despite the notion the new, state-owned GM isn't supposed to be doing that sort of thing anymore.
If GM decides to keep Saab afloat for a new buyer, the board could insist a sale can happen only with conditions that are ostensibly profitable for the company. But an arrangement that makes the deal worthwhile for GM could make it marginal or even impossible for the new owner. Given Saab's recent history, it is difficult to imagine enough revenue being generated to satisfy multiple profit-minded custodians. -- Bill Visnic, Senior Contributing Editor
Photos by GM
1 - 2010 Saab 9-5
2 - 2010 Saab 9-5
3 - Saab 9-4X
Posted by Michelle Krebs at 4:42 AM under Commentary , Featured , Ford , GM | Comments (3) | digg this | Seed Newsvine
More badge engineering from the CEO that hates badge engineering.
SAAB will never be sold as a running company as long as its products are clones of other GM products. GM, right or wrong, isn't going to let anyone into the inner sanctum of their technology. The only apparent way seemingly is to sell the SAAB trademarks to someone big enough that can either rebadge one or more of their existing platforms or develop new ones.
Until then maybe GM can come up with a console-mounted ignition switch for the La Crosse and SRX and call it the Swedish Preferred Equipment Group or something.
Posted by: fulcrumb | November 30, 2009 at 12:09 PM
Next Plateau or call it 'Level' is the out-sourcing of almost all the body components of a vehicle by each and every one of the existing car manufacturers; be it North American or Chinese or Japanese or S. Korean. I can assure you that this is well placed in their -near future- business plans. I am pointing this out to get over the usual and baseless criticism: "Badge Engineering"/"Re-Badged vehicle". I commented on the issue of SAAB brand a week ago arguing that GM should do whatever to keep it OR Roger Penske should buy it, as it is rather much more feasible than the failed Saturn deal. It should stay as a memeber of the US Auto Industry. OK, back to the 'Plateau' issue...; GM can become the supplier of lamda platform to a number of interested complete vehicle manufacturers. In the next level Car Manufacturers will become car designers ONLY. They will not stamp steel sheets or inject plastic parts; they will source them from suppliers in a trimmed and finished/painted fashion ready to mount/assemble on the line.. This is it. Who cares if a well designed body sits on a lamda or a teta platform sourced from a GM plant, powered efficiently by an engine thats built by for example Nissan engine plant. You have to source your tyres, batteries, glass and etc. already/currently anyways... Soo what will count is the appealing design(safety features inclusive of course) and the power/efficiency of the vehicle at the show-room.
Posted by: MTuzmen | November 30, 2009 at 12:54 PM
in my recent comment: the GM body platform names spelled incorrectly; should read *lambda and *theta... I apologise.
Posted by: MTuzmen | November 30, 2009 at 1:05 PM