Reuters: Saab owner warns of funding

Reuters earlier today reported the following:

The funding warning from Spyker came shortly after Saab struck a deal with one of its key suppliers, International Automotive Components Group (IAC), after being forced to stop output for a third day running due to payment disputes.

Unfortunately I became aware of this (thanks to a comment here) too late to confirm this with anyone at Saab.

The latest press release on Spyker’s web site is from Marc 30th and states:

Saab Automobile has sufficient means to meet its immediate liquidity needs from existing and available sources.

The Reuters article unfortunately does not mention any sources other than the annual report.

It seems to me that the press release dated March 30th contains newer information. But even were that the case, it doesn’t mean the situation is rosy. The annual report states there is a need for further funding. It remains to see just how acute the need for immediate funding is. The focus on Antonov is nothing new and is a poor indicator to figure out how severe the lack of positive cash flow really is.

Ironically, Saab is better than average at paying their bills(thanks Gatelaw)


Fred sent a link to Joann Muller’s blog entry

What John is missing, as GM and its federal backers know all too well, is that it takes an awful lot of capital to run a successful car company in a highly competitive, global market. This is a lesson Saab and Victor Muller are learning now.

Nobody said it would be easy.

50 thoughts on “Reuters: Saab owner warns of funding”

  1. One word…Wow.

    JaJ and management departures, CFO backing out, this weeks vendor drama, and now this. Wow.

  2. As has been said before, the wording chosen seems to beckon authorities to accept VA’s capital infusion. Nothing new, and if it is accepted we can hope it should be accompanied very quickly by an announcement on the 9-2…right?

    • I don’t think that announcement would be made so soon even if VA comes on board, though I understand your logic.

  3. The first order of business if VA gets in is likely shoring up the capital reserves and paying off the EIB loan, getting the balance sheet in order, etc.
    The 9-2 can wait. Survival first.
    Also, I would like to echo CJ’s comments that the new team is doing an outstanding job – look what they walked into!!

  4. A (serious) dutch news paper this evening reported that this warning is an obligatory thing for the accounted that checks every publically listed companies year end figures. Muller comments that it’s a formality and that there is nothing to worry about. And frankly, I agree with the Muller Man.

  5. Greetings Everyone,

    In my humble option, the best thing we all can do to support SAAB is to start shopping! We all know there are incredible deals to be had at your local SAAB dealer. SAAB needs to show the world that SAAB products sell in the marketplace. As much as we love the brand, it is first and foremost a business.

    So if you can, I suggest either you take your friend in his 10 year Volvo down to the dealer or consider for yourself how much fun it would be to have a new SAAB in your garage. If not, we may not have that option in future……….

  6. I heard a sound clip of VM on the Swedish TV4 news tonight, that didn’t sound that nice. It was VM getting upset on a journalist, and it was obviously taken out of context, so I assume that the story leading up to this was not getting the answer he wanted from VM. Unfortunately, I think people associate this with Rovers last years, and don’t remember that BMW had trouble selling Rover, while there were many takers for Saab, Saab was expecting losses up to 2012 (which means, surprise, negative cash flow if you don’t sell off assets), and that Saab does have investors wanting to get in. And Saab cars have lots of unique selling points that Rover didn’t.

    I think VM needs to think through about how to handle hostile interviews when he’s upset (even if it’s for good reason). He lacks JAJ total calm and soft voice with annoying journalists, and thus can be interpreted as trying to cover up something. To the public, this impression matters, and most don’t have a clue about the proper state of affairs.

    • +1
      This is a concern of mine too! VM is too emotional and burns bridges… He shouldn’t handle day to day operations, only be an inspiring leader/entrepreneur. Now find that new CEO ASAP!

    • You might have a point, but the reporter he was telling off was Jens B Nordström who have just released a book about Victor where he´s not described in a very nice way.

      • Yes, but TV4 holds all the cards, and in the end forms the view of the public! It seems a CEO just has to suck it up and take the hits below the belt and continue on. Saab can’t win confidence by verbal debates or insults, but by actions and performance!

        • +1
          There is little doubt that the sound clip was unfair to VM, and it contained absolutely no facts. But the point is that TV4 did their best to missuse the phone call with VM, and him sounding annoyed wasn’t to his advantage. If it would have been JAJ’s soft voice expressing some general confidence in Saab TV4 would have a hard time missusing it. But JAJ is hard to beat in this department.

          • yes, you´re both right, it´s just that I´m more of a Victor guy, I don´t understand how they manage to keep their fists in the pocket at all. Hospitals would have been full of reporters and “authors” if it was me they were discrediting.

            I know he should have done it the J-Å way, but I so understand him.
            Victor says: “Jens I don´t think we have anything to discuss, you can read, I have absolutely nothing to tell you so please hang up the phone.”
            For us who know about the book the behavior is understandable, but of course for everyone else it sounds bad.

            Jens was also the reporter who called Victor “a snake businessman” or something right to his face only days after he saved Saab.

          • The press holds a certain power. My parents’ company went bust in the late 80s after a series of probing articles from a minor trade magazine. They were not interested in taking out ads in this particular magazine, and subsequently they received some nasty headlines in return. This scared away a big customer and the banks grew sceptical. My mother later sued the magazine for libel and won, but that was a very small consolation. The Norwegian courts at that point had a practice of rewarding only minor damages.

            So yes, the press must be handled responsibly.

            My wish is that more people realize this and shy away from the type of media that speculates in doomsday scenarios. I have been watching a few old episodes of Penn & Teller’s excellent show “Bullshit!” lately, and I gotta tell you, they are quite effective in showing how media tends to pray on our fear of the unknown “dangers”, thus pushing us into making irrational decisions.

            Is VM selling snake oil? Many here have bought Saabs in the past year. They roll quite well, don’t they? If VM was selling snake oil, you would not be able to get from A to B in your new Saab.

          • Rune, OT could you look into the new Saab warranty policy adopted by Saab Norway (5 years instead of 3). If the same thing would become reality in the rest of Europe I think it could be as big of a deal for Saab sales as the 120g diesel.
            I know several who’d dump their interest for all kind of Korean makes instantly.

  7. Victor Muller has said himself that he is not suitable as the permanent CEO of Saab and therefore hopes his interim CEO position will not last for long. By the way, Jan Åke Jonsson is still the CEO of Saab until May 19th and by that time a successor may very well have been appointed.

    • Yes, I’m very well aware of that statement (even before JÅJ left), and my respect for VM grew a lot at that point since he seemed to know his limits. Now it’s time to walk the talk. It might be increasingly difficult to convince anyone to take the job considering this weeks circumstances. And I predict it’ll only get worse from here, due to the liquidity warning given this evening. There’s no stopping the Swedish media now, except a new believable CEO, a highly professional and active PR team and additional financing sorted out shortly. Let’s keep our collective fingers crossed.

  8. This is no secret. Just read the annual report that Spyker published this morning. You can find it on their website.

    Read it and learn!

    Emphasis of matter with regard to the continuity of the Group.
    We draw attention to note 2 to the financial statements, which describes the continuity of the Group. As set out in this note, there are a number of uncertainties regarding the funding of the Group, which implies that if management may not be able to generate the necessary additional funding, or adverse developments occur, the continuity of the Group will become uncertain.

    (words of the accountant)

  9. When the production stoppage was first reported, subsequent SU posts reported that a procurement system issue may have been part of the supplier problem. A cash flow issue wasn’t obvious. It seems by the end of this week we learn officially of liquidation problems.

    There were earlier stories that indicated Spyker/Saab was looking for more flexible financing (via VA) but our speculation was more flexiblity and not a dire cash flow situation. In hindsight, all the “dots to connect” now make sense regarding cash flow (except I don’t think JAJ’s retirement was to leave a sinking ship, especially since it wouldn’t be until May and he would consult through September).

    However, I don’t know how our SU correspondents would figure this out, aside from speculating on various scenarios.

    Finally, to some of the discussion in earlier-post comments, it doesn’t matter that we didn’t understand the financial issue earlier this week since it was proprietary information until it was released officially . Plus, there isn’t much we could do about it aside from the ongoing long-term support for Saab that includes trying to help get more Saabs sold at the retail level. But now we have something to be concerned about. And, we have to hope that the work already begun to get more money will complete soon.

    • Well, VM said a week or two ago that Saab probably needed some more cash this year, and the business plan always said loss in 2011, so I would say that a negative cash flow is expected. If the new 9-5 SC takes off big time in Sweden (which is a real possibility), this will cause liquidity problems UNLESS Saab has managed to get 90 days credit from suppliers (if they can produce and deliver cars within 60 days the suppliers provides liquidity as Saab sells the cars, made on order, on 30 day payment terms). And I think this is what the whole issue of last week was about, possibly with suppliers being on edge overreacting to procurement system issues (and I would be as well, if I just had increase credit terms from 30 to 90 days and the payment showed up late. And by swedish law, bills for fiscal year 2010 has to be filed january 4:th at the latest if I remember correctly, so a lot of bills were probably filed January 3:rd, and if so, were due Mars 27:th. Schenker problems came Mars 29… ).

      I think the PR problems dwarfs the money problem here.

  10. WSJ analysis:

    Spyker’s annual report has revealed what we already know and have reported—namely that Saab needs new equity to be able to keep going. Today we have the figures. It’s bleeding cash and debt interest payments are high—some €40 million last year.

    In fact, a deeper look at the balance sheet and you can see that it currently cannot afford to cover its debt payments while at the same time putting its business and capex plans in place. It would need an injection of at least €300 million of equity just to be able to generate enough free cash flow to cover principle interest payments, according to calculations by Alessandro Pasetti at Dow Jones Investment Banker for The Source which are based on very moderate Capex expenditure.

    Spyker admits in its annual report that it needs new funds to keep going, but says it’s confident it can get them and talks are reaching a conclusion.

    • Indeed somewhat troubling. As I understand it the EIB loan is to 90% made up of a very affordable and low interest rate. The last 10% are borrowed by the Swedish state/Riksgälden at a market level interest. How VM thinks loaning those 500 million from the market and get away cheaper (considering the state Saab currently is in, and what levels of interest they could get), the debt interest might only increase. Sales needs to take off, and they would have if the trust in Saab is not damaged too much now. Act fast VM!

    • I’m more worried about the reaction of the press, and in particular the Swedish. I think VM still has some cards up his sleeve, but the press will be watching his sleeve closely…

      • rodmylon,
        we need to be careful not to feed that press though. A lot of people are on here saying this is what’s wrong, that’s what’s wrong not knowing anything other then what’s being “reported”. By constantly jumping on and off the band wagon, it’s no wonder people are talking about poor consumer confidence. Don’t feed the animals, we all know and it should be no surprise that an auto maker coming back from the dead would have bumps and bruises along the way (especially when they didn’t have a bailout package to draw from) and we need to try to see the accomplishments rather then get stuck on all of this stuff. As you said, VM still has some cards up his sleeve, so lets wait to see what he does rather then speculate that Saab is too damaged now. Really hurts that this has been the news in the last few days, especially when the sales numbers look like they are heading up now. Keep buying, keep driving and keep loving your Saabs, this will all boil over soon.

  11. I’d like to repost something I wrote last night on an article that went off the front page already:
    – –
    Hmm, I guess i stand in the middle between Börjesson and Jeff [concerning last week’s situation and the posting on SU]. The severity of the PR disaster in the Swedish market is without comprehension for anybody not from the northern countries (I’m from Finland myself, nativly (Finland-)Swedish-speaking though). The confidence in VM is below zero in the media. The “severity” and “danger” if Saab’s situation is being touted in every tv-news and business news, with serious reporters standing in front of Saab’s main gate telling the viewers that the end of Saab is near, the leadership can’t be trusted and that Saab might go bankrupt any day now. Meanwhile VM is quoted saying “Jens I don´t think we have anything to discuss, you can read, I have absolutely nothing to tell you so please hang up the phone.”

    The fact I want to stress is that our loyalty here at SU should be with the brand of Saab and what it stands for, not one single actor physical entity. We’re all great-full for VM and Spyker saving Saab, but that can’t leave us blind and ignorant of the current situation. With all respect for VM (and I DO have a lot) he’s strong sides are to inspire people towards a brighter future and give inspired and visionary statements and interviews. He should NOT lead day to day operation, managing the company as a CEO. Neither should he handle the day-to-day operation commenting with the media. VM is very emotional, short tempered and gets frustrated with the (unreasonable) reporters easily. This burns vital bridges, that Saab cannot afford to lose!

    What I so desperately want to stress is the importance to appoint a new credible CEO and also sit down and discuss how the PR should be handled in the future. With the liquidity warning just being announced, Swedish media will be on it like vultures, and if VM snaps at them then he’ll just dig Saab’s grave. They need to issue a statement what this means. That it is standard practice and nothing has changes from last Friday. Saab’s possibilities to get affordable loans on the market might be severely restricted considering their current state. VM needs to pull this off ASAP. Hopefully VA is let in soon too. Looks like he told the truth about Saab a month or so ago, when he shocked us and the press about the state of Saab and then went out and “corrected it”, and made it sound less serious.

    What I think the media should mention is that Saab’s liquidity problems arouse due to the severely delayed sale to Spyker. It wasn’t an impossible business plan, but it was delayed too much. That’s why they need more financing. What hasn’t been mentioned here, but was mentioned in Jonas Fröbergs “Kampen om Saab” book (that I seem to cite here quite a lot) is that GM actually took about 100 million euros of the cash that Saab got in the deal selling the tools to BAIC. It was considered that the sum left for Saab would be enough for the business plan. This was left nagging me, and now with all this it really angers me! It seems one of GM’s last actions now ends up hurting Saab perhaps the most. Those millions didn’t make any impact on GM’s (terrible) finances anyway, it was just simply such a waste…

    Saab now needs to be tougher than the toughest and smarter than the smartest and play an open game. Take it to the next level and show the world that Saab has a future!

    • Rod, the more we’re tooting that Saab can’t be trusted the more it becomes a reality (perception, remember). Unless you work for Saab there is very little one can do except to be supportive and visit a dealer.
      Your venting doesn’t help Saab, just the opposite.
      We’re are talking everyday over here what Saab can do better and they have actually done many things we’ve suggested.
      I don’t want that to see that connection to be cut off because to many are only making contributions in form of shouting out their own frustrations.
      Monday morning quarterbacking is SOOO easy compared to actually doing it yourself.
      Did you think bringing Saab back to life would be a walk in the park with limited funding and all the problems in the US?!
      The independent Saab has already done more in a year than GM in a decade.

      • I agree that we shouldn’t be resorting the levels of the comments on some sites. But we shouldn’t close our eyes to the reality, that’s not what this site is about. I never believed it would be easy, but the current situation is, as I’ve understood it, outside their worst-case scenarios. I also understand the difference between saying something and doing something, it shouldn’t stop us from assessing the whole situation. We all need to be on the same page.

        I’m the first one to agree on that “Saab has already done more in a year than GM in a decade” and that is a big part of my concern, since this last week might undo everything.

        I do still strongly believe in a future for Saab, and that’s the message i spread elsewhere, and that’s why I stress certain points and franticly hope they are resolved shortly. Media’s attention is something we could partly affect, by correcting them and demanding higher levels of journalism and analysis. I’ve sent them numerous mails about some articles, and they’ve even responded sometimes.

        • rod- I’m absolutely with you we need to have a range of outcomes in mind for Saab, and that in the back of our head we should always be aware of how fragile the whole situation is and what a tight rope that management is walking on. I’m with you 100% in the hope that Saab gets a credible CEO and PR team in place to be able to swiftly deal with media firestorms and put out flames in the future. Credibility is key, but so is consumer confidence, and in this situation, they couldn’t have one without sacrificing the other anyway. Let me explain.

          What’s the farthest indication we knew that Saab was going to have projected liquidity problems? Probably when they missed sales targets almost by half at the end of last year. Should they have said, this puts us in a very precarious position which will mean we probably won’t have enough cash to last the year without a bridge loan from new investors? Do you think that would have helped sales momentum? After all, the only way out of this mess is sales. So going back that far, I don’t think they had a choice but to hope for the best but plan behind the scenes for the worst, which is exactly what they did. Another opportunity they could have had– let’s say when JÅJ announced his retirement, VM had announced that Spyker barely had enough liquidity to pay its suppliers and was working with a banking consortium to remove obstacles. Can you imagine what the press would have said about Jan Åke’s motivation to leave? So yes while I agree Victor has a short temper when it comes to reporters questioning him, when they all lead with “How long until Spyker goes bankrupt?” you can’t blame him for getting upset.

          Bottom line, the whole Spyker team has been working their asses off behind the scenes and us criticizing them for not having the foresight to anticipate a supplier disruption while their management is understaffed, operating as lean as possible trying to cure the problem (liquidity) instead of the symptoms (supply disruptions), is not something they need right now. If they weren’t looking for solutions with banks and VA, then yes I’d say that we should all lead the charge for a management changeup, but seeing as a) most readers aren’t Spyker shareholders and b) they’re acting in the best interests of the company already, I don’t think it’s warranted.

          Finally I’d like to compare the struggles Saab is going through now to the ones that Fisker and Tesla went through two years ago. Do any google search and you’ll find countless articles on why their business cases shouldn’t make sense, but from all indications and the partnerships they’ve made, most journalists now concede they expect them to be able to profit and maintain their niches in the coming years. Saab is a startup right now, except with a real legacy to carry it through, and I fully expect these initial hiccups to resolve themselves once everything falls into place. I imagine the banks that are about to loan Saab money agree with that assessment too.

          I’ll have more in a post later at some point, but it’s the first nice weekend in a while here and I’d like to enjoy it too 🙂

          • Thorough and good answer. My point was not that Saab should go out and speculate on their fragile situation or any internal problems, neither was it that I didn’t expect them having challenges or bumps in the road. It is more about the way this was handled. Perhaps they started the project of getting more funds a long time ago, we cannot know, but letting it getting this far and then loose the control of the PR for a brief moment – that’s my concern. Same goes for the CEO situation.

            VM needs to step up the communication, make everybody keep the internal affairs within the company/subcontractors and out of the press, form a cohesive and united front outwards and restore confidence inside and outside the company.

            Anyway, enjoy your weekend, I will too! And I’m looking forward to the post 🙂

          • Real quick- are you saying that as soon as the suppliers cut them off and the press got a hold of the production stop that they should have right away said “We’re having funding issues and we’re working on getting a bridge loan” instead of “These are normal routine hiccups and we’re working to restore production as soon as possible”…? I maintain the Swedish press should have shut their mouths, given Saab some space until they were ready to announce the fact that they’ve been working behind the scenes to get new funding. For their own health and out of respect, the least they could do was seek off the record comments from VM and keep the story until the loan comes through out of respect. I still put this debaucle more on the press and suppliers than I do on VM, I’m sorry if you disagree and think that companies need to manage their PR better, but I don’t see how with an antagonistic press who is looking for red meat you’re ever going to do better than Eric Geers did in this situation. Have a good weekend 🙂

          • Agreed entirely Jeff. Regrettably, the power of the press can cause a self fulfilling prophecy. I sincerely hope that doesn’t happen to Saab. And many of the issues of today can be traced to Sweden dragging it’s feet during the sale Saab first to the Konigsegg group. I would submit that Saab became damaged, in great part due to delays caused by the Swedish government and NDO. Let’s pray that doesn’t happen again.

  12. 1. The succesor of JA should have been cleared before the announcement of the leave.
    2. VM is a fantastic seller and a dream builder, but he should leave the economic business to another with this type of speciallity.
    3. Without JA swedish media will attack VM directly with any type of bad news.
    4. Saabs needs a officiall spokesman with political skills and swedish mentality.
    5. The 9-3 will save Saab, not the actuall portfolio

  13. This is a serious crisis, and it is not be blamed on anyone else than VM. Quick decisions are required. I think it is all about funding and public trust. If it fails, this might be the end certainly for Spyker, but even Saab’s future would be in the clouds.

    That the original business plan would not work was to be anticipated, when sales turned out to be much weaker than expected in 2010. The takeover by Spyker was on a highly leveraged base, thus sales were crucial. That sales did not catch up in 2010/ early 2011, is not primarily Spyker’s or Saab’s management mistake. The damage from GM bashing Saab was just too big, including the stupid factory shutdown. Under the new leadership, for an outsider as me many things were made the right way.

    What was done very well, was to catch up with improving the product offering, both for the new 9-5 after initial reviews as well as for the “old” 9-3. Remember the first negative car tests about the 9-5 in the UK, things were improved quickly afterwards. The lower consumption figures for the 9-3 diesel, with a more up-to-date interior are all great achievements. Current sales figures and the planned model introductions (9-4x, 9-5 sc) seem to imply that a substantial sales pick-up could have happened. Maybe 80k for this year was too optimistic, but something between 60-80k certainly achievable. Additionally, trust into a succesful product development for the upcoming 9-3 was established, Own modified platform, elements of the layout, cooperations with class-leading partners (BMW, AAM, ZF) and so on. An own administration independent of GM and new sales organisation were established – all fine.

    Mistakes happen, it is human. In a turnaround there should not be many mistakes, and if so, they should be corrected quickly. The main mistake occurred in the US. The new 9-5 sedan was introduced in a way that put it in a lame-duck status and bashed its resale value from the very beginning. It has been discussed here often, no need to detail it again. Look at the poor sales figures and the huge inventory overhang still there, despite massive cash rebates.

    Now that in a turnaround things are not evolving according to plan, and that more money (equity, credit) is required, is nothing unusual. It should be from the very beginning in the actors mind, and what to do under those circumstances.
    And that is, what is asthonishing, that VM did apparently not steer this in an appropriate way. Never in life an acute liqudity crisis (delivery stop, payment crisis becoming public) like last weeks should have occurred, with the negative publicity, customer retreat and secondary severe sales implications for the future, if the right steps would have taken earlier on. From Q4 2010, at the latest from the beginning of the year onwards, it was clear that additional substantial funding from Mr. Antonov was needed.
    Why did Mr. Antonov apply for becoming a shareholder of Saab at the Swedish debt office only last week, while he was freed up from allegations in two reports already months ago? That he would not be allowed to come in overnight should have been clear.
    Why additional short-term funding wasn’t organised before to bridge the gap?
    The worst was the initial communication concerning the non-payment of bills, slapping suppliers into the face publicely – and forcing them to bring out details.

    In a corporation to organize the funding is a CFO task, with a clear responsibility for the board of directors to supervise the smooth working and to bring in the needed cash, when the business implies a cash drain. That VM has not done properly, and that is in my view the only point where he has really failed – given the precarious standing of Saab with potentially disastrous reputation implications. When the press now hits at him for everything, it is not fair, but in a sense inevitable. But to resolve the crisis, it is important to know.

    To resolve the crisis, a big amount of fresh money is required – first analyst reports talk of 300m EUR, Saab should give its own estimate quickly. But to restore trust the bigger the better – anything between 500m and 1bn EUR would be more suitable. If VM has the capacity to organize it quickly this would be the most effective damage control. The amount has to be mostly in equity. There are two dates: The New York car show should be the window of opportunity to present new Saab products to the US market. Useless, if the brand’s future is not cleared. Latest date is the Spyker general assembly. If the funding will not be resolved by then, …

    Additionally, the presentation should involve an updated business plan, that has to address changes in the external environment and the weaknesses recognized: exchange rates, oil prices, US product offering for the 9-5 and inventory overhang, dealer strategy. To pump in just more money, without addressing key issues will not satisfy. Just a few ideas:
    – Overly dependent on US market with an enormous downward pressure on prices and loss-generating exchange rates, the latter for the UK market as well. The business model is geograhically completely imbalanced. To balance it, Saab has to introduce a Diesel for the 9-4x and a bigger Diesel for the 9-5. If the dollar stays where it is or even suffers further, Saab can export a Diesel 9-4x with big margins to Europe. 9-5 sales in Europe might increase much more with an adequate Diesel. Will require further, but limited upfront investment.
    – How to tackle high oil prices? The fallout from the nuclear catastrophy in Japan will be higher energy prices for all forms of energy worldwide, including gasoline. What solutions will Saab be able to provide? Diesels, gasoline engine efficiency improvements, hybrids for both, and if, by when for what models? What additional investments required?
    – Are the costs for developing the 9-3 covered by the business plan?
    – What to do about the US market, with a 9-5 engine offering completely different between the 9-5 sedan and sc. How to tackle the inventory overhang? To produce such an updated business strategy, consultants usually can update the documents and make them consistent, a high pressure exercise.

    Organisation an controls: To restore trust and confidence, changes in the BoD have to occur, with external credible members that have to supervise a finance committee. And after last week’s events it is not a good idea for VM to act just as an interim CEO. If possible, JAJ’s stay should be prolonged, till a new CEO will be there.


  14. Michael, I agree on most counts but you can’t put blame on VM for poor sales. It’s just unfair. He and JÅ were doing everything they could to promote Saab while cars hadn’t even arrive in the US and marketing was non-existent in Europe.

    Lets face it the biggest problem of Saab is perception. With the last weeks turmoil it didn’t get any better, but the real issue is what the public know and feel about the cars in terms of value.
    We here know Saab is on par or better than ze Germans competition (minus a few narcissistic details and a couple of engines). How many outside the Saab circle knows this, it surely not common knowledge.

    What adds to the problem is that most Saabers are smart.
    If we can get a ‘Swedish Audi’ for 20% less we’re not going to complain, now are we?
    It is simply not sustainable. You can not build a premium car for the price Saabs are selling after incentives at the moment. The company and the dealers are not making any -or very little- money with this strategy.
    Someone (VM) needs to step up and stop this madness that’s been going on for some 25 years now. It will run the independent Saab into the ground. Only thing that matters here is profit, not how many cars are sold.

    If we want less expensive Saabs they need to lower cost/quality, but who wants a Saab then? Not the traditional Saaber anyway. It all comes down to marketing.
    Where do you turn when you want the best winter car ever made? Where do you turn when you want the most value for money in the premium segment? Where do you turn when you want the safest cars on the market? What do you choose when you want a fun car (according to many journalists)? Where do you go if you don’t want to be like everybody else? No USP’s?!
    IN YOUR FACE MARKETING. Where is it? Maybe it’s a Swedish thing not to shout out you’re good, but it has to end now.

    If Saab and the dealers are collectively giving out 20% of their revenue to their customers (us) they won’t have any money to keep the business running, much less develop new products.
    No more incentives for the MY12 and onwards! Customers will come when Saab has the wisdom to market their products and stand tall behind the prices. (a little less than A and B to make Saab the smart choice instead of ripping their customers off). To flood the market with discounted Saabs will only destroy resale/residual value in a few years, period.

    BWM’s bottom line is ‘only’ 15% even with their Asian factories, huge sales and prices. Do we want Saab to succeed or not? We always get what we pay for (unless this changes Saab will forever stay the ‘troubled’ brand as there isn’t enough profit to stay competitive). Discounting means you don’t value what you’re selling. So what you’re indirectly telling your customer is that the product is originally priced above it’s true value.

    Current dealers who won’t get it or are not willing to do the promoting/sales have to become ex-dealers as they’ll never make any money selling Saab and therefore can not provide the customer any service either.

    I apologize for the long post and if I’ve offended anyone.

  15. RS,
    I have reread my text, there is no point I blamed VM or the the management for poor sales in 2010/early 2011. The only true point is that Saab, whoever that was, created a problem with the 9-5 sedan in the US market.
    For the rest, I am in line with your base ideas. The only thing I wood consider as Saab right now is to give additional sign-on incentives in markets with big margins for Saab for the new models (9-5 sc, 9-5 sedan, 9-4x). That would insure more sales, visibility for the new models.

    • Michael, great post and I agree with you almost completely save a few minor details. It’s not easy or cheap to source a bigger V6 diesel and get it certified and working right away in the next two years, if liquidity is an issue now the payback vs. initial investment just isn’t quick enough to warrant it. I’m with you that it would bring in more cash, but the breakeven wouldn’t happen until 2013-14 at the soonest, and Saab needs cash now. Crappy situation, but that’s where they’re at.

      On the rest I agree that RS’s ideas are key. Marketing and US sales have been utterly off message and have proven ineffective. Saab needs a bolder marketing campaign and gutsy pricing to maintain their edge in the market. They need customers to experience the product, and pass on what a good deal it is to their community. I think Saab needs to think about a special pricing campaign for the US market, taking a temporary hit (which I know, hurts liquidity, but is practically in line with real prices at this point, just market the real selling prices) with a broad approach leveraging online shopping tools that customers are looking for deals on (Gilt, Groupon, etc.). Then make Saab customers selling agents– give $200-$500 cash bonus to any Saab owner who refers a friend who actually buys a Saab, and you’re golden. There’s going to be a thread about this where we solicit ideas from the whole SaabsUnited community, and at some point in the next couple weeks I’ll be interviewing James Sweeting, the new sales chief for the US. Maybe we can brainstorm something of use for once 🙂

  16. Hopefully, there is time for all the seemingly good ideas articulated here. I will say that when I see the bloated inventories in the US even with major discounts and stories of dealers barely hanging on, I am gravely concerned. And if the Swedes don’t have confidence in the brand, why on earth should a US consumer?

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