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GM change its mind?

November 8, 2011 in Editorial

A lot of Swedish media is now speculating that GM might change it’s mind about the 100% ownership deal with the chinese if the NDRC would say yes to the deal. Many newspapers are seeking advice from people with absolutely no connections to Saab what so ever trying to get their opinion on the matter?

So what do we think? Well, I don’t think there is any idea to chase “experts” again as has been proven to be in vain so many times before. I for one have never thought that GM would approve this deal, regardless if it’s a matter of 54% ownership or 100% ownership. As we talked to James Cain yesterday I got the feeling that GM are very careful with it’s technology.

Look at Japan as a good example in history, it didn’t take long for them to buy technology from the western world and with their amazing commitment, the Japanese soon not only caught up with the western world, but also passed them technology wise and today, Japanese car companies are some of the most advanced in the world.

This scenario could very well play out in China as well, so why would GM aid in this development by selling its technology to companies in china who clearly are only interested in exploiting it? The question is, if we were the Chinese, would we act differently? Probably not.

But in the best interest of Saab’s future I think the “save” might not located in the big country in the east.

35 responses to GM change its mind?

  1. Hope that it’s true but i won’t be cheering yet!!

  2. Sorry Tim, I didn’t catch your point. So you think that VM should look for a different solution than the chinese one?

  3. The poetic logic of your last sentence is that the “save” IS located in the big country in the west… ;-)

  4. @Tim, I guess you don’ think that China is good for SAAB? What do you propose, do you have any info about the possible owner/savior? Is it some US company or?
    For me it looks like GM’s staring point of the coming exhausting negotiation process. I think that GM smelled a lot of money and wants a piece of that.

  5. Just a thought: the cheapest solution for GM to keep their latest technology safe from rights infringement AND to preserve Saab as a customer, IP-license payer and tame provider of advanced tech solutions would be by making a deal with SWAN to convert their prefs into common shares (no money changes hands here) and, in exchange, provide (part-)funding for Saab. That would remove one of the millstones Saab carries around its neck (the 326 M USD GM repayment obligation), make Saab a whole lot less indebted and so more viable in the future and… eminently saleable to some European or non-Chinese carmaker. Saab is no threat to GM as a nicher without production facilities in China. It would be, however, if Saabs get built in China en masse, using cloned GM IP and sold there at price levels outcompeting comparable GM/SAIC products.

    It’s not like GM are still circling the drainhole now as they were 3 years ago, so it would not seem to be such a big deal for them financewise. And the USA /US companies wouldn’t have to immerse themselves in another trade conflict with the Chinese. Which, given the state of the world economy and the amount of US state bonds held by China, the US can probably use like they can use a toothache.

    Like I said, just a thought.

    Ivo

  6. I certainly wouldn’t your breath on GM changing it’s mind!

  7. Would anyone know exactly what percentage of the presently built Saabs does GM have an IP license for?
    Is it 10%, 20%, ….. or 100%? If it is 10 to 20% how long would it take to convert this over to an outside source? What about the factory machinery in TH? Would all of it be GM’s or Saab’s?

    If, Saab’s future is in going forward with the Phoenix Platform, would anything that might be used in it; require GM’s approval? Since the factory has not produced any vehicles since the beginning of 2011; How long would it take to completely change over to an exclusive Saab platform? What kind of money would it take to bring out the new 2013
    9-3? These are just a few questions that I hope Saab’s management is looking into.

    GM went begging and received billions of dollars from the US government, that a majority of the US taxpayers were against. If the Chinese government would just come forward and give the PD/YM deal their seal of approval where would this leave GM?

    • @gpg41: If it was that easy VM would have done it by now, as I’m sure you know. GM is in the DNA of current & planned models. It would cost €Millions & several years to refactor out the GM IP and parts & re-submit everything for approvals everywhere.

      I too was half wondering if GM would buy back in. Trouble is that though they owned Saab, they never “OWNED” them. Opel & Vauxhall – yes, adopted as part of the family, but Saab – no, just a foster child.

  8. Tim: whilst you make good points, I think reminding the US about Japan (or Germany, for that matter) is a losing argument. Post-war economic prosperty and technological development in Japan and Germany owes its success almost entirely to the work done by the USA, the UK, and their allies. Without that enormous investment of time and money (in return, it has to besaid, for strategic gains by – primarily – the USA), those economies would not have gone on to be anything like so dominant.

    In a GM context, the simple story is this: we helped the Japanese, and they dominated us insome areas; we helped the Germans, and they dominated us in some areas; if we help the Chinese, surely history will repeat itself?

  9. IIRC, Ford owned Volvo before selling to a Chinese concern…did Ford show the same reservations as GM? By the way, this isn’t a rhetorical point, I am genuinely curious to know!

  10. These stickers were popular a couple of years ago. Perhaps they will be again?

    I don’t think we could ever describe GM as being either benevolent or malevolent towards Saab. It has always served it’s own interests. Precisely what it seems to be doing now.

  11. What is GMs technology? Technology they ow? Technology they developed in Detroit or which for instance was developed at Saab/ Holden,..?

    • All of it. Saab was an integrated 100% subsidiary of GM and, basically, the IP of everything developed by Saab during that period is GM property. Saab is probably paying GM for stuff developed by themselves.

      Ivo

  12. Guy’s I don’t get this IP thing with GM and the Chinese.

    If the Chinese think there is some IP in the GM or Saab line that they are interested in they will just go and buy some cars and tear them apart, this happens all of the time at auto manufacturers, in fact I have taken part in these processes in the past.

    What is not so easy to get hold of is the DNA (of which Saab has heaps) and the brand, which despite the words of many doom sayers on internet forums is still worth quite a bit.

    My conclusion is that the deal will get fudged through but GM will resist, because this is about market share in a profitable area of the auto business, just look up the Quandt family if you do not think that manufacturing and more specically manufacturing auto’s is not a worth while revinue stream! There is also quite a parallel in that story with ailing auto manufacturers.

    Baz

    • @ Baz:

      True that GM IP can be reverse engineered, but that takes a tremendous amount of time and effort to do. Also, there are the processes by which much of the technology is built. The IP GM could loose would simply hand another manufacturer not only the physical product, but the means by which the product is actually built. To put it simply, there is more to the IP than just an automotive platform.

  13. Cain was quoted yesterday as saying “we have made our decision….and it’s final”.

    Therefore, you can probably assume that any combination of ownership percentages between swan, young man and pa dang is unacceptable. Or for that matter, any other automaker outside GM’s existing partners.

    Small boutique car manufacturers, private equity shops, are not the solution.
    To me there is one viable option only, as an alternative to liquidation.

    GM buys it back, assisted with massive Swedish government help.

  14. Some naive thoughts….
    Just to declare myself; I love SAAB, I drive a SAAB and I want to drive a SAAB in the future. I also appreciate that thanks to VM SAAB still exists and all SAAB-aholics should be thankful for all his efforts.
    However, it comes to the end. Honestly GM has to act like they do and they have to protect their own interests in China, so there is no place to support SAAB by the necessary ok. Being in bankruptcy by itself, GM simply cannot do it. Nobody is bad her, its just that GM is also struggling for survive just like SAAB does (well not that bad but still…). In other words, this deal will not take place as its not possible to get granted by GM due to its own, very natural, interests.
    Is this the end of SAAB? In its present form yes. But must be a real BEGINNING. So far everyone worked incredibly hard to make SAAB surviving in its present form and with its present cars. Honestly, I think SAAB’s only chance is to join forces with the Chinese and find a new partner (Magna, BMW or some Japanese company like Toyota as they will sell easier European cars in China than their own ones) with whom they develop new SAABs. The way out is to cut the roots to GM, this should have been done already much earlier. Meanwhile, why not taking over the old and aged 9-5 of which the production line was anyway shuttled to China to get sold there while to start production for the non-China market in Trollhätten for some time again (I guess this will be accepted by GM). Meanwhile SAAB can cut the roots to GM and plan together with a new partner to come up with new SAABs that suit much better to the present and future needs than the present ones (be realistic, the new 9-5 is far to heavy and its gas consumption is ridiculous), meaning light weighted, fast, sportive not too large Nordic cars.
    Its only my humbling opinion and I, truly, do not want to harm anybody her – believ me. I do have my highest respect for VM and all other parties involved here. But I really think its time for a RESTART and not keeping on a track that brought up SAAB’s current problems. Remember Steve Jobs words saying “Your time is limited so don’t waste it living someone else’s life. Have the courage to follow your heart and intuition, everything else is secondary

  15. The best hope Saab has with a Chinese deal right now is that GM cools off and allows something to go forward. I don’t see that happening anytime soon, though. This is very, very messy.

    • +1
      Another hope could be that VM reveals that he has been working on a plan B all along with a non-Chinese potential investor that is not perceived as a threat by GM. Either way I think everything is coming to a head.

  16. So, maybe GM will buy back Saab? :-)

  17. Somewhat perversely, GM’s dislike of the plan will be a huge attraction for the China NRDC. Their interests are exactly opposite. This places Saab in a suspended location somewhere between the two interest sets.

  18. I find it hard to beleive that the owners of Saab and YPD would enter into an agreement for the sale of Saab without their knowing full well that they would have exactly the problems with GM that they are having. Knowing that, would these very savy business people proceed without plan in place that would make it possible for the purchase to be approved? I don’t think so….otherwise the whole excercise would be a huge waste of everyones time and energy, to say nothing of raising false hopes among the Saab community. I can’t imagine YPD going this far without some very strong assurances by Saab that the deal would get done, unless they were misled to understand that GM would go along with the deal. On the surface this deal is so messy it almost doesn’t make any sense, unless there is a lot of wheeling and dealing going on behind the scenes….which I am sure there is.

  19. This is like going round and round a roundabout, in reverse, at night with no lights on.

  20. I am no expert on this matter but I was thinking, most current Volvos (now owned by the Chinese) were built and developed under Ford. Surely they still use Ford’s technology etc. So why isn’t Ford afraid about their technology being exploited etc? I think GM are just being their usual selves (ie twats). They could make an agreement with the Chinese that would cost them more if they wanted to use their technology. There are solutions to this. But GM want to make things hard as usual.

  21. *Nomex suit ON*
    A-hem…

    With GM doing so well, for me, the best outcome could be that Saab falls back partially under the protection umbrella of GM. Imagine how well the 9-4x and 9-5 COULD HAVE been sold had Saab had access to GM’s marketing money. Some sort of agreement that allows Saab and other partners to year by year phase themselves out of GM and onto a brand that stands on it’s own.

    This would allow GM to get “paid back” for the IP investments being used and planned for but give Saab the freedom to work independent for future models to be GM free as the situation allows.

    I’m no business expert but it would be nice if it was so simple.

  22. A short note only.
    At General Motors website there are currently no comments at all about the rejection of a Saab deal.

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