I will keep this post at the top during the weekend as it may be of interest for many.
More on Christopher Johnston and Merbanco
I want to begin by letting you know why my first post on SaabsUnited deals with a company and person that has been a topic many times before here on SU. Our dear friend Swade has done a couple of brilliant interviews with Christopher Johnston (CJ) CEO of Merbanco.
But the fact is, questions may vary with time and Saab has now been in the most capable hands of Spyker for over a year. Things change and maybe even personal reflections.
CJ is, besides being a businessman on a grand scale, a true lover of Saab and has also been seen commenting quite frequently on SaabsUnited.
This interview is intended to focus a bit more on CJ´s thoughts regarding product, dealerships, markets and perception of the Saab brand and product. Oh and yes, a wee bit on the deal that did not happen.
As always a Big thank you to CJ for taking the time to answer our questions and being so open towards us.
My SaabsUnited contact with Christopher Johnston, CEO Merbanco
I got in contact with Christopher a while ago to see if he would be willing to give his personal views on some of the questions that had been lingering for quite some time in relations to Merbanco´s bid to acquire Saab Automobile from General Motors. Questions that many of us have asked ourselves and pondered over but as yet had an explanation for. Questions like what his views are on the current and future Saab product portfolio. As a friend of SaabsUnited and an allover genuinely good bloke, CJ agreed to give his answers to questions compiled from the SaabsUnited team.
So click on through and find out more. And why “the big surf” in the headline?
(Please note that Chris´s answers are based on his own views and does not necessarily reflect the views of other individuals within Merbanco or involved business partners.)
YOU DON´T DRIVE A SAAB CJ!?! …Oh gezz, you scared me a bit there mate
I started out in an all informal way and asked CJ if he still drives a Saab? The answer to that question is…No he does not.
In his driveway stands a Chevy Silverado Hybrid Pickup and an E-Class Mercedes.
But good news! Chris Is looking to buy a Saab 9-3 TurboX. So if there is a dealership that has got a sweet deal for CJ on an X, do not hesitate to get in contact and I´ll forward him the info. That´s what friends are for eh?
The Merbanco bid and Chris´s views on the sales process
Deciding to try and buy a company like Saab is nothing one does without thinking the deal through several times before acting and really being sure that you have the means to pull it through. On a question on how such a grand scale business deal takes place, CJ responded that it in fact may be looked at as buying a car and signing on the dotted line. The big difference being the sheer size of the deal. Just like in buying a car you have to go through the due diligence phase. Analyzing everything, challenging plans and testing assumptions. And in CJ´s own words:
“If you don’t do enough due diligence, you may be surprised by what you buy. You have to kick the tires and turn over every rock. You have to ensure it has ‘soul’ and you must understand the brand and what it means in every market.”
As we know, Merbanco´s bid was refused by GM. There may be many reasons as to why. It might have been CJ´s outspoken critique towards the lack of engagement from the Swedish Government or it might have to do with one of CJ´s businesses failing in the wake of the weak economy in 2009. Times were hard and as we know even companies the size of General Motors where on the brink of bankruptcy.
CJ is open with the fact that he was not the financial muscle behind the group. And if personal issues where behind GM´s and the Swedish Governments decision to end talks with Merbanco, I can really feel the agony from CJ´s point of view. Quote from CJ:
“The process was set by others and we were discouraged from reaching out to the government along the way. Like many here, we were very frustrated by the lack of support when watching Saab slowly die.”
Personally I would not even begin to try and understand the politics involved in all this as I do not have the proper financial or legal education to take on such a daunting task. What I can say is that I am a human being, and I have a heart. Thing is, what matters of the heart do not often mix that well with business.
According to CJ, and a source I like to be unnamed, Merbanco indeed had a solid bid and plan. I´ll let a quote from CJ tell you just why:
“Our group was well qualified and funded – we went through a very detailed examination and vetting with both Deutsche Bank and GM. We had the right experience, specifically in automotive, manufacturing, branding and world wide dealer/distribution.”
The refusal of Merbanco´s bid might also have been a question of Sweden versus the US. The Swedish Government often argued that GM didn´t do as much as they could and that might have resulted in negativity towards letting yet another US company in as a potential owner of Saab Automobile.
What is CJ´s take on what American ownership in the form of Merbanco could have meant for Saab?
“Had we closed, Saab would have had American and Swedish owners…the ‘perfect storm.’ Our bid all along was to complete a management buyout and management and employees would have owned between 20% and 30% of the company. I believe now that being American hurt us with the government and maybe that was ok. I can’t help but think that, today, sales in North America would be enhanced with owners from America who know this market very, very well.”
Everyone is entitled to their own opinion but I can´t say that I´m with CJ in his assessment and what might have been when it comes to sales in the US and American ownership. Saab NA is an American operation, and I believe that it is only the way of letting the buyers know about the cars and who the buyers really are that has yet to be manifested. Saab NA is run by people that understand the American market, but get directions from Saab management as it ought to be. Saab after all is a company based in Sweden.
I hope that we can agree to disagree on that one CJ?
And as stated, sales have been halted somewhat due to other factors, like the economy, and I would say to a large extent, by the negativity shown from certain members of the press.
I asked CJ what he feels about The Saab business plan. The response?
“The Saab plan and team were very solid. Sales were an important ingredient and have impacted the plan. We expected the sales were optimistic – we were lucky to have had time to complete due diligence and model testing. Our expectations were more conservative than the plan given the economy and challenges in the USA.”
And before the press jumps the gun on that one I would like them to please bear in mind that the current Saab Management team have come a long way since February 2010 and are doing so well. I can feel no threat to a positive future. Saab is planning ahead, making connections with new subcontractors, expanding its market among other tasks. Things are looking brighter each day because of the tenacity of the Saab management, enthusiasts around the world, superb dealerships and the hard working people of Trollhättan, Sweden.
Saab is now in the very capable hands of the new Saab management team.
As I see it, a team that has achieved so much in so little time is a team to be trusted and supported to its fullest.
And please note that I say so in the uttermost respect to all the groups that invested so much in hopes of acquiring Saab Automobile. We ought to be truly grateful for the interest they showed and that some of them still support Saab in ways they can.
I would like to end this part of the interview with a personal acknowledgment from CJ to Saab and people he met during the sales process and how strongly he supports our beloved brand.
“I am grateful to have made friends with an outstanding team at Saab and, when the going got tough, at the darkest hour, we were there. I became close with several people at Saab, including Jan Ake. Those who were involved know the huge efforts we made to buy, and then save, Saab. The story was long and complicated…even when we stopped the chase, we continued to help Saab. That is a promise I made personally to the team and I’m glad it turned out well. To me that says a lot.”
Dealer network, markets and dealerships
The main focus from Merbacos side in the process was the dealer network, distribution and customer experience. And being an American he was asked to give his view on what he believe needs to be done in North America to boost sales and what obstacles Saab NA and dealers have to get past.
“The Saab dealer network has been abused these last several years…by the economy, by the sale, by low residuals, and by the challenges. I’m proud they hung in there with the company, shows unbelievable dedication. Dealers, distribution and the customer experience are the “plasma” for the company. The dealer is on the front line and defines the company and the dealer is who provide the customer experience. The dealers are absolutely critical to success in the US. In Sweden and Britain, Saab has a strong “corporate” following. In the USA, it is an iconic brand, some thing for those who want to be “different”. Thus, there are two (or more) different Saabs.”
And difference in Canada?
“Same as the USA, dealers interact with the customer, both past, present, and future. Regaining trust will take time – one bad experience will impact this. Customers have to have a reason to want a Saab, to trust Saab – that this is commitment and unsurpassed care and service.”
We asked CJ what he sees as key for the Saab dealerships.
How would he like a customer to be approached? What would the dealership look like and what kind of feeling should the customer get from the atmosphere and design of the facilities? Is the latter important at all?
“There are several ‘customers.’ People who own a Saab, people who once owned a Saab, new people interested in Saab. As a small company, the customer experience should be more simple and friendly, very ‘uncorporate’ in the USA. Anyone walking into a Saab dealership should be treated like family and they must leave believing they are part of the family, or very much wanting to be part of the family.”
It becomes clear after reading some of CJ´s answers to our questions, that connection to the customer is something CJ cares about a lot. Or the right word might be passionate. And that is a big piece of what I like very much about CJ.
CJ´s biggest priority was the sales process and the dealership connection to the customer. How does he feel Saab can strengthen that area in the most tangible and measurable ways?
“Knowing the great product pipeline at Saab, selling them was the key. The dealer network had been impacted heavily by the economy and the sale/closure/sale whipsaw. As mentioned earlier, the Saab experience must be family, specially here in the USA. Alongside the product, Saab’s strength is its loyalty, and also the fact that it isn’t BMW, Audi, Lexus, etc. If you try to fight them on their ground, they will kill you. When I bought a car from Just Saab in Cincinnati a while back, I pulled the trigger because they offered a great value and a great commitment. There are a lot of great cars out there these days, a great commitment.”
Product, the typical Saab buyer and… surfing
The product is the visible part of Saab and often the part that got us to become Saab drivers and enthusiastic about the brand. And if you would like CJ´s view of product, well ladies and gentlemen, this is some really interesting reading right here.
Besides the products that are now on market and products that were in the pipe in 2009, what kind of vehicles would CJ like to have seen if Merbanco had taken the helm?
What about the PhoeniX?
And how does CJ define the typical Saab driver?
First a short list of desired products, then detailed answers and then… Hmm, I guess someone in the SaabsUnited team will have to come back to this in an article regarding… Saab pickup trucks.
- An updated 900
- A Saab pickup truck
“We wanted to bring back an updated 900 – that was the model that really defined Saab here in the USA. We also discussed a Saab pickup truck similar in concept to a previous Pontiac or Holden G8 model. I could see the surf/ski crowd using the sport pickup and we thought Sweden and Europe would take too it as well. We thought it would be fun to broaden the model range within the size footprint.”
And with that I can almost hear some of you go: “SAY WHAT?!?”
But to be honest I think that this is so cool, debatable, and plain good fun to write about!
Price, profit, experience
Some people argue that Saab’s are too expensive. Some feel that Saab is aiming for the wrong kind of buyer– that Saab ought to sell on the brand qualities like design, safety, spirited driving characteristics and that that may be obtained with a car at a lower price and tech level and still be uniquely Saab.
What’s CJ’s take on creating a more affordable car like the New 900/9-3 model that came out in 1994? A car that was unmistakably Saab. A car that still managed to be on par or in many points better than the competition although some of the parts where gathered from the parts bin of an inferior new sibling. Saab showed that they could do wonders in a short amount of time with what was given to them.
“A car can be expensive as long as there is value and care, and attention. There must be support on residual value to justify the cost and I would love to see a free scheduled maintenance plan if the product is expensive. I don’t think small is the way to go. I do believe that a simple and safe Saab, without all the ‘bells and whistles’ would appeal to a certain segment. Think about it, how many families have a car for their children here in the USA – they don’t need to be fancy, parents want safety.”
Suffice it to say, there are as many feelings towards this as there are people commenting on SU. I can not see the reason for turning away from the path now taken by Saab. But I do believe that Saab in time would benefit from a smaller car with unmistakable Saab characteristics, base equipment level and a price tag to go with it. Not the price of an econobox but the likes of that “Das Boring” brand. (Did you copyright that name Steven?) 😉
The typical Saab driver
A car is nothing without its driver. So nearing the end of this interview, I’d like to know in CJ’s opinion: what kind of person drives a SAAB?
“In the USA, any smart, independent, rebellious, snow driver, passionate. People who like engineering details and like a sporty driving experience. Also, singular workers like attorneys and engineers are Saab people. Saab owners appreciate people who care.”
And here is my personal note as a response to that view of the typical Saab driver:
I’m not an engineer neither am I especially rebellious and on occasion somebody might have accused me for not being that smart, but I am passionate and appreciate people who care.
And to close the interview… The Big question
Here is a really tough question to end this interview. A question I feel takes some guts to answer from someone that missed out on the chance of ownership, with an answer that reflects what CJ feel so strongly about:
(SU) “Would you like to join the current owners of SAAB as a part-owner?”
(CJ) “Probably not. It would be fun to look at the USA operations of Saab.”
CJ, thank you for your kindness and good will. And thank you all for reading.