About those Saab profits

UPDATED for Saab 9-6x.
I think that Maud Olofsson and the Swedish government are right in wanting to prevent General Motors from dumping Saab on the Swedish taxpayer.
I think that if they can find away, they should support Saab in a manner that ensures that the benefits stay in Sweden and do not flow to the US. I think they’re right in trying to ensure that Saab are saved the right way and that GM live up to the responsibilities they have in being Saab’s owners.
But I also believe that maybe, just maybe, they’re stalling to some degree in doing this and that their hesitation is based on the well-worn line of Saab not being profitable. They say “GM couldn’t make them profitable, so why should we keep them going?” and it’s a popular line to take. No-one wants to see taxpayer funds go to a delinquent party.
But does this line take in the full picture?
Consider all the things that Saab have had to put money into and got little-to-no return for due to decisions made by General Motors.
– The full Saab 9-3 range was ready to go when GM put the brakes on Saab back around 2003. The development of what is believed to be a much fuller range than what we have even now cost a lot of money, which was never recouped through sales.
– A prime example of this was what is now going to be released as the Saab 9-3x. This model was ready to go, but cancelled.
– A re-development of the Saab 9-5 was ready to go several years ago and was cancelled. Again, you have significant development costs with no return.
– Instead of a new 9-5, you incur some more (albeit minor) development costs in refreshing the Saab 9-5 yet again. You do get some revenue from this, but they’re declining revenues and much less than an all-new model would bring.
– You have more development costs for stop-gap models such as the 9-2x and 9-7x, the first of which is never a big seller and the second selling at mediocre levels in one market only. Both vehicles end up damaging the brand to some degree.
– Saab worked on a 9-6x SUV that was to be built alongside Subaru’s Tribeca. The model was cancelled when GM sold it’s stake in Fuji Heavy Industries and naturally, all that development money went down the drown with no revenues to offset it.
– Then there’s all the work that went into development and tooling in Sweden for the Cadillac BLS. The car sold in pitiful quantities and all Saab saw from the investment was some better insulation in the 2008 Saab 9-3.
Add to all this the possible implications of inter-entity transfer pricing and it’s plain to see that in all the years that Saab were nearly profitable in the last decade, they most likely would have been doing well if it were not for some boneheaded decisions that were forced upon them.
In order to make a profit you have to sell the cars that you develop and make money on them. Spending a heap on a 9-3 range, a 9-6x, a new 9-5 range and a bunch of half-baked re-badges that sell at mediocre levels is not a formula for profitability, yet this is the position that Saab found themselves in at GM’s behest.
GM saw the potential in 2005 when they authorised the building of the Aero-X. They probably hadn’t realised that they couldn’t manage such a niche brand by that stage, but they know that now.
What they did see at that time was that Saab could make money. I’m sure their internal calculations confirmed this, which is why Saab are still around today.
My hope is that the Swedish government see this too. I hope they see that Saab have not only been mistreated in the past, but also that they have a plan for the future – one that involves new models in the short term and the development and implementation of some very cutting edge technology in the medium-long term.
They need to come out and support Saab in their search for a new owner. There are a lot of jobs and income resting on it and sitting back playing school headmaster isn’t going to achieve much at all.

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