Saab’s sad demise
On the steps of the courthouse in Sweden, Victor Muller, chief executive officer of Saab Automobile’s parent company Swedish Automobile said the decision to file for bankruptcy was due to General Motors’ decision to reject yet another takeover bid from a potential Chinese investor. He described the move as “the last nail in the coffin of this beautiful company”.
In reality Saab has been in a tailspin for nearly a decade. Several years ago we had dinner with the then boss of General Motors Europe, Carl Peter Forster. While his main focus was on Opel’s plans to get back in profit – still an aspiration for the firm – the conversation turned to Saab.
Given that much of the 9-3 and 9-5 models at the time were Opel engineering cloaked in the Saab façade, I asked whether it would make sense to move the Swedish firm’s model production to Opel’s Russelheim plant. He responded with his own query about what actually makes Saab Swedish. Is it the fact the cars are built by Swedes, or that the design is influenced and driven by Swedes? He then wondered aloud whether, if Saab were to close its production in Sweden and merely retained marketing and design functions there, they would be any less Swedish?
Such a move never came to pass, no doubt influenced by the impact such a move would have on sales in the home market and the undoubted political pressure that would come to bear from a Swedish government eager not to lose so many manufacturing jobs. Similarly Volvo would have baulked at the move, given that its suppliers were equally dependent on both brands to justify their own production facilities in Sweden.
This week Saab filed for bankruptcy, thereby ending over 60 years of car production. If as expected the Trollhatten plant remains closed, it will put pressure on Volvo suppliers as feared.
Some blame must fall on General Motors for this situation. Car firms depend on new product to survive. It’s clear that a coherent product plan was never put in place. That meant its new owners were straddled with just two models and little in the pipeline to replace them. Given that a new model can cost anything up to €800 million to get on the road, and at least two years of development, they needed time and working capital to see them through. In the event, they had neither.
GM’s recurrent rejection of potential new buyers says a lot about its interest in seeing a successful Saab resurrected. It contrasts with Ford’s approach to Volvo. There the US car giant would have had the right to similar reservations about selling to a Chinese investor who might one day become a serious international rival. It carried on with the deal and Volvo has benefitted as a result. Not so with GM and Saab.
While the endgame played out in a Stockholm court room, in reality the future of Saab was determined in Detroit when GM announced the brand was up for “sale or closure”. The only sale that would garner support would be to a firm who would never be in a position to one day compete with the US firm. That ultimately has consigned Saab to a slow and gradual death.
Whatever about the dismay this week in Trollhatten, there must be a degree of worry in Russelheim as well, home to Opel. Having been up for sale itself in 2008/2009, a potential deal reportedly fell through for similar reasons: GM was not prepared to let Opel fall into the hands of a potential future rival.
So in the end GM decided to keep Opel. Yet there is still a regular drip-feed of industry reports from Detroit that GM executives are eager to off-load the loss-making European. If they do, will it only to be someone who will never quite have the ability to turn it around, thereby repeating the sad tale of Saab? It must be a worry at Opel, but also in political circles in Berlin, where the threat to 40,000 jobs and ancillary industries would be horrendous.
The passing of Saab is a real shame, for the brand had a good pedigree, well respected as an alternative to the rest of the premium players.
A favourite amongst dentists and architects, it was considered as premium choice, but less brash and arrogant that the German models. It was an image that could have been cultivated into profit, even if the underpinnings were shared with others. Alas, unless a white knight arrives to save the day – and one that’s unlikely to offer any threat to GM in the future – then we’ve seen the last of the Saab griffin on the bonnets.