Can there be another vehicle maker with a recent history as beset by turbulence as Saab? Having been pushed into liquidation by General Motors in early 2010 after the withdrawal of Koenigsegg’s takeover bid, then unexpectedly rescued by Victor Muller’s Spyker Cars, the company is now awaiting new funds from China. But what would Hawtai Motor Group taking an equity stake mean for Saab’s future? Glenn Brooks considers what’s likely to be ahead.
While Saab anxiously awaits the Swedish Debt Office’s approval (or rejection) of a proposed share sale to Hawtai, a small, privately-owned SUV specialist, the single line at its Trollhättan plant remains stopped. Even if the EUR150m (US$210m) pledged to the company by its potential new Chinese shareholder allows Saab to be recapitalised in the coming days, it will take some time to rebuild global vehicle inventory, not to mention supplier, dealer and customer confidence.
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Supposing that it survives, the first priority for Saab ought to be a worldwide PR initiative, to simply point out via one high-profile campaign that the company is alive and well. But the idea would have to be simple, striking and logically, push the firm’s underdog status. Recent history suggests that this could work as long as it was slickly executed and able to catch the imagination of social media networks in the largest global markets.
The town of Trollhättan might lack an equivalent of MoTown’s very own Mr Marshall Mathers, yet if Chrysler can use Eminem to imbue the 200 Sedan with Made In Detroit cachet, surely it can’t be that hard to relaunch Saab with a Scandi-cool campaign featuring the 9-5? Cynics should note that while the 200 hasn’t much thrilled the enthusiast press in the USA, the car’s sales were last month up 50% year on year over the former Sebring sedan, thanks in no small part to that ad campaign.
Saab should also tell the world all about its new potential shareholder and likely future owner. Right now, there are all sorts of pieces of information and misinformation floating around. Hawtai (formerly translated into the Roman alphabet as Huatai), has none of the glamour of Spyker’s supercar heritage, yet citing the gritty Chrysler example again, will potential Saab buyers really be put off to know about the new owner’s origins as an assembler of old Hyundais? After all, Hyundai itself, currently one of the world’s fastest growing brands, was as recently as 2005 still building clunkily-styled SUVs and chintzy luxo-barges based on outdated Mitsubishi platforms.
Hawtai is itself a firm that likes to go against the grain, in much the same way as Saab was once famous for doing. It might not build cars with wraparound glazing and fan-pattern alloy-wheels inspired by features of Viggen fighter jets, but its decision to focus on clean-diesel technology in a country where use of the fuel for passenger cars is starting to take off, was visionary. Indeed, the firm, which is controlled by the entrepreneur Zhang Xiugen, has tried to stay out of the limelight, in a way that contrasts with its larger rivals BYD, Chery Auto and Geely. Yet Hawtai is arguably far more worthy of positive publicity as it tries to quietly get on with the business of growth and innovation.
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By GlobalDataSome of the reason why Hawtai has shied away from trying to become a major national brand is simply its size. Unlike the rivals mentioned above, this company has only two production plants, with the more modern of the two located in Inner Mongolia, a region of China not exactly throbbing to the tune of major automotive investment. But by investing in this province, Hawtai is showing something of a maverick spirit, not to mention positioning itself as a firm that sees it must work with the Communist Party and keep its operations physically at a distance from the larger state-run OEMs such as SAIC, FAW and Dongfeng.
Hawtai has a self-declared current manufacturing capacity of a mere 350,000 vehicles a year but the Erdos plant in Inner Mongolia as well as an older facility in Rongcheng (Shandong province) are each being readied for new products. Critics might well point out that the company’s current model range consists mostly of restyled Hyundai Santa Fe and Terracan models but that is only one part of the picture.
Part of the Erdos manufacturing complex is dedicated to the production of state of the art diesel engines. Hawtai has licensed technology from both Hyundai and VM Motori. Currently it builds 1.5-litre three-cylinder (OED383Q) as well as 2.0-litre (OED483Q), 2.5-litre (OED492Q) and 2.8-litre (OED494Q) four-cylinder units, along with a 2.9-litre V6 (OED6V83Q). Diesel production capacity is claimed to be one million units a year, while Erdos also has a stated annual capacity for some 300,000 four- and six-speed gearboxes.
Clearly then, there are plans for a major increase in vehicle output. The Hyundai-based SUVs sell in relatively small numbers but neither of those models is anything but a stopgap to where Hawtai sees itself in the near to mid-term. It is currently preparing several new cars for launch, the first of which is due to hit the Chinese market from the second half of this year. Adding assembly of the next generation Saab 9-3 to the Erdos plant around 2013 or 2014 is surely a given, especially as Trollhättan, while a modern facility in the GM style, is not the best location from which to base a push into the Chinese market.
Just as they rightly did when Geely first showed an interest in buying Volvo Cars or indeed when a loss-making Dutch supercar maker declared its interest in Saab 16 months ago, elements in the Swedish media are raising questions over a potential foreign white knight. Has Hawtai inflated its recent production numbers? Where exactly does the firm’s funding come from? Is it profitable? Why does it wish to become a Saab shareholder? And most important of all, can it properly fund its potential new Swedish subsidiary? These questions need to be answered.
Yet as well as demanding answers, the media must also give both Saab and Hawtai breathing space. Production will reportedly restart at the Trollhättan plant in the coming days, at which point, major creditors, having at last been paid, should sit down with Saab management and declare either their support for the firm, or else opt out of all future dealings. Doing the latter might seem tempting after the recent financial problems but if Hawtai really does have the appropriate amount of funding in place, Saab’s suppliers might suddenly find themselves invited to bid for new contracts in China.
It’s not hard to see what a firm that has recently had to prove itself as fast-thinking and adaptable as Saab might be able to bring to the manufacturing table for Hawtai, especially when it is presently readying three additional models (B21, B22 and B35) for production. Likewise, Saab’s suppliers could gain entry to the Chinese market via tie-ups for these Hawtai-brand vehicles, the first of which, B35, will be a rebodying of the Hyundai Santa Fe. Due for launch in 2012, the B35 was recently displayed as the Bolgheri (Baolige in Chinese) concept at the Shanghai motor show.
Hawtai has a lower medium model, the Yuan Tian (B11), which could be adapted for Saab, giving the brand an instant rival for next year’s Audi A3 sedan and hatchback series. There is no reason whatsoever why such a model could not be made alongside the Yuan Tian at the Erdos plant – China could simply become Saab’s future second home market in the same way that Volvo has declared its parent’s base will gradually become. Perhaps in the longer term exports might make sense but for the first few years, an adapted B11 would be fine for what is effectively a brand new market for Saab.
The B21 sedan and B22 wagon, meanwhile, are equally relevant, being similarly sized to the Saab 9-3. Why not run restyled Saab versions down the same line at Erdos, badged as, say, the 9-2, a special model for China. After all, GM has long built unique premium brand cars for China such as the hugely successful Buick Excelle, while Shanghai VW will also soon launch a bespoke upscale sedan.
As the hypothetical examples above show, Hawtai and Saab have much to offer one another. The sceptics who have recently publicly pondered an alleged embellishment of Hawtai’s claimed sales and production numbers are right to have asked the company to prove its own numbers. Yet so long as the firm has the funds to help Saab grow in the medium term, what Hawtai built or did not build in 2010 is not something that really matters. What does, is the potential for a tight manufacturing and distribution alliance using Hawtai’s underutilised but ultra-modern plants. Powertrains might also follow, especially as Saab seeks to replace its current GM-sourced engines and gearboxes. As just these few examples show, the sceptics are wise to ask questions, but they should keep an open mind too.
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