Could GM sell Saab – even if they wanted to?

Sorry, but this financial crisis stuff is just too big to let go for too long. It’s taken another twist today with GM’s boss Rick Wagoner doing an interview with Automotive News:

General Motors CEO Rick Wagoner says GM’s financial distress is so dire that it must line up financial assistance from Washington before President-elect Barack Obama takes office in January.
“This is an issue that needs to be addressed urgently,” Wagoner said during an exclusive interview today with Automotive News. Now is the time to “overshoot, not undershoot” when it comes to assistance for the auto industry, he added.

The problems with this scenario are numerous.
First, you’ve got the fact that President Bush still holds the reins until January 20, and he’s already said “no” once. GM are eligible for a share of $25billion that’s aimed at getting more fuel efficient cars on the road, but what they want is access to another $25billion just to keep the lights on.
There are a number of commentators now saying that maybe GM should get a payout, that the consequences of letting them go bankrupt would be too dire to contemplate:

“If GM goes down, it will take down companies like Lear and Johnson Controls,” Wolkonowicz says. “That will shut Ford down, and it would shut down production at Toyota and Honda. They would go down like dominoes.”
One supplier CEO agreed. “Any occurrence of bad debt would be a death blow to the industry,” said the executive, who asked not to be identified because he does business with the Detroit 3.
“If GM filed for bankruptcy, … the impact would be so catastrophic that it would make the current industrial downturn look like a walk in the park.”

But many are also saying that if they do get a payout, there should be some pretty serious strings attached. Strings that look like nooses, perhaps. Around the collective necks of the current powers that be. This from the Wall Street Journal:

Let’s assume that the powers in Washington — the Bush team now, the Obama team soon — deem GM too big to let fail. If so, it’s also too big to be entrusted to the same people who have led it to its current, perilous state, and who are too tied to the past to create a different future.
In return for any direct government aid, the board and the management should go. Shareholders should lose their paltry remaining equity. And a government-appointed receiver — someone hard-nosed and nonpolitical — should have broad power to revamp GM with a viable business plan and return it to a private operation as soon as possible.

Wagoner himself is having none of that:

But Wagoner said he is not prepared to resign in return for government aid. “I don’t think it’d be a very smart move,” he said. “I think our job is to make sure we have the best management team to run GM. It’s not clear to me what purpose would be served. …”

A quick tangent – that’s Wagoner trailing off there, as printed by Automotive News. What a weak, weak response, and what a weaker-than-weak report in that they let him get away with it. I guess they’d lose the story if they’d have asked him for some justification as to why he should be kept at the helm. Maybe he should stay at the helm. I don’t know. But I definitely think he should justify why he should be allowed to stay, given that he’s presided over a mess that’s at least 50% of GM’s own making. End of tangent.
Meanwhile, a guy from Deutsche Bank has done what we bloggers call linkbaiting by rating GM shares as a “sell” with a value of $0. Attention-seeking aside, he actually had some interesting things to say as well, especially for we Saab nuts:

GM’s collapse [is] “inevitable” without federal aid. Rod Lache of Deutsche Bank said GM may otherwise run out of cash before the end of the year…..
….GM might need to eliminate five brands, close five assembly plants and renegotiate the United Auto Workers contract under a restructuring scenario unveiled Monday by Lache.
A leaner GM could emerge by keeping three brands — Chevrolet, Cadillac and Buick — and eliminating GMC, Hummer, Pontiac, Saturn and Saab, Lache said. GM would lose $2 billion in gross profits by killing those brands but cut $5 billion in costs, he said.
GM may need to reopen the UAW contract and cut hourly compensation for core employees from $71 an hour to about $40.50 an hour, Lache said.

$71 an hour?!?!?! But I digress.
This isn’t the first analyst saying that GM should cut Saab loose and I’m sure he won’t be the last. But the question I’m pondering tonight is what would that entity named Saab look like, and whether there would realistically be a buyer for it.
You and I have the utmost faith in a properly resourced Saab being of value to someone out there. The Saab way is the way of the future and has been for 30 years. Smaller, turbocharged engines. An emphasis on aerodynamics, safety and design. What’s not to like about these core values. The problem is that Saab were too small to start with and have never got big enough to stand on their own two feet. It’s amazing they’ve lasted 60 years, really.
Will someone else have faith in the Saab brand, though? Faith big enough to buck a global financial squeeze and throw what many would say is good money after bad, and actually buy the brand and invest in it?
The reason I’m left asking this question is because as yet, no-one’s been willing to come forth and purchase what was perhaps the most well-defined brand in GM’s stable – HUMMER.
Hummers make no sense to you or me, but there’s a desert-load of wealthy people out there who love their vehicle big and brash, and I’m sure there’s still a market for a company that wanted to take Hummer beyond the image it’s already created. If GM can’t sell a brand as well defined as Hummer, then what chance are they going to have with a little brand from Sweden that everyone really liked 20 years ago?
Then, of course, you have the integration argument – that Saab are so integrated with GM platforms and parts that a new owner couldn’t separate them from the mothership. This is something I don’t necessarily agree with. Where there’s a will, there’s a way.
But would a new parent company want to deal with a legacy supplier of parts that might be going down the tubes? Could they secure a supply of components to keep building them if the supplier goes belly-up? They’d need to design all new models – and pronto – so that they’re self sufficient in the quickest possible time. Who’s got the money to do that right now? Especially with a brand that’s little known, despite being a global presence.
If worse comes to worst, we might end up with a scenario where the Saab name and badge are sold, only to be left on the shelf until the buyer can come up with the cash to kickstart design and production again. With that sort of momentum shift, Saab could be gathering dust for some time.
All this is just theorising, though. If it came to that, I’m sure GM wouldn’t get much for the brand and they’d most likely mothball Saab in their own dungeon whilst they sorted out their affairs.
If they can’t sell Hummer, can we reasonably expect that they could sell Saab?

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