General Motors hasn’t exactly covered itself in glory with the example of brand management provided by its stewardship of Saab. That things have got to where they are now is a consequence of a failure to invest and a lack of direction for the premium marque ever since GM first got involved with Saab in 1990, as well as the impact of the crisis for the auto industry this year which left GM with few options.
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The proposed sale to Koenigsegg has ultimately unravelled because pieces of the jigsaw on the finance side weren’t coming together quickly enough as far as the prospective new owner was concerned. It’s a massive and cruel blow for Trollhattan, where many were optimistically eyeing a new start with a new culture and the fillip that a new flagship model (a cruel irony) would provide.
Will a new buyer for Saab quickly emerge? Will BAIC, an important element in the background of the Koenigsegg bid, return for another bite of the cherry? They may do, but there must be doubts now about whether BAIC can satisfactorily restart the negotiating process (and allay GM concerns on technology transfer) on a timescale that suits GM. Is anyone else coming in for loss-making Saab? No-one is going to be trampled in the rush. Any new buyer will be faced with the same hurdles Koenigsegg was.
The Swedish government is still prepared to make loan guarantees, but it has to be a credible business plan and buyer. A public bailout appears to have been ruled out.
If there is no new prospective buyer in the frame, what will GM decide when its board meets next Tuesday (December 1)? Will it do a 180 and decide that it can, after all, rescue the ailing brand? It is not impossible, but it doesn’t look very likely.
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By GlobalDataGM is still very much in the mire and concentrating on what it needs to do to survive. It concluded that it needs to hold on to Opel/Vauxhall to have presence in Europe. That was too much to give away and would have impaired its chances of long-term survival and success.
But Saab? It is not a must-have in the way Opel/Vauxhall is for a GM that wants to be a credible global player; it will perhaps be seen as a luxury GM cannot afford.
Saab has a small share of the prestige segment and is dwarfed by the big German brands. Building the brand up is a long-term project that will take investment. Relocating all production to Trollhattan was perhaps fine for a new owner, but it wasn’t so long ago that GM was saving on industrial cost by planning to make most Saabs in Russelsheim. Is there a way to do that again? Rejig Saab production to do it more cheaply? Perhaps do a small Saab on the Delta (Astra) platform and make it at an Opel plant? The flip-side of such a strategy would, again, be the headache of low capacity utilisation at Trollhattan.
Or could GM simply pick up the current Saab plan, the one that has apparently failed to get sufficient backing in time? If it’s such a winner, why has a frustrated Koenigsegg simply walked away?
The harsh reality is that GM executives may not even want to reopen the Saab file. How big is the operating loss and how much investment is needed over the next five years? Saab was in the out tray and has come back in to haunt. There is perhaps a feeling that there is more than enough to do at GM without the additional management distraction of fixing loss-making Saab on top.
A decision to wind-down Saab on Tuesday would not be a big surprise. But if it does happen, it will be a sad end to a brand that would not be in this desperate situation if it had been managed better.
Dave Leggett
See also: GM’s Saab sale comes undone
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