Three weeks ago, the General Motors board of directors determined that selling its Opel operation was a bad idea. Today, the board found that one of its better ideas, selling its perennially unprofitable Saab brand, had vanished like a Swedish meatball at a smorgasbord.
Fritz Henderson, GM’s president and chief executive officer, expressed disappointment that the prospective purchaser of Saab, specialty car builder Koenigsegg, had weaseled and said it would take “several days to assess the situation.”
GM acquired a 50-percent interest in Saab in 1989 and bought the remaining half in 2000. The company sold 103,591 cars in 1989, dropped to a low of 70,961 five years later and had clawed its way up to the 120,000-plus level by 1998. It reached its all-time GM-owned high in 2006 with 133,167 cars and trucks, 36,349 of those sold in the U.S. In the wake of bankruptcy and adverse economic conditions, 2008 global sales sank to 93,295 including 21,368 sold here.
While GM and Koenigsegg were still speaking, the two companies had agreed to cut Saab’s U.S. dealer network from 218 to 137. Through the first 10 months of this year, Saab sold 7,441 cars in the U.S., with only 513 of those moving out in October. Extrapolating, that works out to a 2009 sales rate of 8,929, meaning that an average Saab outlet would move 65 cars a year. A Rolls-Royce dealer would be ecstatic at selling five cars a month, but any sane group of investors interested in buying Saab would need at least a five-fold increase in sales before they could manage a deep breath.
Koenigsegg, in fact, had plans to sell 100,000 Saabs by the end of 2012, at which point it felt the company would be profitable. But that optimism was likely based on the 93,295 sales figure from 2008, not the disaster that is the 2009 Saab sales record.
And, you may well ask, just who or what is this Koenigsegg? It is a Swedish super car builder located at Angleholm. The company was founded in 1994 by Christian von Koenigsegg, an entrepreneur who made a part of his pile selling food to emerging markets. Koenigsegg sold its first car at the 2002 Geneva Auto Show. This was the CC8S, which has been followed by the CCR (2004), the CCX (2006) and the CCXR (2007). The latter model, like its predecessors, is faster than a Three Card Monte dealer and costs the earth. Unlike them, it is a 1018-hp bioflexfuel zoomer billed as the world’s first green super car.
In June of this year, von Koenigsegg and an investor group announced that it would purchase the Saab brand from GM. It sought a 400,000,000 Euro ($600,000,000) loan from the European Investment Bank, which it wanted the government of Sweden to guarantee. The government’s reaction did not so much as reach the lukewarm plateau. In September, Koenigsegg announced that BAIC of China would come on board as a potential minority shareholder. The arrival of BAIC did not obviate the need for the loan, but you just aren't a real purchaser these days without some Chinese currency in your saddlebag.
Then, after presumably getting a ways down the due diligence road, von Koenigsegg announced today that “delays in completing the deal have led to risks and uncertainties that prevent us from successfully carrying out our business plan.” Or he may have suffered a reality attack, figuring that he and his 43 employees just might not be up to the rigors of becoming an adult car company. As one industry wag commented, “Saab probably has 43 people stuffing envelopes in its direct mail department.”
The losers in all this? Well, if you were a dedicated GM basher you might ask how in God’s name anyone could take a 43-person potential purchaser seriously and not lose credibility. Building a super car is one thing; running a company with thousands of employees, many of them unionized, is something else. Then there are the Saab dealers. Because of the “sale” GM canceled all 218 dealerships, and even the 137 that were to survive under the Saab/Saab hookup are probably taping garden hoses to their exhaust pipes. Counting dealers and sales personnel, 3,400 jobs in the United Kingdom are at risk, as are 15,000 union jobs in Sweden.
The government of Sweden has already said that it will under no circumstances take over Saab, and after the Koenigsegg announcement, rumors began to swirl in earnest that GM may just press the garage door opener one last time and put and end to Saab, which last year represented 1.1 percent of its sales.
The tragedy for Saab enthusiasts, who may be taking a last look at the objects of their affection, is that the newest Saab products, the 9-5 sedan and wagon, are excellent machines. Were these Opel-based vehicles “real” Saabs in the eyes of the faithful? As my friend the late Bob Sinclair, who headed Saab for years in the U.S. once told the Swedes about an earlier Saab, “It’s just not ugly enough.”
Maud Olofsson, the Deputy Prime Minister of Sweden and Minister of Enterprise and Energy may have had the most useful thought about this whole circus. She suggested that the company had a better and brighter future moving to the production of wind power turbines than building cars for a crowded and oversupplied market.
There might even be more government bailout money for such a move.