A Way Forward

Thats paraphrased from the Reorganization Plan that Lofalk has published for the meeting today. It is available for public consumption in Swedish or English, but I’ve reproduced it after the break.

Most of the highlights have been covered here already this morning, but there are more tidbits leaking out now, like:

  • 2012: 35.000 – 55.000 units are expected to be sold, sales are expected to rise to 78.000-86.000 in 2013.
  • Dealer and Consumer Incentives
  • New 9-3 in 2013/2014 [I believe this means a 2013 introduction with 2014 model year designation as the target]
  • New Premium Compact (9-1/2)
  • NG Premium Crossover (9-6X)
  • New Executive Luxury Car (9-7)
  • More local sourcing and licensing of tech to other Chinese partners

1. Introduction and Background

On February 20, 2009, while still under ownership of General Motors, SAAB was granted a first order for reorganization. This reorganisation was conducted until 20 August 2009 when the targets were considered fulfilled by the actions taken.

While still under reorganisation, former owner General Motors continued negotiations with potential buyers. An initially negotiated deal with Koenigsegg Group was, however, cancelled on November 24, 2009.

On 18 December 2009 General Motors announced that they intended to close down the Company. On 12 January 2010 General Motors applied for liquidation of the Company and the Swedish Companies Registration Office appointed two liquidators. On 23 February 2010, however, General Motors exited the liquidation and sold the Company to Spyker Cars N.V. (currently known as Swedish Automobile N.V. (”SWAN”)).

A loanfacility of MEUR 400 by European Investment Bank (“EIB”) was secured in February 2010. The loan was guaranteed by the Swedish National Debt Office (NDO), collateralized by a significant share of Saab Auto Group’s assets and was agreed to be paid out in partial payments before 31 August 2012 with repayment during 2017.

Following payment difficulties, Saab experienced a number of production stoppages.. On 6 April, the Company decided to halt production. After additional funding had been secured the production was restarted on 27 May 2011. However, production interruptions followed in the days after as a result of an unsteady inflow of parts and components for the production. On 9 June 2011 the Company stopped production once again.

As a consequence of the escalating liquidity issues in summer 2011, a second petition for company reorganization order was filed on September 5, 2011 and granted on September 21, 2011. Since then, owners, Saab management and potential investors have worked thoroughly on developing a sustainable turnaround plan for Saab.

2. Development since the last reorganization and Consequences thereof

First Achievements

During the first year of independence GM introduced two new models were introduced to the public. The market launch of the “Executive premium” 9-5 Sedan was a first step in the process of decreasing the average age of the productportfolio. With the soon-to be launched mid-sized 9-4X SUV, the product portfolio is enhanced with an offering in the 10% growth mid-sized Premium Crossover segment. Both cars received excellent press reception. With titles such as Bjorn again (Car & Driver, USA) and Best Saab Ever, It’s Fabulous (Aftonbladet, Sweden), Hot Saab has the Xfactor (Auto Express, UK) Saab left the earlier negative headlines behind and turned press coverage back into positive news around its products. International press praised the 9-5 as the potential start of another of Saab‘s excellent adventures (Car & Driver, USA) and as conjunction of tradition and innovation (L‘Illustré, Switzerland). Also, the 9-4 X was well received and seen as head-to-head with BMW X3 and Audi Q5 (Road & Track, USA).

At the same time, Saab achieved a reduction in the break-even point from 150.000 to 120.000 units per year through structural cost reduction (headcount reduction by 1.200 FTE since beginning of 2009) and contribution margin improvement through the new 9- 5. A further reduction of break even point is planned to drive it below 100.000 units by 2013. This will be achieved through further reduction in its cost base and improved contribution margins resulting from the new product launches.

In addition, after its separation from General Motors in February 2010, Saab gained full operational independence. The former owner GM is now an important business partner.

A global independent sales network, including adequate financing solutions, is in place in Europe and North America, and well underway to expand into China, Russia, Mexico, Japan, Australia and others. Former “integrated” functions such as Engineering, IT, Quality, Purchasing, Finance, Legal etc. are now fully independent. IT infrastructure is – to a large degree – separated from GM, with a clear timeline for what is remaining.

The Problems

While significant cost reductions were achieved and production and sales ramp-up were in line with the plan, the entire re-start of Saab was six months delayed due the above mentioned liquidation process that had started. Those delays turned into major obstacles for the successful path to profitability and required additional short-term funding.

The initial negotiations with General Motors, the liquidation process and the transition of ownership to Spyker took far longer than expected – thereby causing a production stop in Q1 2010 and delay of six months in the sales ramp-up. The original plan was based on a jump start in Q1 2010 with running production and a 20% order increase each quarter starting at 3.500 units per month. The quarterly growth target of around 20% in order intake was actually achieved all the way up to the production stop in April 2011 – culminating in wholesales of 4.700 units in March 2011, on track for an annual volume of approximately 60.000. However, the initial delay resulted in targets only be achieved with a six month delay, resulting in calendar year 2010 volumes and aggregated contribution margin falling short by 50% vs. the initial business plan.

Furthermore, some separation activities from General Motors in the sales organization turned out to be more complex than initially expected and thereby contributed to not being able to recover the delayed ramp-up schedule faster.

For example, Saab‘s North American sales operations were fully integrated into General Motors North America until 2010. Carving out operation and rebuilding an own National Sales Company quickly proved to be a challenge and caused Saab‘s US sales to remain below expectations since then. GM ́s communication of a “discontinued brand” together with Hummer, Saturn and Pontiac didn ́t help either.

In addition, Saab transitioned to a direct dealer model in some markets (e.g., Germany, France Norway and Austria) to serve dealers directly out of Trollhättan instead of building up own National Sales Companies after the separation from General Motors. Conducting such an activity during the restart phase took too much attention away from making the actual re-launch a success.

While the secured funding was based on an immediate production start and ramp-up, liquidity was used up during the delay of launch. Getting access to additional funding to bridge the gap for the six month delay proved difficult. Current owners had no headroom to provide liquidity and with most assets already collateralized for the NDO as part of the loan from EIB – a loan that can only be used to fund development related projects – access to sufficient additional capital or funding proved impossible.

The Consequences

Lack of funds through the delayed ramp-up had severe consequences for Saab, ultimately leading to the filing for a new reorganization.

Lack of liquidity led to Saab not being able to fund critical activities during launches of brand new vehicles and required investments into market development. Saab’s advertising spending for example was 50% lower than initially foreseen (and below industry standards) in the last two quarters before production was stopped. At the same time, overdue supplier payments caused disruption in the material supply chain for production and in the aftersales business.

While press coverage for the new 9-4X and the 9-5 products was very positive and supportive throughout, negative corporate news since the first production stop in April overshadowed the positive evolution. Declining trust levels in the long-term viability of Saab from customers, dealers and suppliers turned the business into a downward spiral. In some markets Saab is no longer considered in the premium competitive set and competes against volume brands in the customer perception.

The Saab dealers were adversely affected alongside Saab through this period and still are today. Some dealers have not received products for months now and aftersales service levels are continuously declining as parts availability in the central warehouses declines. Furthermore, Saab is facing increased staff attrition over the last six months. However, a significant share has signalled to return once a viable and sustainable setup is found.

 

 

3. The Way Forward

3.1. Immediate Action Highlights

With the agreement (“MoU”) reached last week between the Chinese parties Youngman and Pang Da on the one side and SWAN on the other side, the basis for a successful re- start of Saab has been established.

Saab Automobile AB with its subsidiaries and Saab GB Ltd. (together “Saab Auto Group”) will be 100% owned and controlled by the Chinese parties.

This gives the Saab Auto Group new and financially strong owners and industrial partners with a strategic and long term interest. They are committed and able to fund the turnaround plan presented here-in. Short term funding for the re-organization process has been secured through a EUR 50 mn bridge loan.

Long term funding for the turnaround plan will also come from both Chinese owners with funding commitments of RMB 5.5bn (approx. EUR 610mn) for 2012 and thereafter, as well as further draw down on the remeinaing EIB facility of EUR 63mn.

Given the short time-frame since the MoU between former and new owners the repayment schedule to our creditors has not yet been finalized. This will be presented during the scheduled composition meeting.

Saab has also further reduced its structural costs in order to reduce break-even point and funding requirements. Programs and initiatives are in place for immediate structural cost reduction of SEK 1 billion.

The most important point is to restore trust and build credibility for Saab after the public discussions on Saab’s future. Given the last minute agreement between current/former and future owners Saab ́s management did not yet have the opportunity or time to reach out and share facts as well as plans with the key stakeholders. Provided that Saab can continue its reorganization, management attention will be on restoring confidence and trust with suppliers, dealers and employees based on a solid turnaround plan and competitive products.

 

3.2. New Owners and “Extended Saab”

The Saab turnaround is founded on a solid basis due to two new owners committed to fund the new turnaround plan: Pang Da Automobile Trade Co. Ltd. and Youngman Automotive Group. Both parties together intend to own 100% of the shares in Saabs Auto Group.

Pang Da has tremendous experience in Automotive distribution in China. With a network of more than 1.000 sales outlets, revenues of RMB 50 billion and a growth of 49% annually from 2008-2010, it is the largest privately-owned Automobile trading company in China. CEO, Chairman and 30% owner is Pang Qinhua. The company has achieved gross margins of 10-11%. Pang Da‘s investment is crucial for funding the turnaround and for the immediate access to the Chinese market.

Youngman Automotive Group, on the other hand, is a manufacturer of commercial vehicles, passenger cars and automotive components. The company employs 8.000 staff and is led by Pang Qingnian. Additionally, it controls coal, silica and other mineral resources worth more than RMB 30 billion. Zhejiang Youngman Lotus Automobile Co. Ltd. is the subsidiary of Youngman Automotive Group cooperating with British Lotus Cars and focusing on the production of the L5 passenger car model. Youngman‘s investment will help funding and ensure long-term operational efficiency with a production footprint in China.

Investment Rationale for New Owners

Pang Da and Youngman are not seeking quick returns like a purely financial investor would. Their investment in Saab is driven by business rationale and a long-term strategy. Pang Da, Youngman and Saab jointly form a new entity that combines the strength of all three partners – with Saab‘s brand equity and heritage, product portfolio and capabilities being the key elements in a partnership that may be summarized as follows:

  • Access to one of the last available global automotive brands – with brand heritage and brand equity in many developed markets
  • Existing product portfolio and short-term product pipeline with very competitive products
  • One additional carline and a key derivative within three months from restart of production
  • Reputation for quality and safety
  • Experienced engineering organization for global premium standards
  • Ability to leverage Saab’s global distribution network
  • Global customer base with more than 1 million vehicles in operation; and
  • Complementary capabilities to join forces – Saab as a marketing and engineering company, Pang Da offering immediate Sales access to China, and Youngman with available production capacity and supplier base in China

     

With the proposed turnaround, Saab would no longer be a standalone car company but an integrated part in the new structure.

New Structure

Through the investment of Youngman and Pang Da in Saab, along with the creation of two new entities in China, a new „Extended Saab“ is to be created (see Illustration 1).

Illustration 1: Indented future ownership structure

Youngman (60% ownership), and Pang Da (40% ownership) will jointly control “Saab Auto Group”. Saab Automobile AB will continue to consist of its subsidiaries Saab Property AB, Saab Automobile Tools AB, Saab Automobile Powertrain AB, Saab Automobile Parts AB as well as the National Sales Companies and other smaller entities. As part of the transaction, Saab GB Ltd. (Saab‘s national sales company for the UK) also becomes a subsidiary of Saab Automobile AB. Saab Auto Group will remain a fully fledged automotive manufacturer with design, engineering , manufacturing operations as well as worldwidesales, . Saab Auto Group covers all entities currently in reorganization.

To tap into opportunities in and stemming from China, Saab, Youngman and Pang Da are intending to found two new entities in China:

  • A China Distribution Entity will manage all sales operations in the booming China market regarding Saab vehicles; and
  • A China Manufacturing Entity will provide manufacturing facilities in China, building Saab vehicles both for the Chinese and the worldwide market.

Development of the vehicles manufactured in the Manufacturing Entity which will take place within Saab Automobile AB in Trollhättan

With all entities of the „Extended Saab“being closely interlinked, the new owners are highly committed to securing the long-term viability through securing sufficient long- term funding of all the involved entities’.

With Saab Automobile AB being in reorganization, the preliminary turnaround plan financials which will be presented in this document only relate to the activities concerning Saab Auto Group as well as it‘s business relationships with the two new entities – but do not yet contain the business plans of the new China entities itself. A joint business plan for the “Extended Saab” is currently under development.

3.3. The Restart

As in any successful automotive turnaround, the turnaround will be revenue and product led. A key uncertainty in the plan is the loss of sales capacity and key personnel at the dealers in the markets after being without products for such a long time. Given this potential loss of sales capacity at the dealers in the market, it will be key to offer new and interesting products in line with customer demand to dealers and the markets. This will allow to create positive product news in consumer minds, floor traffic at the dealers and to attract sales talent back to the brand.

Traditionally, a two product company with an aged product portfolio, Saab now has a number of market-ready products that have not been market-launched in the past due to financial constraints.

Product Portfolio

Illustration 2: Saab Product Portfolio MY 2012 with existing and new products

In its three key markets (65% of historic volume) Sweden, UK and US Saab has new products to offer with the re-launch. The new 9-5 Sports Combi is scheduled for 2012 to build the basis for the Swedish and UK recovery. The Wagon is traditionally the strongest segment of the Swedish market with Saab then having the most recent product in the segment. UK recovery will also be supported by a new 120g powertrain offering on the 9-5 which thereby fits the requirements of corporate customers and fleet buyers. The plan also conservatively assumes that some time will be required to be re-listed by all major fleet and leasing companies and to re-enter the Swedish support fleet business.

The 9-4X is the basis for the US re-launch, giving access to a completely new segment for Saab, combined with a re-positioned 9-5 Sedan. Both carlines target traditionally strong segments in the US.

Besides traditional markets, Saab also targets high growth markets. Due to the background of the owners, China will be in the focus of activities in growing markets. The China launch of Saab in conjunction with the distribution capability of Pang Da will have multiple legs. The 9-4X is in a fast growing segment in China and the one-year-old 9-5 Sedan with its 2837 mm wheel base fits well with the Chinese market. For both, a significant order bank already exists. Furthermore, a new importer agreement for Russia and Ukraine has already been signed.

The turnaround plan conservatively assumes that the volume ramp-up curves follow the realized actual pattern in last year’s re-start, despite having more carlines available. In addition to that, volume is planned to be generated through access to the large and fast growing Chinese market. While in 2012 35.000 – 55.000 units are expected to be sold, sales are expected to rise to 78.000-86.000 in 2013.

The restart is planned to be accompanied by market-facing activities to rebuild trust in the Saab brand over the next 2-3 years in the traditional markets and kick-start the sales channel. These activities are characterized by fast sales impact and low investment.

They will address customers, dealers as well as the important fleet and leasing channel. Specific campaigns will be offered temporarily during the restart period – differentiated and tailored to selected market. Examples include:

Targeted at Customers

– Loyalty incentives
– Offer service packages
– Offer test drive campaigns

Targeted at Dealers

– Organize re-start and productevents
– Temporary incentives for new orders
– Support dealers in recruiting (sales, service)

Targeted at Fleets and Leasing Companies

  • Organize re-start events
  • Temporary order bonuses
  • Subsidize residual values on selected volumes

After the successful sales restart has been accomplished, Saab is going to a shift activities towards a restatement of the brand position through motorshows, events as well as traditional and non-traditional communication channels.

 

3.4. Long-Term Strategy and Viability

3.4.1. Positioning & Portfolio

Saab is a niche premium brand, leveraging its unique brand heritage, targeting the upper liberal customer segment – aiming for differentiated position vs. traditional premium brands. Saab Brand position and Saab customer segments provide opportunities for premium prices and high contribution margins per unit. This provides a profitable business at low volume versus premium volume brand such as BMW, Audi and Volvo. Other niche brands that compete for high price realization at low volumes are for example Jaguar, Land-Rover, Mini and Porsche.

The traditional Saab positioning is unique and Saab aims to further strengthen the uniqueness through differentiation from other premium vehicles. Starting with the next generation of vehicles, Saab intends to sharpen the brand to provide cars that are non- traditional cars and compete less with existing car brands and vehicles.

Building on Saab’s roots and heritage, iconic products are meant to be the foundation for the future, based on four principles:

– Mostprogressivedesignofall
– Driver-centered
– Responsible performance; and
– Sporty vehicles, done the Saab way

 

The Chinese market requires a dedicated positioning strategy and discussions with our partners are currently are under way to work out the details.

Saab holds a considerable pipeline of new generation cars which are almost fully developed and close to market launch. The recent launch of 9-5 Sedan and the upcoming market launch of 9-4X have a significant impact on the average portfolio age, bringing it down from seven years to four years in 2011. Furthermore, the 9-5 Sports Combi is ready to be launched in 2012. Saab envisages a further decrease of the average portfolio age with new generation of competitive vehicles:

  • Saab’s main product – the 9-3 in the midsize range – is planned to be introduced in 2013/2014 with a new – unique in the segment – fastback and convertible
  • In addition, Saab plans to enter a new offering within the premium compact segment
  • The next generation premium crossover is expected to in this increase share in this growing segment
  • Ultimately, a new entry in the executive segment fully reflecting the new iconic Saab positing is planned to follow

 

3.4.2. Operations

Saab’s new strategy will be backed in operations and engineering by historic strengths which will open up opportunities for cost savings and innovations. Key highlights include:

Operational excellence:

  • Trollhättan is one of the most efficient automotive plants in its segment – with 29 production hours per car. Saab plans to leverage this and the well trained staff to ramp up production again quickly
  • Flexibility in the manufacturing footprint is to be enhanced significantly through local manufacturing in China. Going forward Saab plans, to a much higher degree, to gain from producing the cars closer to the customers and leverage the cost advantages foreseen from producing in China.
  • While significant right-sizing has already occurred, Saab wants to continue along the path to create leaner operations
  • During the production downtime since April, Saab has significantly invested in staff training to increase future competitiveness – with each employee participating in 140 hours of training.
  • Also opportunities for supply chain efficiency are evaluated. Working capital reduction programs are under way through reducing lead times. Saab management expects to reduce its current manufacturing-related operating working capital by 40% until end of next year.
  • Saab envisages to leverage opportunities through local sourcing in China for new products.
  • Reviewing the supply base, having a revised production footprint and growing into new markets, like China, is expected to further reduce risk through a more balanced FX footprint.

    Innovative Engineering:

  • Saab is currently developing a proprietary scalable in-house architecture (Phoenix) for all future Saab models which will ensure economies of scale and other synergies across carlines. This modular technology-based architecture covers all Saab segments including crossover and SUV capability – thereby enabling fast changes and quick to market development.
  • Within this technology architecture Saab deploys all leading technologies (e.g. open infotainment platform, electrical XWD/hybrids/E-REV (Extended Range Electric Vehicle technology), state of the art active and passive safety systems), meeting the Global Premium & Quality Standards (e.g. 5 star safety, low emissions, superior ride & handling, hybrid/electrification).
  • Saab’s engineers have deep experience in developing breakthrough innovations – being the center of excellence for key performance areas and technologies (e.g. turbo-charging, powertrain/controls software engineering, active and passive safety, all-wheel drive) while being part of General Motors.
  • While vehicle and powertrain development were separated in the past, Saab is currently in the final stages of merging these two organizations to form one holistic engineering organization.

Being a niche manufacturer with premium standards, Saab plans to collaborate with the best suppliers, car manufacturers and strategic partners to:

  • Obtain access to technology and achieve scale advantages through partnering; and
  • License out own products to the new entity in China, as well as other car manufacturers

3.4.3. Long Term Volume Forecast

Saab’s volume forecast is based on three main growth highlights:

1. Access to China

The new ownership structure with two strong Chinese partners facilitates Saab‘s access to the Chinese market. With annual volumes in the Premium Segment of one million (Forecast 2011; 19 million total market) and an expected annual growth rate of more than 15% (8%) over the next years, the Chinese market is the most attractive market globally. While historically Saab‘s markets were in the West with 64% share of sales in Europe and 30% in North America, in the future Saab‘s focus is expected to shift to China – capturing 1/3 of sales.

2. Broader product portfolio

Along with the geographical diversification comes a carline diversification. While Saab relied on two carlines (9-3 and 9-5) up until 2011, adding the 9-4x now and the Compact vehicle at a later stage will double the number of carlines. The diversification paired with launches of next generation Midsize/Executive Premium models also leads to a product rejuvenation, decreasing average car age from seven years at beginning of 2010 to two years in 2014. All target premium segments are expected to grow considerably over the next 5 years (CAGR (Compound Annual Growth Rate; worldwide): Premium Executive (5%); Premium Midsize (8%); Premium Compact (10%); Premium Crossovers (10%)

3. Profitability focus

The new turnaround plan acknowledges market dynamics in the relevant segments as well as focus on profitability, rather than volume by any means. As Saab‘s production and sales have been low during the financially constraint period of 2010/2011 and competitors have entered the markets, Saab’s segment shares in traditional markets are forecasted to remain below historic levels. The peak volumes planned in Sweden, US, and UK for the traditional carlines (9-3/9-5) are between 53% and 70% of historical averages – but achieving better contribution margins per vehicle.

Thus, growth in Saab sales is expected from new markets, predominantly China, as well as new products such as 9-4x and Compact. China is foreseen to account for 1/3 of global volume and the two new carlines are expected to contribute 40% of global volumes by 2017.

Illustration 3: Annual Car Sales Volume by Market in ‘000 units

These global sales stem from the “Extended Saab”. Saab Auto Group will continue to produce in Trollhättan and is in charge of worldwide distribution of all “Extended Saab” products. Saab Auto Group accounts for approximately 70% of “Extended Saab” volume by 2017, which is reflected in the preliminary turnaround plan for this reorganization. The manufacturing entity in China is intended to supply to both the China distribution entity and Saab Auto Group.

4. Funding

Short- and long-term funding is assured through the new owners. Youngman and Pang Da have committed an immediate bridge funding of EUR 50mn and have also committed to RMB 5.5bn (approx. EUR 610 mn) funding for the medium-term timeframe for 2012 and thereafter as well as further draw down on the remaining EIB facility of EUR 63mn.

Given the short time-frame since the MoU between former and new owners the repayment schedule to our creditors has not yet been finalized. This will be presented till the scheduled composition meeting.

5. Preliminary Reorganization Plan

All activities in combination with the new ownership structure and the funding translate into a fully funded preliminary turnaround plan for Saab Auto Group.

Highlights include:

– 175-200k units sold through “Extended Saab” – 130-145k revenue-generating units for Saab Auto Group

o 1.7% market share in Executive Premium
o 3.8% market share in Midsize Premium
o 4.9% market share in Midsize Premium SUV o 3.4% market share in Compact Premium

 

Sustainable long-term profitability
o Net sales of about SEK 35 Bn o Sustainable 5% return on sale

The negative result for 2012 and 2013 is covered by the financing described above

Positive cash-flow during 2014

Over the next weeks, management will work thoroughly with the new owners and the newly established China entities to transform this preliminary reorganization plan into a full turnaround plan for “Extended Saab” covering all related entities.

6. Timetable and Next Steps

Saab and the new owners are highly committed to the timely implementation of the new turnaround plan. New ownership and funding have been agreed at this stage, and further detailing of the “Extended Saab” business model is underway. As early as funding for the restart is obtained and latest with the composition meetings, Saab will discuss a preliminary start-up plan with suppliers. As delivery of parts & material is crucial to a quick restart, the final schedule for production restart will be compiled based on information from suppliers during November 2011. At the same time, before the first car leaves the assembly line, Saab will restart sales and marketing activities including the earlier discussed selective incentive measures for dealers as well as events for end customers.

Once operations are back up and running, the focus will be on restoring the brand and market position in all key markets and starting on mid-term activities such as positioning the brand as a niche premium brand in key markets.

Guy Lofalk Administrator

Peter, Sweden
Member
4 years 10 months ago

Oh, the new 9-3 is now confirmed as a fastback 🙂

Thylmuc
Member
4 years 10 months ago

One of the few statements in the above text that troubles me a bit. According to Wikipedia, a fastback is a body style, while a hatchback appears to be more of a functional style, i.e. a big tailgate. The Jaguar XF could be dubbed a fastback. The BMW 5er GT has a tailgate, while the smaller 3er Gt anounced will have a trunk lid and a fastback style. I hope that this statement of Lofalk was merely a glitch, not an anouncement.

Bravada from GMI
Member
4 years 10 months ago

Generally, the sales strategy is giving away money. How inventive. It’s good to know Saab learned something from GM over those years…

Seriously, I am terrified. It seems marketing and sales went from dormant to brain-dead.

michael
Member
4 years 10 months ago

Could you please elaborate on “giving away the money”? Not that I don’t agree with you, I just did not quite catch it. :-/

Bravada from GMI
Member
4 years 10 months ago
The restart is planned to be accompanied by market-facing activities to rebuild trust in the Saab brand over the next 2-3 years in the traditional markets and kick-start the sales channel. These activities are characterized by fast sales impact and low investment. They will address customers, dealers as well as the important fleet and leasing channel. Specific campaigns will be offered temporarily during the restart period – differentiated and tailored to selected market. Examples include: Targeted at Customers – Loyalty incentives – Offer service packages – Offer test drive campaigns Targeted at Dealers – Organize re-start and productevents – Temporary… Read more »
Bravada from GMI
Member
4 years 10 months ago

BTW, rebates don’t rebuild trust. They only cement the belief that the car is nowhere as good as it should be.

michael
Member
4 years 10 months ago
Thank you, got it! And agreed (unfortunately). In my opinion, the main focus should be pulling _the product_ and experience up to premium market expectations, if they are planning to compete in premium and low-volume. The examples (Jaguar, LR, Mini) given in plan are exactly what to look at. It means better quality, better materials and better design at almost the same price as high-volume premium. What is the most frequent complaint aboun new 9-5? Noticeable GM parts, dull black-and-grey interior and plastic dashboard. That screams to be fixed! Also, I don’t get it when they give not top versions… Read more »
Tripod
Member
4 years 10 months ago
Nothing about repackaging products, engaging past and present owners, leveraging the enthusiast base, repositioning the brand etc. It’s all “events, subsidies, bonuses, offers, incentives”. One can always discuss this or that, and I’m confident that the Saab community will since every one has his own opinion about how things should be done, 😉 and I would not expect them to mention the enthusiast base in the plan, but for some of what you mentioned, from the end of the preliminary reorganization plan: “Once operations are back up and running, the focus will be on restoring the brand and market position… Read more »
Paul
Member
4 years 10 months ago

I actually think they have to use incentives to build market share. Remember the new 93 doesn’t come out until late 2013. That means the current 93 is a 10-year-old design selling against new players that are pretty good. The 9-4 probably won’t need incentives, but the 95 might until its successfully re-positioned in the market (the GM tech means Saab is limited in how much money it can save or tweak the design for. The phoenix platform gives Saab a chance to do the opposite, tweak the design to match the price position they need to be at.)

Pedro
Member
4 years 10 months ago

Noticed that too, Bravada, and share the cringe feeling… Hope it works without cheapening the SAAB brand.

Also, I wonder what will the 9-6X and the 9-7 be… Mainly for China, I would say (and in a way hope)?…

Ben
Member
4 years 10 months ago

■A China Manufacturing Entity will provide manufacturing facilities in China, building Saab vehicles both for the Chinese and the worldwide market.

■Flexibility in the manufacturing footprint is to be enhanced significantly through local manufacturing in China. Going forward Saab plans, to a much higher degree, to gain from producing the cars closer to the customers and leverage the cost advantages foreseen from producing in China.

This seems to say they will make china for everywhere and later that they want to use local manufacturing sugesting it is for only the asian and “local” markets. Does anyone get which it is?

saab prayer
Member
4 years 10 months ago

Does anybody know what will be with shares of SWAN?

BoeBoe
Member
4 years 10 months ago
What do you mean? SWAN shares still exist and they will continue to exist. But is Saab is sold to the Chinese SWAN only exists of Spyker and they have nothing to do with Saab. At the moment SWAN ownes the shares of Saab and they intent to sell those shares to the Chinese for 100 million euro. After that transaction SWAN is no longer the owner of Saab. I guess you are a SWAN shareholder? And this will not change. You will still have shares in SWAN, but SWAN sold one of their companies. They will only have Spyker… Read more »
jond
Member
4 years 10 months ago

Actually, that’s not entirely accurate. The value of a share may be higher or lower than the Net Asset Value, depending on the prospects for earnings in the future. In any case, if the Euro100m is to be paid out over 4 years, then there will be further costs of servicing the debt, which may well eat up the Euro3m that you calculate remains. But this is just being pedantic, really. Without any further investment of capital, SWAN does look like it may be just a shell if it sells Spyker.

BoeBoe
Member
4 years 10 months ago

It was just a quick & dirty calculation 😉

I know that the stockprice has some “future value” in it.
Victor said himself that SWAN will probably be an empty shell.

If I would own any SWAN stocks I would sell them now they have any value left.

ivo 71
Member
4 years 10 months ago
Well, Lofalk did cough up a lot of text for his 11 to 17 M SEK 😉 A few (to me) striking points: – the projected China production entity will produce for both the local and the worldwide markets. So, at a certain point in time, Chinese-built Saab cars will be sold outside China, also in Europe and the USA. I wonder what that will do to brand perception in the USA and Europe. Could be good (premium quality at lower prices and/or more profit/unit), could be bad (people saying now already ‘I’m never going to buy a Chinese-built Saab’).… Read more »
Belfast_Saab
Member
4 years 10 months ago

+1 Ivo, seems do-able. Marketing through loyalty bonuses seems very sensible, attracting back old Saab owners or retianing current ones is a priority. Fleet leasing is the second priotiy and that can only be done by incentives. All of this costs money but eventually the sight of cars on the road is the best advertising Saab can get. Metal > posters every time 😉

Ben
Member
4 years 10 months ago

It also says they want to take advantage of local manufacturing. Maybe they mean chinese made cars for asia and Swedish for Europe and America.

Doctor Donk
Member
4 years 10 months ago

Aero X should be in line also

dcpattie
Member
4 years 10 months ago
It sounds like all the drama over the past 6 months has set back the introduction of the next 9-3 by about 6 months. That’s not so bad. IIRC, the original target was at the end of calendar year 2012 as a MY2013. Now, the aim is sometime in 2013 as a MY2014. So that means the current 9-3 must solider on for approx. another 2 years. Maybe that can offer some free incentives to move inventory like Navigation at no cost and perhaps even bump the HP on the 2.0 to 260? About the 9-5. Maybe Saab could squeeze… Read more »
BoeBoe
Member
4 years 10 months ago

The plan says:

is planned to be introduced in 2013/2014

They plan to introduce it at the end of 2013 of beginning of 2014. They don’t speak of introduction in 2013 as a 2014MY. Last week Victor Muller also said that the new 9-3 would probably be introduced in 2014.

dcpattie
Member
4 years 10 months ago

Also, the way forward to regain the attention (and trust) of the U.S. market is to offer an outstanding warranty and competitive no-cost maintenance. Look no further than Hyundai and Volvo for inspiration.

adams
Member
4 years 10 months ago

For the record, I (a U.S. based consumer) will never, ever, ever buy a Chinese made Saab. I believe in heritage and the individuality of nations and I want my hard earned dollars to help put lingonberries on the dinner table of the trolls who have been making Saab cars for generations. And, for what it’s worth, I would also never buy a U.S. produced BMW, a Finland produced Porsche, or an Austrian produced Aston Martin.

74StingSaab
Member
4 years 10 months ago

Then you better be making this comment from a Apple II GS, otherwise you’re using a Chinese made computer.

adams
Member
4 years 10 months ago

I’m not passionate about computers. I’m passionate about cars.

74StingSaab
Member
4 years 10 months ago

OK, fair enough statement… even up, lets have a beer. You know the kind i refer to, my apologies.

adams
Member
4 years 10 months ago

Hey, no offense taken. If we ever do meet the first round is on me!

dbv
Member
4 years 10 months ago

I completely agree with your statement. I am another US based loyal customer and will no way be buying a Chinese made Saab. A Saab made in China is not a real Saab. Wish I could sell my 2010 9-5 Aero now but resale is so bad on these cars that I would take a huge hit. I would rather buy an Audi made in Germany, a BMW made in Germany, etc….

fido
Member
4 years 10 months ago

You can always buy a Swedish made SAAB until one day Trollhattan can’t produce high quality Saabs.

even if SAAB’s chinese factory can producing the same quality cars, their production capacity must first meet chinese market, then east asia, then Australia, i think this must be 5 – 7 years later.
and at that time, i think Trollhattan will mainly produces high-end series, e.g. 9-6, 9-7. and maybe SAAB will set factories all over the world, producing cars locally, this is a trend.
If they want to compete with BMW, Audi, They can only do so.

ivo 71
Member
4 years 10 months ago
I think you are right, fido. Very expensive foreign luxury cars get only sold in China if they are guaranteed to actually come from the country of origin of the brand. If so then the wealthy Chinese are prepared to pay through the nose for them and the import taxes don’t matter so much any more. Top models of MB and BMW are, as far as I know, both imported and built locally but only ‘the real thing’ really matters to the happy few. The owners of the same car built in China pay less, of course, but can’t count… Read more »
GerritN
Member
4 years 10 months ago

“a Finland produced Porsche…..”???

My 2 favourite cars, Viggen and Boxster, proudly display a sticker that says they have been assembled at the Valmet plant in Finland. Careful with thrashing too many things when you get excited and never ever say “never, ever, ever”.

adams
Member
4 years 10 months ago
Perhaps I used one too many “evers” but I wasn’t excited nor was I thrashing. I simply expressed my personal conviction to not own a Porsche assembled in Finland or a Saab assembled in China. A company’s historical ethos is very important to me and I want to support the workers in its country of origin nearly as much as I want a very good car. So I stick to what I said … I will never, ever buy a Saab from China. And, from the comments I’ve been reading here, as well as at Inside Saab, I believe there… Read more »
GerritN
Member
4 years 10 months ago

Sorry for using too strong words.
I merely wanted to point out that the Valmet plant assembled some great cars. Both Porsche and Saab set up assembly in Finland because they didn’t have enough production capability at ‘home’.
I agree that at the moment Chinese assembled cars would be lacking in quality a bit, we’ll see in 10 years.

davidgmills
Member
4 years 10 months ago
I am with you adams. There is something about buying a product from the place of its origin, rather than an offshoot of the origin, that has something that the offshoot doesn’t. How many restaurants had a really good product at their first place of business only to loose something once franchised and produced elsewhere? It happens every time. Saabs are made and engineered where the elements are brutal. The people who make them are used to harsh environments and what it takes to make something work in that environment. Get people to make the same thing who don’t appreciate… Read more »
ivo 71
Member
4 years 10 months ago
Well, I do understand the emotive part of that attitude. But cars aren’t really put together by people anymore (mostly) but by robots. When people are still involved, they use special tools developed to assemble that specific model of car. I’m pretty sure the tools the Chinese workers will use will be the same the Swedish workers use. So, speaking purely empirically, what difference does it make if the same pile of parts is screwed together by the same Swedish ABB robots programmed with the same software? And if the same guys perform the quality checks in China as those… Read more »
LG Aero
Member
4 years 10 months ago
+99 dcpattie Nothing will do more in US market than these 4 areas: Increase warranty time, mileage SUBSTANTIALLY along with no charge maintenance Massive rejuvenation and rebuilding the dealer network Intense, expensive, continuous advertising that show more than ants and leaves Reduction of pricing to avoid discounts and better represent what the car will actually sell for The sale of cars in the US is a battle, one that is fought everyday by all of the other brands. You win battles by selling more product and that requires the right weapons. We have a good product, but as has been… Read more »
davidgmills
Member
4 years 10 months ago

Judging from this business plan, North America which even played second fiddle under GM and Spyker, will now move to third fiddle and China will quickly replace North America as No.2.

Aeropilot
Member
4 years 10 months ago

” the projected China production entity will produce for both the local and the worldwide markets. So, at a certain point in time, Chinese-built Saab cars will be sold outside China, also in Europe and the USA. ”

If that’s the case i’ll certainly hope for GM to “save” the company by interferring the plan !!

a chineese made Saab – never !

E
Member
4 years 10 months ago

My 9-4X says “Manufactured in Mexico.” I can tell it’s a SAAB as it looks, feels, and drives like a SAAB. What is the difference between a SAAB made in Mexico versus a SAAB made in China? (Granted, I prefer seeing the assembled in Sweden verbiage…)

When I think of both countries, I think of lower paid workers. Now you could argue that in Mexico, GM is providing oversight…

Anyway, something to ponder this Monday.

Aeropilot
Member
4 years 10 months ago

E.
Well last friday I was testing a 94x at my dealer, and I was rather dissapointed, -and didn’t have any Saab feeling !
The plastic quality eg. on the door sides reminded me of a low cost no-premium car.
Same hard plastic as in the SRX btw, -so if that’s the mexican/american quality,- you can keep it.

94x is a GM mutation which hopefully will be short lived in Saab history..

A Swedish made and produced SUV from the ground up, -is another matter 🙂

rune
Member
4 years 10 months ago

Aeropilot:
You are supposed to be driving the car, not look at the door. 🙂

How did the 9-4x behave on the road?

Did you check out the 9-4x presentation? http://saabsunited.saabklubben.se/2011/10/octoberfest-engineers-%e2%80%93-saab-9-4x.html

Aeropilot
Member
4 years 10 months ago
Rune. well actually it was an fine car but I had expected a little more luxury eg. leather an the door panels and so, -while it was the asolute top af the range 2,8L Aero Aut. version at a chocking price tag ! Access to all seats including the rear was excellent and trunkspace, -well ok. Frankly it could have been any other 4wd SUV in handling and size, -not much of a Saab. I had the apportunity to test the NG 9-5 Aero as well. It was the new “sport Combi or wagon” even though there was absolutely no… Read more »
E
Member
4 years 10 months ago
@Aeropilot – I hear what you’re saying, but don’t necessarily agree with you about it not having any SAAB feeling. Granted…it’s not like a heritage SAAB feel, but I think you’d say the 9-5 does not have a heritage SAAB feel either. The cockpit is very “new SAAB”-like, it drives very well (for a CUV, not a car), and it looks far nicer on the exterior than anything in its class, IMO. I will grant you that is has the same hard plastic on the exterior bottom as the SRX, but I’m not sure what else I’d want down there… Read more »
Aeropilot
Member
4 years 10 months ago
E. Well actually I was talking about the inside of the doors 🙂 I find hard plastic do belong to non premium cars only, and certainly not on the inside of the doors and around the seats of a 9-4x. That’s too lousy in a premium car. It can be ok on the outside but in my “home” inside I want leather on the door trim, as well as on everything I touch like the steering wheel, gear lever, seats ect. I’m not very happy with the “new saab” instrument cluster with separated dials in the NG9-5 but stick to… Read more »
davidgmills
Member
4 years 10 months ago
Aeropilot: I have to agree with you that there is not that much sport in any of the Saab AWD’s. I haven’t driven a NG 9-5 Combi because we don’t have them in the US. But my 2.0 9-3 Combi, which is not AWD has lots of zoom, and my 2.0 NG 9-5 also has a surprising amount of zoom, though not as much as the 9-3. That said, I like the way my NG 9-5 is put together a whole lot better than the 9-3. The 9-3 had lots of rattles, even brand new, and is much worse now,… Read more »
rune
Member
4 years 10 months ago

The 2.0T 9-5 gets quite a boost from Hirsch stage 1 tuning. Mine has XWD and now feels very nimble and fast on the uptake. Fuel economy stayed about the same.

klypp
Member
4 years 10 months ago

a chineese made Saab – never !

Would you rather buy a chinese made BMW or Audi???

The main reason for building cars in China is closeness to the market. Not low-cost as some seems to believe in here. Close to market is a lasting advantage. Low-cost production is short-sighted, as industrializing an area soon leads to higher costs. Production cost in “low-cost” China has already reached 4 times the asian average!

“Close to market” means that SAABs now will be built in China as well as in Trollhättan in all of the foreseeable future!

Aeropilot
Member
4 years 10 months ago
Klypp. No absolutely not ! -and I don’t think it’s possible to buy a Chinese made “german car” outside China. Chinese made cars should stay in china. What they call a Chinese “Saab” i don’t care as long as it is not “Saab”, and they keep the thing inside the walls. Btw there are some brand name rights to be considered. Im not happy about a Chinese made “Saab” for export outside China that be US or Europe, and hopefully that will never happen ! I´m sure they won’t sell any of these no matter how cheap, as long as… Read more »
Mark
Member
4 years 10 months ago
It’s not unreasonable to expect the entry level 9-1/9-2 and the 9-4x replacement to be made in China is it? This will make the price very competitive. Also the proposed 9-6x and the 9-7 could be mainly Chinese built, as China will probably be the single biggest market for these cars. It all comes down to quality control really. China can make as good products as anywhere else with the right levels of OC. That being said, the 9-5 and the 9-3’s successor need to remain Swedish built, at least for non Chinese markets. Because of tariffs, some 9-3s and… Read more »
Trued
Member
4 years 10 months ago

How Shell this be interpreted?

– Mostprogressivedesignofall – really radical design?
– Driver-centered – More fighter pilot oriented?
– Responsible performance; and – New fules?
– Sporty vehicles, done the Saab way – a factory Rally & Racing team!

Bravada from GMI
Member
4 years 10 months ago

It all translates into “bollocks”. I do hope Saab hires/promotes somebody with some brand management cojones…

Tripod
Member
4 years 10 months ago

– Sporty vehicles, done the Saab way – a factory Rally & Racing team!

Perhaps there will also be a Saaby Pang Pang? 😀
(Chitty Bang Bang)

Mark
Member
4 years 10 months ago

A delay is understandable, but trying to sell the 9-3 into 2013 will be a difficult task to say the least. It’s no cult classic like the C900 was which actually allowed that car to continue for 14 years until the NG900 arrived.

I’m still hoping the 9-3’s replacement (whatever it’s called?) will eventually come in a 3 door, so there’ll finally be a fitting successor for my OG9-3 coupe. It’s been a really long wait and us hatchback fans have spent far too long in the wilderness!

ante
Member
4 years 10 months ago

This is maybe the new 9-3. NDO forgot to black out the picture in the documentation 😉

http://www.svd.se/naringsliv/motor/har-ar-saabs-hopp_6596872.svd

… or maybe it’s just a sort of the new 9-3 in picture of a car! Who knows?

Mark
Member
4 years 10 months ago

Thanks, If it is the 9-3’s successor, I hope it looks better in the flesh, err I mean metal! Somehow it looks kind of short wheelbased like the C900 or maybe it’s an illusion? Here’s hoping for a much better looking coupe version anyway…

kanundrum
Member
4 years 10 months ago

Well thats just plain awesome looking.

Tim
Member
4 years 10 months ago

I like it! Although I wonder why they seem to go for a 3-door hatch and not a 5-door…

BoeBoe
Member
4 years 10 months ago

Look closely, there are 5 doors.

davidgmills
Member
4 years 10 months ago

The cult classic, as you put it, was one of the most butt ugly cars ever made. My 2 cents.

Mark
Member
4 years 10 months ago

Classic 900 was “butt ugly”? I’m afraid statements like that will make you few friends here! At least the C900 had a whole lot of character and presence. The 9-3SS has very little of either, which will make trying to flog the thing into 2013 bloody hard.

74StingSaab
Member
4 years 10 months ago

hey now, tread easy…. some of happen to love the 9-3SS

Mark
Member
4 years 10 months ago

At least I didn’t call it “butt ugly” which it isn’t. Just a little ordinary that’s all. I’m afraid it’s the car that has to accept most of the criticism for Saabs becoming much less Saablike during the GM era.

74StingSaab
Member
4 years 10 months ago

reminding me of the Saab commercial “world of sameness”

GerritN
Member
4 years 10 months ago

“Saab is a niche premium brand, leveraging its unique brand heritage, targeting the upper liberal customer segment”

Wow, I’m an upper liberal!

ivo 71
Member
4 years 10 months ago

Yippie!!

😉

Ivo

74StingSaab
Member
4 years 10 months ago

you meant, HIPPIE!!!

ivo 71
Member
4 years 10 months ago

That, too. I myself wore an Afghan coat at the time to complement my mustache and beard, listened to Country Joe and Hendrix and even drove a split-window VW van for a while. Not for long, mind you, it was an experience to forget a.s.a.p., but I did. Although, speaking from experience, I kinda doubt that many then-hippies with then-flowers in their hair would consider themselves ‘upper liberals’. Even today. What do you say, Gerrit?

😉

Ivo

74StingSaab
Member
4 years 10 months ago

🙂 ivo 71, you’re alright in my book.

GerritN
Member
4 years 10 months ago

Most then-hippies cut their hair, got a close shave and turned into right wingers. Not many of the old breed left, although a new generation of discontents seems to be rising.
The ‘upper liberal’ phrase just caught my attention, reminds me of arm chair revolutionaries.

Tripod
Member
4 years 10 months ago

😀

I think you can be calm; the English version states, at the beginning:

This is a translation of the Swedish document. In the extent of any discrepancy, the Swedish version shall take precedence.

The Swedish version doesn’t mention ‘liberal’ in that section. 🙂 But hey, if it’s ‘unorthodox’ to have, and to like having for example the ignition key between the seats, then I’m ‘unorthodox’ and you name it. 😀

74StingSaab
Member
4 years 10 months ago

Indeed, I can handle being called unorthodox., just please don’t call me a liberal. 🙂

current friends who are liberals, thats ok 🙂 we’re still friends

Bernard
Member
4 years 10 months ago

I want to know what “a re-positioned 9-5 Sedan” will be like. A lot of people complained about the initial positioning of the 9-5. Will this be an effort in changing perceptions (perhaps by pushing the $40,000 base price rather than the $50,000+ full-load price), or will there be significant changes to the car itself?

Bravada from GMI
Member
4 years 10 months ago

Read again. They will reposition the lettering on the big rebate placard: “$8400 off” instead of “$4800”.

davidgmills
Member
4 years 10 months ago

They are already $10K off. Where have you been.

Tone
Member
4 years 10 months ago

If Chinese built Saabs are destined for the worldwide market, does this mean they’ll be priced accordingly? I don’t mean bargain basement, but – in the case of smaller and or base model products – would they be priced against the likes of VW? If so, and PDYM can keep the quality of Chinese-made Saabs (Chaabs?) at levels similar to those of real Saabs, they might just have a shot at making the volume.

The only way I’d consider a Chaab is if it came at a significant discount to a Saab.

davidgmills
Member
4 years 10 months ago

GHAAB. Chinese Automotive AB. — We have a winner for the new name. I will promise you get the royalties on the name.

davidgmills
Member
4 years 10 months ago

Nos for some Chinese automotive financing. CHMAC?

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