Rebuilding Trust

In an interview at the auto show in Nacka, Victor Muller admitted there Saab made mistakes dealing with the press last week. “We failed last week, clearly. We have spent one year trying to build up trust and the confidence in the business. It will take time to repair this, but we’ll repair it.” Since last Wednesday, there have been serious concerns raised in comments here by the production stop– does Saab have enough money to last the year? Will sales rebound? How can we trust management now? Potential customers are left wondering if Saab is a viable company anymore. Any dealer can tell you one of the most common questions asked to them is whether the company will be around next year, making a sale all that much harder. While the SaabsUnited community knows that Saab has a sound business plan and willing partners ready to step up to the plate to provide bridge funding, the average consumer usually collects the worst snippets and pieces them together to create their own picture. Last week certainly didn’t help to change that view.

Going forward, Victor is clear– “The most important thing Saab must now do is to not be in the media in a negative way,” something we can all agree on. “We have spent one year trying to build up trust and the confidence in the business. It will take time to repair this, but we’ll repair it.” This is the statement I’ve been waiting to hear from him since this whole debacle started. Demonstrating that he’s taking criticism to heart, it’s clear that he understands that the only way to get customers back on board is to provide some sort of clarity and transparency into the business plan, so that the next time a supply disruption occurs, the media can’t react and create their own picture of what’s really going on. I think where the controversy started was when the press jumped to their own conclusions by filling in the gaps of the story without taking into account the whole story, only from one side. What I and others here were trying to avoid was making assumptions based on faulty information, judging for ourselves the truth without a full picture. This is why we tried to create space and time for the details to sort themselves out– now that production is ramped up again and the situation seems to be under control, we can finally start to reflect more critically on what happened. Some here rightfully demanded that management be clearer and come out with the facts in a quicker way. While we all like quick answers, sometimes we need to remind ourselves to be patient and realize that Saab is essentially a start up, that they’re rebuilding their management team and that they haven’t been used to managing public expectations of their finances in such a public overt way.

Remember that under GM, Saab was simply described as “loss-making,” and there was always someone at GM left to pay the bills. Yes, being a part of a multinational conglomerate had its advantages, namely shelter from an overly critical media. In a recent letter to shareholders, Victor said “I have compared Saab often to a beautiful lion who grew up in captivity. One day that lion is loaded on to a truck and released in the vast savannahs of Africa. That mighty animal has to learn how to hunt for its own prey and support himself. Being used to receiving his meals in a stainless bowl, that lion has some serious challenges adapting to his new-found freedom.” While I agree that’s a romantic description of the situation, I think of it more like a divorce between two partners who fell out of love with each other. GM went off on its way with a fantastic settlement and new swagger that Saab helped to influence.  Meanwhile Saab is left figuring out how to do so many of the things that GM used to handle or that it never had to worry about dealing with when it was with GM– paying the bills, managing expectations of supplier agreements, etc. Is Saab better off single? No question– it’s finally free to date around, and clearly hooking up with BMW, ZF, American Axle, and future partners is a lot more fun than being bossed around by GM.

But there are certainly disadvantages. In past negative cash flow years, Saab could hide under the GM umbrella and didn’t have to report their finances publicly, though GM liked to say that Saab always had a loss despite evidence to the contrary, probably for currency reasons. One piece of information that is clear from the media reports is that the suppliers have been routinely compensated at irregular and often late intervals going back to the GM era; it’s clear there were supply disruptions in the past too. But now that Saab is on its own, there’s a hypersensitivity to any seemingly negative symptoms that could suggest deeper problems within the company. At any sign of trouble, we may yet hear alarms go off in the press, and Saab has a daunting task to make sure that these small fires ring as few alarms as possible.

“If we have a production stop for two hours, when we lose 56 cars, in the media it’s like we’re going bankrupt,” Muller said. “It’s almost impossible to prevent, but you can do your utmost to contain situations. The situation last week just spun out of control.” “The business plan did hold up last year” in terms of earnings before interest and taxes. Victor also said that he wished Spyker had not given production forecasts for Saab, saying the company had been “hammered” for failing to meet the targets. “The business plan and reality are two different things. The business plan said we were going to make 50,000 cars last year. But we didn’t.” That said, “The team managed to push down the break-even point and the cost, which was quite an achievement,” he told reporters today.

There aren’t too many second chances in this game, but with a new CFO, CEO, and strengthened PR message, I think Saab stands a good chance of getting it right going forward. As Saab customers and fans, most of us tend to give Saab management the benefit of the doubt, yet scratch our heads when answers don’t seem to line up quite as neatly as we’d like. It’s crucial for everyone, from the factory worker to the CFO, from the dealer sales representatives to the first time Saab owner, to have credible information. Some of us here have very strong opinions about how Spyker manages PR and the company, and suggest this situation shows that they’re out of touch and unable to handle the complexities of managing Saab. I’d like to remind everyone what a huge task it was for Saab to be sold from out of GM’s clutches last year in the first place, and have just a little more faith in Victor Muller and his team. With our commentary, as Saab’s most active customer base on the internet, our best function in moments like this is to offer constructive criticism and solutions to help Saab recover. So with that I’m hoping that we can offer up comments in a more constructive tone, and I’d like to put out a challenge to everyone to come up with their own ideas on how Saab can prevent situations like this one from getting out of control in the future. How can Saab stay ahead of the stories in the first place? Should Saab have a team dedicated to updating the Swedish press behind the scenes? Should they be even less candid with information and investor guidance seeing that their skewed sales figures seem to have triggered the most criticisms from the press? What positives like Saab’s low breakeven or their renewed model lineup can you elaborate on as reasons for the media and potential customers be aware of that shows Saab has a credible plan? I’m curious to hear what ideas people have in comments. Some examples of PR initiatives that I think Saab should be working on right away:

  • Present a clear picture of Saab’s business plan to customers in a 1 page brochure or poster available at dealers, so at point of sale any ambiguities or hearsay a customer may be influenced by can be eliminated. Discussion about how Saab can be small but still make a profit as a small automaker because of their lower breakeven and new partnerships should be made clear.
  • As soon as new loans are approved, instead of simply a press release, hold a press conference or call with media to give an update on the state of the company.
  • Give customers peace of mind when they buy the car, make it clear that their warranty is in effect and perhaps even extend it an extra year to give assurance that they will be covered no matter what happens.
  • Start leaking development information about the new 9-3 to give the press something positive to talk about, just like GM did with the Volt at the height of their bankruptcy fears.

There’s plenty more ideas, and we’d love to hear them. In the next few weeks there will be plenty more opportunities for us to offer our own opinions on pointed issues, from dismal US Sales, to development priorities. The new team is trying our best to keep the dialogue here above the typical speculative fray, and make sure we as an enthusiast site don’t fan the flames of hysteria that is so common on most Swedish news sites. While we can’t make everyone happy, we appreciate that you at least respect our intent to keep this site a positive place for people who love Saab to have a reasoned debate.

Finally let me address something that’s been bugging me all day since I first read it. Swedish supplier group FKG and investor group VEB are making it known they’re pissed that Victor got a €500,000 bonus last year, even though Saab lost money. Spyker’s annual report shows Muller was also paid a €550,000 management fee and 120,000 Spyker shares for his role in the takeover of Saab, though he doesn’t earn a salary. Did they forget that this is the man who pretty much single-handedly had the balls to save the company? In 2010, no Victor Muller means no Saab. His compensation is a drop in the bucket compared to losing the company. Given that one of the best chances Saab has at getting more funding is through his close friend Vladimir Antonov, in my opinion having Victor as chairman with his connections is worth every penny.

Phoenix
Member
5 years 5 months ago

Well written Jeff. You are doing a good job as are the new SU crew. We are greatful that you continue this work. In regards to VM compensation the critisism is a joke. The work and effort he put down he deserves the compensation. As you say it is a drop in the bucket.

Romac
Member
5 years 5 months ago
+1 : a good article. SAAB are too big a company to tell the press etc to “mind their own business” and too small to hide everything under a corporate umbrella. It’s difficult living life in the spotlight. First and foremost, SAAB is a business, and needs to do what it thinks is best for itself. We all want them to survive because we like their products, but we should remember that we don’t actually own them. We think we have good advice for them, but it is SAAB’s prerogative whether they take any of it. As for VM’s remuneration… Read more »
Romac
Member
5 years 5 months ago

“…don’t actually own them.” meaning “…don’t actually own SAAB“.

Nate 9-3
Member
5 years 5 months ago

Great write up. I still have faith in Victor! However, he (like myself) is a choleric. He feels comfortable being in control and when that control is threatened he appears to get pissy (like me :)) Why is Eric Geers or someone else not the the face of SAAB to the media? They should put someone else in front of the cameras for a while. Victor can win any argument, but this is not the time. It will only be ammunition for the Swedish media.

george
Member
5 years 5 months ago
Thank you Jeff, for this well written piece! It addresses the highlights of the current SAAB-company; but also the learning process it’s going through. Buying a car company and transform it into a lean healthy organization requires dedication, positive news and support from the media. I’ve noticed that there were and still are skeptical people that would love to see the whole Saab-Spyker deal collapse because of the entrepreneur mentality of Victor Muller. It’s a fact that people who stand out will be a center of attention and that’s a shame. If it wasn’t for Victor Muller there wouldn’t be… Read more »
talladegan
Member
5 years 5 months ago

Great post Jeff. NGSU is certainly keeping up the standards. Anyone heard from Swade recently? I seem to remember today was his start day in the new role.

If you’re reading this Mr Wade…all the very, very best of luck for your personal new chapter!

joseglv
Member
5 years 5 months ago

Well done Jeff! Good writeup!
My best idea ( about the press crisis ) is to give imediate response at the least. The goal here is to reply before the question been made.
Instead of manage the situation, let´s give them small leaks so they can talk about it ( like GM and the Volt thing )
And i tottaly agree with Nate… let´s shild VM here and have someone strong to run the media.

tmjr
Member
5 years 5 months ago

While SAAB may have been thought of as a “loss-making” company during GM’s ownership, it’s new adjective is “thinly-capitalized” under the new ownership. All blustering aside, changing that adjective would be my first priority.

hughw
Member
5 years 5 months ago

From all reports, they have financing in place to last them through 2012 if they can meet some production goals. They have the potential to be a profit making company before too long. This is a lot more than can be said for some heavily capitalized startups, especially in the internet world. From what I’ve read Facebook (or is it youtube) has never made money and no one knows if will ever.

ivo 71
Member
5 years 5 months ago
Whatever Victor Muller’s self-admitted weaker points as a day-to-day manager may be and whatever some people may think of some of the imaginative ways in which he conducts business, he has an undeniably rock-solid track record for turning around ailing corporations into profit again. He has done so at least twice before with great success. Saab is a company in turnaround mode and will be for at least two more years, however much we here at SU may wish to believe that it is already solid and unshakable. But, well, that’s how it is. Given that, I truly doubt Saab… Read more »
till72
Member
5 years 5 months ago
Well written Jeff. You’re right, Saab has to be seen as a startup and as I have started my own business a few years ago I can tell that some financial hardships and even some problems paying the bills in time are nothing special. But I had the advantage of being allowed to discuss such issues with my suppliers in private. When it comes to Saab the press is on it at once. It’s really hard to judge what might be the best way to deal with the press in such moments. Saab could be open and allow the press… Read more »
paddan
Member
5 years 5 months ago

Well written Jeff. Thank you.

Kroum
Member
5 years 5 months ago

Rebuilding trust is best done by action, not talk.

More sales, improved product, better customer service. It can all start with small achievements, too.

Btw. Jeff, well written! You’re doing a good job filling some big shoes. 🙂

CJ
Member
5 years 5 months ago

Kroum +1

74StingSaab
Member
5 years 5 months ago

+2

mike saunders
Member
5 years 5 months ago
As much as I gripe and groan about the frightening level of blind faith shown here… Jeff, this post was an absolute blueprint for how to resurrect a faltering public relations campaign. Saab did everything wrong over the past week, but it’s extremely lucky that it can tap into a huge reservoir of good faith — both in the press and in the general car community. As far as I can tell, people want to see Saab succeed, for all the reasons we’ve mentioned. But members of the press aren’t going to wait for what you describe so well here:… Read more »
Bravada from GMI
Member
5 years 5 months ago
I wholeheartedly agree with the notion that Saab should become more transparent. They are a public company de facto, and I must say I found their 2010 press release less than informative. Couple that with a number of issues that remain confusing or doubtful, especially for those who don’t follow Saab as closely as we SU addicts do. Saab has nothing to lose, as their every move is being scrutinized and analyzed anyway, and in response to what is being written by the media they have lifted the lid perhaps more than any other automaker due to their small scale… Read more »
CJ
Member
5 years 5 months ago

BfGM +1

Eric Geers is the best. This one is much higher up and really set Saab back.

Sven van Dijkman
Member
5 years 5 months ago
Nice and well written piece from you Jeff! Mistakes in the PR handling cannot correct the damage that already has been caused. Handled well the future will not show us events like this again. Good PR doesn’t show that much, bad is very painful. Obviously the was at least some reason to talk bad about Saab, but these small pieces are just the kind of meat that the media vultures like so much. The lion should clean its plate! Saab has beautiful products and wants to show them off in Nacka (Vårsalongen) but the media looks for any stain of… Read more »
thomas
Member
5 years 5 months ago

Saab should focus on selling cars. !

It might have been a mistake to set goals on sales numbers, but since the numbers are out, the only thing that will stop the suspicious writing are sales that match or exeed the reported numbers. If Saab succeds in this, the media will start writing articles about “the miracle in Trolhättan”, how the underdog succeded ect.

RS
Member
5 years 5 months ago
To be honest I wouldn’t want to work for Saab PR at this point in time, but they do have to get organized a bit better and agree on the responsibilities when bad press hits them. EG must be able contact VM and JÅJ 24/7 so they can have an official press release out within 2 hours if that’s what required. Wouldn’t be a bad idea for the SU crew to have access to EG or Swade (who’s up all night 😉 ) if something severe comes up? I also agree that Saab should be fighting fire with fire. Saab… Read more »
rodmylon
Member
5 years 5 months ago

DI/TV4 Väst (west) claim that production is halted again, due to 5 suppliers stopping the deliveries. Unpaid bills gain, according to the head of the supplier organization/guild. He claims that what Saab says (that they are negotiating with suppliers) is BS and that it’s only about unpaid bills. Sad that these statements continue to slip out form the supplier organization…
http://di.se/Artiklar/2011/4/5/232171/Stopp-pa-Saab-igen/?sr=6&tr=286716&rlt=0

rodmylon
Member
5 years 5 months ago
It seems the reason why the suppliers go to the press is that Saab make it sound like the problem is the dealers themselves. That Saab claims the suppliers demand an increase in prices while the reality is that Saab hasn’t payed the bills. The suppliers have and still want to stand up for Saab, but they don’t want to be blamed unjustifiably. They want Saab to come forth with the truth if Saab is begging for part-payment terms (installment plans?). The head of the supplier organization doesn’t think the media has blown this out of proportion, rather that Saab… Read more »
rodmylon
Member
5 years 5 months ago
saab93f
Member
5 years 5 months ago

I´m afraid that the suppliers are not handling this as well as they could. Not to say that Saab wasn´t at fault but still…
Damn shame altogether – JÅJ and VM should rally Eric Geers to answer questions ASAP.

kaiger
Member
5 years 5 months ago

So with the new stop today, it’s really time to start rebuilding the trust. Let’s see if they do sth. or not. The press starts again with the same stories as last week…

goose
Member
5 years 5 months ago
Ouch: Again a disruption. Below is a google trans. from http://www.nu.nl: Saab production falls quiet again Production at the Swedish automaker Saab, a subsidiary of the Dutch Spyker Cars is again stopped. That made Saab announced on Tuesday. The company has to do with supply problems. Saab said in negotiations with suppliers. Last week, production was interrupted several times even after suppliers stopped supplying Saab had ceased. There would be unpaid bills. ”We have conversations with vendors and do our best to come to mutual agreement”said a spokeswoman for Saab. Four or five suppliers would not deliver to Spyker, says… Read more »
mike saunders
Member
5 years 5 months ago

That’s disturbing. The scramble for financing, and the tapping into the EIC line of credit, won’t make suppliers any confident in the company’s viability.

When your vendors — the people who need your business — start to question the solidity of the ongoing operations, then that sends messages throughout the business community.

deltabravo
Member
5 years 5 months ago
The problems Saab face now are not insurmountable. A proactive approach sounds like what is both needed and promised by the company. Increased sales are needed, particularly in the large US market. Some have suggested that the price of the new 9-5 is a little high in the US. One suggestion I have made to Saab USA is to offer an Aero version of the 9-5 with the 4 cylinder turbo engine, Hirsch enhanced, with Front Wheel Drive and a manual transmission. This configuration of the Aero is available in other markets and would accomplish two things in the North… Read more »
michaelb
Member
5 years 5 months ago
The topic (restoring trust) from a different angle. German magazine Auto-Motor-und-Sport has an interesting comparison on their website, namely big differences between ECE-consumption and real life consumption. The magazine has developed over the years a highly standardized test cycle, which is much more realistic than the laboratory ECE-test. It contains more highway traffic above 120km/h and use of climatisation, stop and go and so on. Their list is impressive, it shows that many of the top German carmakers have real life consumption, that has nothing to do with official values. Here a few examples from their test: ECE consumption test… Read more »
michaelb
Member
5 years 5 months ago

Sorry for the bad presentation of the data, when I flled the text in, everything seamed okay.

blksaabth
Member
5 years 5 months ago
I’ve been sharing ideas with our local dealer… In the auto section of the newspaper (calgary herald)… instead of publishing pics of saabs, just publish QR codes with no descriptor, which links to videos of saab models in action. It would be a first and create some buzz and appeal to the prospective buyers. I was also thinking you could create some buzz by holding an exclusive luncheon/test drive at bankers hall ( the downtown banking centre for Calgary). Have a 9-5 on display in bankers hall…. and announce lunch time test drives with free lunch included (RSVP only). Have… Read more »
SPG900NY
Member
5 years 5 months ago
The issue with revealing more and more info about the new 9-3 is that as soon as you let that cat out of the bag, you will definitely kill current 9-3 sales unless you dramatically discount them (aren’t they being discounted enough already)? Once people see the new “real Saab” 9-3, true Saab enthusiasts would probably just wait another year if they were considering a 9-3. So who would buy the current 9-3’s? People looking for a deal, or people comparison shopping with Audis and Subarus and the like — people who aren’t necessarily automatically sold on Saab as a… Read more »
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