GM to give up Saab ‘for free’

I’d like to draw you attention to something I wrote in an update I posted late last week on the ownership scenario for Saab:

Note that Deutsche Bank are engaged by General Motors to find Saab’s buyer, which means that GM’s interests are paramount in this process, but also note that GM’s best interest is served by Saab surviving to engage in future contracts with them. It’s hopefully going to be a win-win.

In that post I was re-capping a number of points that had been provided to me by Saab Sweden about Saab’s current situation.
What I raised in the quote above was not one of those points and when I covered off the article I proposed to write with Saab (yes, this happens sometimes as there can be things mentioned in conversation that aren’t intended for print) this was not amongst the points that stayed on the page but I included it anyway, primarily for reasons we’re seeing today.
The name General Motors will rightfully leave a bad taste in the mouths of many a Saab owner, but the fact is that GM are doing quite a lot of work behind the scenes in terms of trying to ensure a smooth and successful sale and transition for Saab.
Why? Because its in their interests to do. They’ve engaged Deutsche Bank to find a buyer for Saab and it’s in Saab’s and GM’s best interests that that buyer be a viable and interested party.
Saab’s interest in that is obvious – survival and growth.
GM’s interest is less obvious, but just as fundamental. Firstly, GM want to keep Saab going and get them growing because that will mean that GM can manufacture more architectures for Saab. It means they can manufacture more 9-4x SUV’s for Saab. It means they can continue to utilise Saab’s expertise in turbocharging, safety, XWD, etc.
Relationships will continue for some time and GM have a lot to gain over the years from a successful Saab.
And that’s why today’s papers are reporting that GM may be willing to virtually give Saab away for almost nothing.

People close to GM say it is also prepared to unload Saab, its Swedish premium brand that filed for creditor protection in February and recently opened its books to outside investors, for as little as nothing in order to divest the brand.

A sale of Saab might raise around $1 billion at the very most. GM owe thirty or so times more than that to the US government alone, let alone to others. The sale of Saab for a fee is barely going to register on GM’s radar.
The continuity of Saab and their eventual growth means a lot more. It means cashflow, engagement of production capacity and access to technology and expertise. It also means they don’t have to pay out dealers if they’re forced to close. Even if GM have to write down Saab’s debt to them, they’re going to be better off this way.
I’d suggest that some of the main criteria Deutsche Bank are using to find a buyer is their ability to keep Saab going in the medium to long term, and what plans they’d have to develop the business. Assessing what sort of cash they can come up with for a purchase is not going to be high on anyone’s list.

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