Modern versions of classic Saabs are very much on the agenda for the company’s new owner Victor Muller, much to the delight of Mark ‘Coolbear’ Bursa
I’m in the departure lounge at Geneva Airport, waiting with assorted British journos and PRs for easyJet to whisk us back to Luton Airport.
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The topic of conversation turns to Saab, and the overall mood is far from upbeat. Rover’s false dawn a decade ago as a private company under the control of the ‘Phoenix Four‘ casts a long shadow in the UK media. And although none of my colleagues believe Saab’s new owners plan a similar asset-strip to the discredited Rover owners, they fear a similar outcome. Saab won’t have the resources to keep afloat.
Flashback 24 hours and I’m at a low-key evening party on the Saab stand. The fact that there’s a Saab stand at all is something to celebrate, but Victor Muller, the CEO of supercar-maker Spyker, is playing down his role as The Man Who Saved Saab.
Indeed, the 50-year-old Dutch businessman is remarkably relaxed, considering the whirlwind of the previous three months. Spyker only opened talks with GM once the earlier deal to sell Saab to Swedish specialist carmaker Koenigsegg collapsed last November. Since then, the deal has been on, then off, then on again: Spyker finally closed it on February 23 – just 93 days after Muller started the process with a simple email to GM director Bob Lutz.
“Eight minutes later, I got a reply,” he says. “And next thing we know we’re on a rollercoaster ride that will take 93 days, working 20-hours a day. But here we are. Saab lives, and I’m very proud of that.”
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By GlobalDataWith good reason. Muller was not even in the running for Saab until Koenigsegg pulled out. Last year, he had another takeover on the go – which would have taken Spyker in an altogether different direction. “We were in talks to buy Brawn GP,” he says. Spyker has previous in Formula One – it ran a team in 2007 before selling it to Indian businessman Vijay Mallia, who turned it into Force India.
Muller found his Brawn deal trumped by the might of Mercedes-Benz. “In hindsight, maybe that was a blessing in disguise,” he says. Instead of a company that makes two cars a year, he turned his attention to one with the capacity to make more than 100,000.
What did he think he was getting into? “I had no idea. Not a clue what it would entail. I only knew Saab was for sale, and GM was threatening to shut it down. I didn’t know how much money it would cost, or what the business model was like – I was an outsider. But I thought it was obscene that this brand might go down.”
The price soon became clear. “We needed a billion dollars,” he says. Not an easy task in the current economic climate, but he’s managed to it pull off. “We got USD326m from GM in preference shares – basically converted cash; we got USD400m from the European investment bank; and we had USD200m cash in the bank. So it’s a fully funded business plan.” The Swedish government has guaranteed the EIB’s stake, so the deal is “signed, sealed and delivered”.
Lower break-even volume central to business case
But Muller is under no illusions as to what the job entails. While “Saab lives”, it’s hardly in the best of health. A combination of recession, uncertainty and ageing models saw sales slump to just 40,000 in 2009 – a very long way short of Muller’s break-even target of 100,000 cars a year. “Now the work starts. Everything we’ve done so far is nothing compared to what we’ll have to do in the next two or three years.”
And this is where it starts to get interesting – and why there may be reason for greater optimism over Saab’s future than perhaps my departure lounge companions believe. Muller has a simple target – 100,000 cars a year – and a pretty good plan for how to get there.
This year, the arrival of new models, spearheaded by the 9-5, will boost production to “between 50,000 and 60,000” in 2010. Rather like Ford and Jaguar Land-Rover, GM has left Saab with a decent ‘dowry’ in terms of fully-engineered new models. As well as the 9-5, which will gain a ‘Sport Combi’ wagon version in 2011, there’s the 9-4x crossover. This will be produced at a GM plant in Mexico, alongside the Cadillac SR-X, with which it shares a platform.
“The deal was in place, and we didn’t see the need to change it as it was a very good deal,” says Muller, “and making models in dollar markets and exporting to non-dollar markets is also a great dollar hedge.”
Other than that, everything will be built at Saab’s home in Trollhattan, Sweden. The 100,000 target is achievable, he believes, as it’s a lot less than Saab has managed in the past. “Saab has consistently delivered 120,000-130,000 cars a year, and only fell to 98,000 in 2008,” Muller says.
Production of 9-5 is just about ready to start: the Geneva Show cars were Trollhattan-built, unlike the Russelsheim-assembled prototypes from 2009. Muller expects to build “about 20,000” 9-5s this year. The start of production has had to be scheduled around parts deliveries, as GM stopped ordering parts as part of its “orderly run-down” of Saab. There’s normally an eight-week lead-time, so ordering parts was the first job for the management team, the day after the deal was signed.
New product inspiration draws on heritage
The new models will give Saab “the kind o
f product palette it hasn’t seen for years”. The existing 9-3 will run until 2012, and it’s around this point that things will start to get interesting.
Muller is immersing himself in all things Saab – and that includes getting down and dirty with the company’s illustrious – if a little distant – motorsports heritage. On Saab’s Geneva stand is a 1957 two-stroke Saab 93, in full rally trim. Muller intends to drive it on the Targa Florio classic motor race this year – which is about as close as you can get to the sort of rallies that Erik Carlsson used to win in a similar Saab 96 – the RAC and the Monte Carlo, twice, in the early 1960s.
Does Saab need a smaller car than the 9-3? ”I think we do, yes,” comes the reply, without hesitation. “Is that a clue?” I ask, pointing to the 93. “You’re looking at it,” Muller says.
Regular readers may remember my analysis of Saab at the height of last year’s turmoil, where I speculated that a retro 96-style car might “do a Mini” for the Saab brand, giving it an uber-hip urban style statement that could open the marque up to a whole new audience. It’s a trick that has worked for Fiat too, and the original aerodynamic Saab is every bit as iconic and distinctive as the Mini or 500.
And I’ll declare a fanboy interest too – I used to own a 1963 two-stroke bullnose 96, and part of me wishes I’d kept it. I tell Victor Muller, and he can’t resist. He reaches for his pocket, gets out his Blackberry. A few prods at the touch screen and he hands it to me, saying. “You’ll like this.”
And there it is, in glorious LCD. The bullet nose, the tapered teardrop tail. The high waist. It’s unmistakably a modern take on the classic Saab 96, but with a headlamp and grille treatment that’s closer to the face of the new 9-5. I’m lost for words.
“That’s what it’s going to be – and that’s what we need. A ‘Saab’ Saab!” says Muller.
“Where can you find an iconic design like that which hasn’t been put back into production in a modern way? I think we can easily sell 30-50,000 a year.” He’s calling it the 92 (9-2 perhaps?) in honour of Saab’s initial production model, which first rolled off the line in December 1949. The last 96 was made more than 30 years later – the basic design was built to last. In total, 740,000 92, 93, 95 and 96 models were made.
Impressively, the drawing on Muller’s phone is his own work – conceived mainly during long-haul flights. He’s a qualified lawyer, but more than a gifted amateur when it comes to car styling, as he’s personally penned some of the Spyker sports models too.
Muller is adamant the new 92 is not a retro car, and cites the BMW Mini as proof. While it takes its lines from the 1960s original, it’s very much a car of the 21st century. “And they sell twice as many as they thought they would,” Muller adds. “They sold 230,000 last year – how well does the Mini contribute to the bottom line of BMW?”
Getting the new 92 into production may be difficult, but it’s vital for the future. “This car has kept me going through the horrible past three months,” he says. Muller recognised the need for such a car “very early on” in the discussions. “I looked at the range, and thought this is the missing link. Everyone is downsizing, but that is what we don’t have. It has to be light, very quirky and very stylish.”
Muller believes Saab has the technology in-house to make the car, too. “It’s underestimated just how advanced Saab is today,” he says. “It’s all there.” That means hybrid powertrains and other state-of-the-art tech stuff.
It doesn’t end with the 9-2. The 9-3 will be more than a decade old by the time it’s up for renewal in 2012. I suggest to Muller that his Blackberry also contains sketches of a modern take on Saab’s other great classic design, the 99 Turbo.
He hasn’t quite got that far – but again, that’s the way he’s thinking. “Of course that’s the way to go. It’s a landmark car. Stop searching! How difficult is that?” And it’s coming too. The funding in place covers the 9-3 replacement, but not the new 92. “If we are to build the new 92, which I will vigorously try to do, either Saab has to do much better than we thought, or we have to get additional funding.”
Collaborations on agenda
That could mean forging a new partnership with another automaker, even outsourcing production. “We have been approached by a large number of serious OEMs that are convinced that Saab needs to go that way and want to share platforms with us,” he says.
“Everyone is awake now. Saab is not a threat to anyone. If you need to bring your break-even down, start sharing stuff. I don’t think there is a better time for Saab to become an independent company. Let’s make the right choices with the right partners and set the company up for the next 10-15 years.”
Muller believes the 100,000 target is achievable with the 9-3, 9-4x and 9-5 ranges. The new 92 would take Saab into the 130,000-150,000 range, which means clear profitability. And while his inspiration for product comes from within Saab, his business model is German – Porsche under Wendelin Wiedeking, which rose, pre-recession, to become Europe’s most valuable automaker, on volumes of less than 100,000 cars a year.
Indeed, by 2012, Muller believes the break-even point for Saab will be down to 85,000 units thanks to cost savings and by following Wiedeking’s methods. “Wideking showed the industry where to go. Every business decision has to meet two requirements. What does it do to enhance our profitability, and what does it do to bring our break-even point down?”
The Boxster, for example, “cost 20% more than a VW Golf to make, but sold for twice the price. It was the most profitable car they made. There’s a lot to be learned from that.”
A realistic business model, the right models, potential partners, a billion bucks in the bank and boundless enthusiasm – Victor Muller’s formula for Saab looks impressive. And while there’s bound to be ongoing scepticism over whether a small automaker can survive, I’d say he’s got a better chance of pulling it off in the post-recession reality of the new decade. Let’s hope so – if ever a brand deserved a break, it’s Saab.
Mark ‘Coolbear’ Bursa
