Correcting some misconceptions about Saab and what they need

“I don’t think Swedish taxpayers should risk their money supporting Saab”
“I don’t think the Swedish government should risk taxpayers’ money supporting Saab if they haven’t been competitive.”

The Swedish government isn’t being ask to pour money into Saab that it can’t get back. In fact, the Swedish government will refuse to do that, anyway.
Those who think that the Swedish government is being asked for assistance with no questions asked are mistaken in their understanding of the situation. The loan guarantees that the Swedish government have offered aren’t without strings attached. In fact, they have much more than strings. More like heavy gauge chains.
We all read of the legal breaking up of Saab into various divisions in the last few weeks, correct? If you haven’t seen that story yet, then click here. As mentioned in that story, this was something that began during the Koenigsegg Group deal and it’s something that was required for legal reasons.
Why?
This was required because in exchange for the loan guarantees, the Swedish government demand a level of security that’s actually more than the amount of the guarantees on offer. That’s them keeping their pledge to the Swedish taxpayer. The breakdown of Saab into various divisions was set in motion whilst the guarantees were being sought so that the government could quickly acquire control of, and sell a part of this partitioned organisation to recoup funds if need be.
Your government isn’t risking a single krona.
They’ve already offered an assistance package
Yes, the government did pass an assistance package through the Swedish parliament back when all this global financial stuff really started to hit home.
And not a single öre from it has been paid to either Volvo or Saab’s car divisions. Why? Because any money borrowed has to be paid back within six months. This is the car industry, where you may not see returns on an investment made today for another three years.
If a car company sits down to dinner today, it takes six months just to burp!
“Remember the shipyards back in the late 1970s”
These are not the 1970s and Saab is not a shipyard. I remember hearing once that Londoners get very concerned about exits to buildings, despite the Great Fire being over 300 years ago.
Times change. Circumstances change. And no-one’s asking for Saab to be nationalised.
“If GM – the biggest car company in the world – couldn’t make Saab work, how could they work on their own?”
That’s because GM don’t know how to manage niche brands. They are a volume company, pure and simple.
GM put the financial clamps on Saab early this decade when they realised that Saab had spent too much developing the new 9-3 sport sedan and associated range. They had at least a 50% share of the company for the previous 12 years, but never had an eye on the ball.
Saab have been getting crumbs from GM’s table ever since and GM only committed to doing something serious with them in 2005, which brought about the Aero-X, the 9-4x and the 9-5 we’re seeing today. Before then, GM’s idea of growing Saab was providing re-badged vehicles from their own family of cars (or associates).
As mentioned in another article tonight, Saab have never been the 100% focus of their owner. They’ve not been let off the leash to show what they can do for many years.
“There is too much capacity already in the automotive market”
Yes, there is. But why should Saab be the one to suffer?
Does the world need another 130,000 Toyotas to bore it to death? Or Chevys? Or Volkswagens? Or Hyundais?
Or would it be better off with 130,000 Saabs in place of those?
The fact that there’s overcapacity in the automotive marketplace doesn’t mean that the smaller companies should die by default. It means that those companies with too much capacity should adjust.
With the right cars and the right promotion and some CONFIDENCE back in the marketplace, there is plenty of room for Saab automobile. They say they need to sell somewhere in the order of 100,000 to 120,000 cars to be profitable.
They sold more than that just 2 years ago.

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