On Koenigsegg buying Saab

I wrote last week of my opinion that the battle for Saab was basically down to Renco and Fiat.
That was before the Opel decision. And I think that Opel going to Magna basically takes Saab out of Sergio Marchionne’s calculations. Saab would have made a nice compliment to Opel if he’d got his hands on the German manufacturer. It would have given him a premium, though small-ish, dealership network in the US and some extra value in terms of cars that had tie-ins with other cars he’d be building already. Now it’d just be a whole lot of extra red-tape and negotiations for little extra margin, and that’s not what Serge is about.
I think Fiat’s most likely out of the game now. But that’s just my opinion.
So bar any epiphany that sees Deutsche Bank go back to previous bidders that might have been good for Saab, that would suggest that Saab is Renco’s for the taking. Renco have storm clouds hovering, though, and that’s as good a reason as any to hope that Dagens Industri were telling the truth last week when they said that Koenigsegg are working like a one-legged man in a butt-kicking contest to prove that they are a viable buyer for Saab.
So here’s a few thoughts about the whole issue about GM, selling Saab and selling Saab to Koenigsegg in particular.

GM Bankruptcy
Today is most likely GM’s last day as the company we’ve all come to know and love. Or whatever. Tomorrow (Monday June 1st), Fritz Henderson will do whatever it is that head honchos do to enter Ch 11 bankruptcy proceedings and GM will be changed forever.
Talk to Saab executives in Sweden and they’ll tell you they’re not totally sure how that’s going to play out, but they’re confident it doesn’t mean there will be large scale (if any) effect on Saab’s current process.
Saab have funds set aside for the rest of their reconstruction and these are accessible to their administrator, Guy Lofalk. They have increased orders, will be ramping up production and will move production of the convertible back to Trollhattan in the next few months.
So all should be OK, but then again GM did throw a few curve balls into the Opel negotiations, didn’t they?
One bankruptcy lawyer in Sweden raised concerns that GM wouldn’t agree to Saab’s debt reduction requirements once they (GM) are in bankruptcy, saying they’d want to recover every penny. I’d point you towards Greg Abbott’s wise words on that issue. In summary, if GM were in liquidation, that might be the case. In restructuring, it shouldn’t be an issue.
Selling Saab
I don’t know about you, but I’d feel a lot better if they’d hurried up a little and got this process over and done with prior to GM going tango-uniform.
Prime Minister Fred Reinfeldt’s recent words wouldn’t have made potential investors any more confident either.

Swedish carmaker Saab is in a difficult position after being left out of the deal by General Motors to sell its German unit Opel, Prime Minister Fredrik Reinfeldt was quoted as saying on Saturday.
“I believe that anyone who has followed this closely realizes that this is a very vulnerable and difficult position that Saab is in,” the local TT news agency quoted him saying.

Actually, the fact that he came out as he did, after several weeks of confidence-inspiring words from other Swedish officials, was quite a surprise. To use his own words, anyone who has followed this closely would have known that Fiat were outsiders to get Opel, and that Fiat were the only bidder for Opel that was interested in acquiring Saab as part of the bargain. So it was always odds-on that Opel and Saab were going to end up under separate roofs (rooves, roofii???).
With the Swedish government most likely to be required to provide loan guarantees, Mr Reinfeldt’s words ring like a hollow note of no confidence in the rest of the bidding field.
The rest of the world read DI.se’s report on Koenigsegg and all they saw and reported on was the headline. Koenigsegg are in the process – cool!
It is cool, but there was more to the story than that.
First of all, the Swedes want a long term owner for Saab. I can’t see Koenigsegg being anything but long term. Anyone who wants to get into Saab and flip it in a few years better have some deep pockets. Koenigsegg are car builders. They will want to build cars. Plus, if they ditched Saab for whatever reason, their own people would hunt them down and do bad bad things to them.
Secondly, they’re professing in that story to have a very solid consortium of financiers to get this deal done. I don’t know how much it will take to carry Saab through until new models arrive, but Koenigsegg should know that by now and they’re still in the game.
One thing that’s been raised in comments and in chats that I’ve had with various people off-site, is the concern as to whether Koenigsegg will have the international big business skill set needed to run a company of Saab’s size.
Apparently Koenigsegg sold less than 20 cars in 2008. If I recall correctly, Saab can build around 27 cars per hour in a normal day. Whilst I don’t believe this difference in scale is an issue in ongoing manufacturing terms (Saab management can run a factory efficiently) I do still believe that there are other scale issues to worry about – and these are the things that I hope Koenigsegg are working on.
Making 150,000 cars and selling them on all major continents involves a lot of international exchange, a spread out dealer network and a bucketload of finance needs. Saab may have done this themselves in the past, but it was probably a long time ago. Those big back-office tasks were assumed by GM some time ago and if Koenigsegg are going to take over the reins, they’re going to have to hit the recruiting offices pretty quickly or make use of whatever high-powered networking contacts they’ve made in the last few years/months/weeks.
The upside to them being able to pull this off off would be huge. As the DI.se article mentions, a strong Swedish bid would be a dream outcome for the Swedish government. But is the Koenigsegg bid a strong one?
It’d be a dream outcome from a marketing point of view as well. The positive bounce Saab received just from the Koenigsegg breaking cover last week was just huge. You’ve all read Saab reviews in the last few years, right? Just the absence of negative GM references would be a bonus in itself, even if they’re not replaced with saliva-inducing K-Segg references.
I still believe that if the players today are Renco and Koenigsegg (I think the Chinese have bailed or just aren’t being seriously considered) and there’s no extra-big backers behind Koenigsegg, then Renco might win the day.
But I’m praying, collecting rabbit’s feet, four leaf clovers and doing anything else I can in the hope that this isn’t the outcome. I’m sure I can learn to live with Renco if I need to, but I’d rather not cross that bridge any time soon.
My head says Renco, but my heart flies with the hope that Koenigsegg can work hard, get the right people involved, and build a great, Swedish car company.