The Day After the Hawtai Deal

Yesterday was a big day for Saab. They gained a critical partner that not only helps them stay alive in the short term but also helps them establish a strong foothold in the largest auto market in the world. To say it was a big day for Hawtai would be an understatement.  And it was an even bigger day for Hawtai, who gets the most valuable commodity of all in its home market– credibility. They scored the deal that a dozen other automakers wanted, which should give them new respect among consumers and competitors.

So how will Saab turn the tide of bad press, skeptical consumers, and financial uncertainty?

Victor Muller wants people to know not only about the deal with Hawtai, but Antonov too, so much so that he’s announced a global media blitz similar to last spring. From Automotive News:

Saab Automobile plans a global public relations blitz to introduce its new Chinese partner and its likely new investor, Vladimir Antonov from Russia.

The plan will include Saab Chairman Victor Muller and will target major media and auto shows. It will be similar to an effort last spring by Muller to show that Saab is alive and making vehicles.

“If and when Antonov gets involved, we want to include him,” said Michele Tinson, a spokesman for Saab Cars North America. “We want people to meet him and know who he is. Obviously we want to include our Chinese joint-venture partners as well in our tour.”

If you’d like to hear just what Victor might be talking about on his tour, Swedish Radio has an excellent phone interview with him, who is now resting in Mallorca, that you can listen to below. You can hear how optimistic he is about the Hawtai deal, as well as information and his reflections on the status of various approvals (and around 8:45 you can hear how excited his kids are about their dad being home in the background 🙂 ). I think you’ll really enjoy it (and I hope you had a nice nap, Victor).

Lyssna: “Märkena kompletterar varandra”

Just how big is the sales goal for Hawtai in China? According to Hawtai VP Richard Zhang, the joint-venture between Saab has a target of 100,000 to 200,000 cars per year in China. That’s more than the breakeven point for Saab on its own. The terms of who shares what percentage of the profits in Chinese domestic production aren’t clear just yet, but Saab should be getting a fair chunk of it.

In an Aftonbladet piece today, Victor Muller made several revelations about the deal through the press conference. “We negotiated with Chinese manufacturers for a year, and the last month during Saab’s financial crisis we were courted by a dozen Chinese automakers. But Hawtai fits us best,” he said.

Asked whether Vladimir Antonov was upset that the Chinese are buying 29% of Saab, he responded, “Quite the opposite! He’s even more interested now that Saab has such a strong financial partner.”

The Chinese are especially keen to gain access to Saab’s electric vehicle technology, a hot segment in China right now. “They want our electric rear axle for a plug-in hybrid and they want access to our electric car (eDrive) technology. Electric cars are very, very big in China, Muller said.

Perhaps his biggest revelation during the conference call to Swedish reporters was that the month offline means that Saab lost 4,000 cars. As covered earlier, there are 5,000 orders on the books and the factory now has to work at high speed to fill them, but Muller says sales will be revised down from the 80,000 2011 target. “It is quite clear that we will not be up to the 80,000 we talked about. The factory has been stopped for nearly a month and we have lost 4,000 cars. But I do not know how far we will reach.”

Finally, just to indicate how big a deal this is for Saab, it even got press on US television. The local news even. That’s fairly incredible, considering the last time anything made the news for Saab on affiliate tv was when they were slated to shut down at GM’s hand in December 2009. As I’ve said before, this coupled with the launch of the 9-4x give Saab a huge reboot opportunity. But allowing the media to report the news in this way though to a mainstream audience certainly doesn’t help. This was probably broadcasted a similar way on dozens of US stations, as most purchase their newsbytes from the same few companies. Hopefully going forward Saab can get more of the press to report a strong message focusing on their stability, not fragility. Here’s the clip.

____________
UPDATE:

After reading Swade’s post over at InsideSaab, I think you’ll see he’s done a great job of answering most people’s questions.

43 thoughts on “The Day After the Hawtai Deal”

  1. But again the media (USA in that clip) are selective in their sound bite reporting – stating “the next model Saab will be built in China”. No mention of continued builing in Sweden. 99% of the public will assume that means the Saab they buy in a few years is likely going to built in China.

    • True, but I guess that is something that coming advertising could address. I don’t know if “Made in Sweden” means anything positive in USA, but if it does, that could be the only slogan needed. A bit corny, perhaps, but it sure beats all the mind numbing payoffs that other car manufacturers use.

      • I truly believe that “Made in Sweden” does have a very good conotation in the US market and think that should be the theme of all Saab ads in the US (except the 9-4X where the statement can’t be made). Emphasize the Swedishness of the product (not, for example, the “non-German-ness” of it–to pick one recent example). A Swedish theme would permit really nice tie-ins for winter capability (a big selling point in the Northeast, Rust Belt and Rockies) and for the convertable (“when you are from Sweden you make a point to enjoy good weather”–or something like that), and for the very attractive design of the vehicle, the comfort of the interior, etc. Surround the product with other Swedish things like modern and post-modern architecture, modern furniture, beautiful images of nature, and beautiful Swedish-looking people to reinforce the various message of each ad.

    • Negative headlines in the press, when there is plenty positive happenings to make positive headlines, i an enemy that it looks like Saab have to struggle against. Damn press!

  2. Damn press? What is next? Damn truth?

    So perhaps press should shut up that Antanov money is Gemini and brings his shares up through a straw buyer?

    His father had to buy him a first date but could not afford a good hair dye and toupee maker?

    • If it helps, I drive a mint 9-3 2.0T manual from 2006, and my family member has a 2011 328i xDrive. The Saab is definitely the faster of the two vehicles. The BMW has a “heavier” more German feel, while the Saab is more nimble. The Saab is the better city / urban highway car, with the turbo and quicker steering. The BMW is the better autobahn cruiser for > 85 mph. Driving either one of these cars is a complete joy. You are choosing between two auto classics!

  3. What are your guys opinion on the fact that Hawtai wants to sell their own cars in Europe and NAmerica? I assume using the same SAAB dealerships? Would this be downgrading even more the SAAB image and “ignorant” people assuming SAAB is a “chinese car” company nowadays?

    I personally think Hawtai should just concentrate on China and “less spoiled for choice” markets like India, Brazil etc. to sell their own cars. I suppose the marketing needs to be very clear: Hawtai for cheap, quality chinese entry-level cars and Saab for premium ass-kicking cars.

    • I agree with you for the time being. However I think the European North American etc markets will be flooded with Chinese cars within two or three years time. We will see a similar development as with the Koreans – ten years ago we laughed at them. I think it could be a good idea for many dealers to be able to offer a parallell low-price brand and many of them already do that because it’s their only way to be profitable. And why not offer them to sell Hawtais instead of Korean-made Chevrolets? The dealer situation varies a lot between the different markets and there is also a great difference between a dealership in a densely populated metropolitan area and a dealer in the countryside so it’s not easy to give a general answer.Also we need to see some smaller Hawtais before they can enter the game.

  4. I think the talk of Hawtai utilizing the dealership network is pie in the sky. They aren’t a strong enough player in the domestic market, nevermind going international. I don’t see anything coming of that tidbit for a long time.

    • They would have to pass the Euro/NCAP tests first. The first Chinese car to do that with more than 1 star has yet to reach Europe’s shores. But if they do then why shouldn’t they start selling here? Lada’s and Dacia’s are sold here, too? Why should a Chinese car, if any good, not be offered as well? The market will make its own choices.

      Ivo

      • Actually the market shouldn’t make its own choices in the case of China. China has very strict (=unsurmountable) import restrictions while happily exporting to other countries. Everyone turns a blind eye because of the lure of a possible huge Chinese consumer market and cheap Chinese export goods. At a certain point the Chinese import and export has to become more balanced otherwise the global market will collapse. The car industry is a good example. If really cheap Chinese cars start competing on the global market while foreign brands are made unaffordable in China then this will be devastating for the European, Japanese and American car industry.. That’s why there should be severe import restrictions and taxes on Chinese cars or, like what Saab has cooked up with Hawtai, a separation of the Chinese and global market.
        Btw, at a certain moment the Chinese economy will get hit hard by its citizens request for better working conditions, income and benefits. From there on things will start normalizing.

        • Just like the Japanese still do, I believe. I dont think you will ever see any Chinese built Saab’s on Western roads but It wouldnt surprise me to see fake Saab cars ie copies of Saab cars in China with a Sino-Western name.

          Chinese cars are total garbage and I sont think you will see them in North America for at least a decade until they can build something that is even remotely safe.

        • Completely agree Gerrit. I think that Chinese companies will benefit from their government’s extreme import tariffs by ensuring that they gain access to Western partners’ technology, as is the case with Brilliance, BAIC, SAIC, you name it. I think it’s only a matter of time before a Chinese company is able to produce a $35,00 S-Class competitor designed by Italians with German engineering for export to the US that scores 5 stars on cash tests. And they’re going to do it a lot quicker than he Koreans did.

    • Little known fact, we don’t pick any of the google ads you see displayed in the middle column of the page (or anywhere else you might see them). Google uses your own browsing history, collected through your own clicks based on factors like your IP address. If you look at a lot of car sites, you’ll get car ads, if you look at a lot of shopping sites, you’ll get clothing ads, if you like to read political blogs, you might get campaign ads. You get the drift. They’re trying to cater to you, and when you click on them, SU gets a few pennies to help run the server and keep it all running smoothly.
      Tim is doing a great job replacing those with as many regular advertisers as he can though, so hats off to him for that 🙂

        • Funny story, I used to do that for Swade when he owned the site thinking it helped, even if I wasn’t interested in the Lexus ad I was clicking on. Somehow the idea that Lexus was in a roundabout way paying SaabsUnited was enough to make me smile. I doubt it does much, but hey, go for it if you like– I know Tim is spending a lot of $$$ on upgrades.

          • How many clicks would it take to make it possible for him to buy 29.9 % of Saab next time they need some more money? 😉

          • Seriously guys (and girls). Shouldn’t a site so dedicated to SAAB ensure it does not happen. I know about how google ads work but there are ways around it. SU being used to promote BMW because I visit auto sites. Seriously!

  5. Muller’s objective should be to assure the Western world that Saab is not being “taken over” or “bought out” by Hawtai, rather invested in and partnering with. I can already see how a Chinese investment in Saab will tarnish the brand image in the West, in a similar fashion to Volvo, MG and Jaguar. They should jump on this quickly before it gets overblown.

  6. Where I live, the Saab dealer already sells a couple of other brands. Opel, Citroën and some more brand made in some other country. I never look at those cars, so I do not really remember all brands and I wouldn’t really notice if Hawtai or some other brand also showed up there. 🙂

  7. Of course in the first place the fact that that this is a cooperation and not a take over of Saab has to be communicated properly. That press blitz is a good way and by taking the new partners with him on tour Victor may be able to show that Hawtai are a well chosen partner.

    Of course partners from China and Russia feed a lot of old prejudices and fears but those are big, growing markets and having strong partners there will surely help Saab in the future.

    I wouldn’t mind if Saabs get engines from that Hawtai/VM cooperation in the future, maybe it’s a chance to develop an engine that fits Saab just perfect. Of course Saab has to take care that the quality is right but if Hawtai wants to export their own models some time in the future they know themselves that they have to meet certain standards.

    Worrying if Hawtai may want to use Saabs dealer network is something we can keep for future times. Right now it’s all about letting the press know what this is all about and making them really listen. Let’s get the message out there.

  8. Maybe the Saab/Hawtai tie can now make the 9-2 viable? Give Hawtai some practice making 9-5s and 9-3s for China, and it should be able to build 9-2s for the world market. Perhaps the 9-2 Convertible and maybe Aero models could be made in Sweden for those that want to pay a premium for a Swedish built car, but building most 9-2s in China could make it a very cost effective entry level car for Saab. Come to think of it, the 9-4x replacement could be built by Hawtai too. The 9-4x replacement using the Phoenix platform will not be built in cooperation with GM. Can’t see GM wanting to share some else’s platform anyway (especially Saab’s), so Saab will have to make other arrangements. Hawtai has access to a suitable diesel too.

    This all could work very well for Saab, but it must keep a sharp eye on quality control. If Hawtai can build 9-3s and 9-5s of good quality, it could reflect well on it’s own products as well.

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