Bob Lutz speaks on Saab sale, and the 9-5

Bob Lutz, a man who I believe has a reasonable amount of responsibility to bear when it comes to Saab’s current condition, has spoken in Detroit about the looming Saab sale/closure and about the story concerning the movement of the new 9-5 to China.

Börjesson has done a translation for us in comments. The original article appears at Aftonbladet:

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GM boss: Saab 9-5 could be buried

DETROIT. General Motors would rather close down Saab Automobile than sell it to someone the company doesn’t believe in.

– Otherwise, we still risk standing there with all the costs, says the soon-to-be 78-year-old Bob Lutz, who still clings on to a GM top position.

Over the years, Bob Lutz has distinguished himself as the most outspoken GM boss. He has always expressed his opinion, often with punchy formulations. When TT meet him at an analysts’ conference at the Detroit Motor Show, he goes on in his usual style.

Saab’s future, he does not think much of:

– If you want to make a small fortune on Saab, you must start with a big fortune.

It would take much for GM to change course, Bob Lutz thinks.

– We have pressed the wind down button, and now we intend to liquidate the company.

– Rather an end with terror than terror without end.

Powerful advisor

Lutz recently left the post as GM’s head of marketing, which he took on in the summer, when he really had intended to retire after many years as head of global product development. Now he has retained the title of vice chairman and is a powerful advisor to the board.

Bob Lutz is not directly involved in negotiations about Saab, and stresses that he can’t say if the new bids are good or bad.

– But we can’t keep looking at proposal after proposal, we must start decommissioning, he says.

– If there is a really good deal on the way, then of course we’ll take it. It’s all about us needing to get more back than it costs to close down, he states.

But it’s not just about money on the table. GM must also believe in a new owner’s long-term ability.

– A closure, we know what it costs. That we can allocate money for, and then it is finished. But if we sell and it doesn’t work out, we risk having to take all the costs anyway, Bob Lutz says.

No Chinese Buick

He argues that retailers among others could sue GM for damages in case of a bad deal.

The new Saab 9-5, which is ready for production in the factory in Trollhättan, may never reach the market. At any rate, it’s not going to China, according to Bob Lutz.

– No, that’s completely wrong. It won’t become a Buick. Not in the U.S., not in China, and nowhere else either.

– The sad thing may come to pass that it never sees the light of day, even though it is a fantastic car.

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A few thoughts on various bits of this.

– We have pressed the wind down button, and now we intend to liquidate the company.

This is the statement that scares me the most. Others have opined that the appointment of Alix Partners was just contingency planning. Planning is one thing. This is an action. And whilst a whole heap of lower-down spokespeople are saying “yes, we’re still evaluating bids”, Bob is up here saying this.

This one’s a little confusing:

– If there is a really good deal on the way, then of course we’ll take it. It’s all about us needing to get more back than it costs to close down, he states.

As is noted in comments, Bob’s talking about two different sets of circumstances here. A sale involves a financial inflow, and a closure involves a net financial outflow (offset by using Saab’s models elsewhere to produce income).

I think the following quote possibly puts it in more perspective….

– A closure, we know what it costs. That we can allocate money for, and then it is finished. But if we sell and it doesn’t work out, we risk having to take all the costs anyway, Bob Lutz says.

He’s saying there that by selling the company to someone they see as a poor owner, they’ll only defer the costs of closure to a later date because they’re worried they might end up on the hook for the new owner’s failures.

I really think that’s a tenuous line to draw. Surely GM’s negotiators are better than that and can work out a position that gives a new owner reasonable warranties over the machinery and tooling they get, as well as protect’s GM longer term interests.

And this one:

– No, that’s completely wrong. It won’t become a Buick. Not in the U.S., not in China, and nowhere else either. The sad thing may come to pass that it never sees the light of day, even though it is a fantastic car.

Well, I just flat-out don’t believe it.

Those who like to promote arguing a case for closure in purely business terms can’t believe it either, because it just makes no sense whatsoever.

Why would you develop what is reputed to be a very advanced car – better than what your Opel unit in Germany is building now and better than what you’re building in China – and then just scrap it?

You wouldn’t. Everyone know it, including Lutz.

Finally, this one is telling:

He argues that retailers among others could sue GM for damages in case of a bad deal.

If this turns out to be a closure, which is something that I genuinely fear right now (sorry, no way of sugar coating it) then it’ll be statements like this and th circumstances leading to them that GM uses to construct a ‘good faith’ argument.

He’s worried about dealers suing GM if it’s a bad deal. Dealers are going to be knocking on his door in far quicker time if there’s no deal.

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Yeah, I’m genuinely worried that there won’t be a sale. GM senior executives are talking this down for a reason.

I still think that a sale could be possible, but it’s going to have to be a very good offer with very good conditions attached.

How much are the buyers willing to bear? I don’t believe they’re looking for a bargain basement car company. I’ve seen them put to much effort, show too much tenacity, to be swayed into thinking that.

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