I received this email today, along with a request to publish. It’s fair to say that Saab dealers have a lot to lose here, with big investments in property and big finance requirements to stock vehicles.
I think this letter summarises the concerns and feelings of many dealers pretty well.
I do have to emphasise, however, that the opinions expressed in this letter are those of the author and this email is submitted from the US Saab National Dealer Council. It is not an opinion formed by Saabs United (which is not to say I disagree with them, but they haven’t been formed by me).
In recent weeks General Motors has made several public statements contemplating the wind down of Saab Automobile. These comments have raised considerable doubt that GM is negotiating in “good faith” in its expressed efforts to sell Saab, since there are currently various companies that are bidding for Saab. On Sunday December 20th, the Dutch niche sports car maker Spyker submitted a new bid that matches GM’s initial offer for sale as well as addresses each of the concerns that GM raised when they walked away from the transaction on December 18th. Spyker has all contracts ready for signature and is prepared to fully execute the deal and take ownership of Saab Automobiles AB before GM’s stated deadline of December 31st.
Since it is evident that GM has a deal from Spyker with completed due diligence and ready for signature as well as additional recently submitted expressions of interest, a decision to close down Saab will cause unnecessary and avoidable injury and loss to the US Saab dealer network and its employees.
In June 2009, GM forced the US Saab dealers into signing Deferred Termination Agreements, under which the dealers waived their respective State franchise legal rights and remedies that are available when a manufacturer closes a dealership for any reason. These rights were established to protect and save the life’s savings of a small business against the decisions of the large corporation. The dealers waived these rights based on GM’s expression of “Good Faith” efforts to sell Saab Automobiles AB. If the dealers would not sign the Agreement, their businesses would be terminated immediately and their franchise agreements would not be considered as part of Saab Automobiles AB in the sale to a buyer.
A decision by GM not to sell would be unconscionable at best. It would be the large corporation causing irreparable damage to the small business in the ugliest sense. A deal with Spyker exists. A deal that matches GM’s offer and addresses the concerns that GM raised. A decision by GM not to sell Saab AB would kill 218 small businesses across the US, the jobs of their loyal employees and their life’s savings.
What’s At Stake?
As a result of GM’s decision to shut down Saab, about 5,000 jobs will be lost at the dealership level in the US. This does not include the jobs that would be added back when we receive our brand new products (9-5 and 9-4X) in 2010. Each of those losses can be avoided. It seems senseless to arbitrarily lose 1 job in an economy that is struggling through a “jobless recovery”.
Nationally, over $300 million worth car dealers’ assets are at risk of being impaired and possibly liquidated [1800 new cars @ $35,000 each; average 10 used cars per 218 dealers @ average cost of $15,000 each; extremely conservative estimates of real estate and facility @ $1.1 million and parts @ $150,000 per 218 dealers. My personal numbers are about 5 times higher. The US tax payer will forego $400 million worth of debt repayment by Saab Automobiles AB or almost 10% of GM’s current outstanding debt to the Federal Government. The travesty in this is that it is all easily prevented. A deal exists; GM simply needs to decide to complete the sale.
What the Dealers Want:
The dealers do not want to litigate the terms of the Agreement after an unfortunate and unwarranted termination of Saab AB. They want to continue to operate their businesses, represent their impassioned brand and serve loyal Saab customers. They want to see Saab return to growth with 2 great new products that are scheduled to launch in 2010: the all-new 9-5, 9-5 wagon and 9-4X. The dealers believe in the brand and want GM to do the right thing by selling Saab Automobiles AB to a serious buyer,Spyker.
The US taxpayer currently owns 61% of GM via $30+ billion of bailout funds and outstanding loans of an additional $4.5 billion. This was given to save the iconic company and provide it an opportunity to redraft its image to one of integrity and quality: one that will win back the consideration of the US car buyer. Since the taxpayer granted them this second chance they have demonstrated an inability to negotiate and complete a deal.
GM has not been able to close any of the 4 deals they negotiated this year.
- Saturn: Penske pulled out of negotiations on the day of closing.
- Hummer: Alleged contracts, but not settled because Chinese governmental permission not received.
- Opel (German Unit): Signed memorandum of understanding with Magna and 3 billion Euro loan from the German government and GM reneges on the deal.
- Saab: 5 companies have submitted bids in addition to 30 that expressed interest, yet GM publicly contemplates killing the company.
This is not an image worthy of our taxpayer dollars nor is it consistent with GM’s pledge to rebuild its image.
By stark contrast Allen Mulally, CEO of Ford has successfully and honorably completed every transaction in Ford’s efforts to reduce their brands.
- Aston Martin: Sold in March 2007.
- Jaguar/Land Rover: Sold to Tata Motors in June 2008.
- Volvo: Asset purchase agreement signed 12/23/2009 with Geely Motors of China. Settlement expected in Q1 2010.
Kurt A. Schirm
International Motors (Falls Church, VA)