Victor Muller’s Essential Optimism

A lot of positive press has come out of the 9-4X test drive that took place over the last four days in the Capital of what will be its largest market, the United States. Journalists impressions are forthcoming, but from what I’ve heard most were impressed and consider it a true competitor in its segment. We’ll certainly be covering all of their accounts in great detail here in the next few days. But in the hours since the reporters packed their bags and went home to write their articles, it appears that the first waves to be felt from the event are more about the management and company itself than the products which it sells. In regards to this, I’d like to take a minute to debunk and rectify what I see as a fair bit of sensationalism.

Victor Muller was able to fly into D.C. for the gathering, and joined the new President and COO of SCNA, Tim Colbeck to reassure reporters that even though Saab made some pretty big mistakes, they’re learning from them are acting immediately to rectify the situation. Chief among the missteps that led to the parts shortage was misjudging the level of tolerance their suppliers would allow. Thecarconnection.com quoted Muller from his presentation to the press in Georgetown on Monday.

“Unfortunately on the 29th of March we called the bluff of one of our suppliers who said that if you don’t do what I want, I’m not going to open the doors of my truck, and if I don’t open the doors of my truck, you’re not going to get the parts. Well, he was serious, and we screwed up. Because it caused a production stoppage of two hours.”

News spread quickly in a media environment that had already taken a very critical slant about the automaker, Muller explained, and the troubled quickly multiplied.

“Within two hours of that stoppage, we didn’t have one supplier with a problem. We had 92. And that started to completely unravel it,” recounted Muller. And soon, 20 million euros had turned into 90 million euros.

At the same press gathering, the Hawtai deal and the subject of Chinese production inevitably came up. This is where misinterpretations start to fuel a non-story and it turns into a fire, I’m hopefully getting to it with a fire extinguisher before it gets any further. Victor spoke to Rick Kranz of Automotive News about what he sees as a sure thing and most analysts are even placing bets on– Chinese cars reaching American shores. Unfortunately, quotes as they usually do have not only been taken out of context but completely sensationalized by other news agencies, from thetruthaboutcars.com to leftlanenews.com. In the Autonews.com article, Victor makes a case that it’s only a matter of time before China infiltrates the US market.

“We laughed when the Japanese came,” said Victor Muller, chairman of Saab Automobile AB. “We laughed when the Koreans came. But we will not be laughing when the Chinese come. The Chinese are like a steamroller.”

…Muller stopped short of saying Saab will distribute Hawtai’s vehicles in the United States, Europe and elsewhere. But he said Saab’s global distribution network will be tempting for Hawtai. If an agreement is approved, the vehicle line would be distributed separately from Saab under the Chinese automaker’s name.

In other words (and from reports of people that were there who actually heard how the actual conversation went), Victor is simply stating the obvious, that the Chinese are eager to find a way into the US market with the right strategy. As I reported last week and backed up by GM global sales head Nick Reilly, they’ve made incredible advances in their production capabilities and now have some of the most modern factories in the world. For a company like Saab that has a strong foundation but limited reserves, why wouldn’t they want to leverage their best assets to ensure their continued survival?

“It took 67 years to build up our dealer network. It is the biggest asset not on our asset sheet, and these guys buy into it for free,” said Muller, who was interviewed during a press event in Washington, D.C.

“If they make the proper cars, can you image how much simpler it will be to push product through the distribution network that is already there? It is like a railway network that is already there.”

Muller said that it is possible Saab could be the distributor for a Chinese-built vehicle that sells for around $10,000.

Asked if this would be a vehicle produced by Hawtai, Muller said “there are 120 companies” in China. Saab would be interested in “the one with a strategy,” he said.

No, Victor didn’t just reveal that Saab is ready to make a deal to import Chinese cars to its dealers, he was merely suggesting the conditions that would be necessary for such a situation to arise. What you have in those quotes is an example of what Victor Muller does best, throw a cog in his skeptics’ gears to show that Saab will do what it takes to survive and reach profitability. Did he outright say that any of this was in the works? Of course not– he was putting the word out that Saab is stronger than those who wish it dead give it credit for and has more assets than are simply on its balance sheet. At the same time, he’s once again changing the conversation and turning the typical automotive production paradigm on its head– a small company like Saab given the proper approvals can do some rather big things to the market. I can imagine that if a Chinese company “with a strategy” as Muller says, priced and built a car right, it would be an incredible boon for independent Saab dealers who have had a hard time making sales for the past few years. Of course that car would have to pass all safety and regulatory tests to even hit the market, but the sensational headline “Saab Recasts Itself As Auto Industry’s Answer To Walmart” tends to get more clicks and generate more revenue (which is why if you want to read it, I’m letting you find it on your own and not linking to it here). I understand a writer’s temptation to be funny or insightful in a headline, or passively sourcing an article based on an out of context quote to piece together a non-story, but such negativism is really getting tired.

I know what many of you will say– that the US government will never approve such a deal or that lobbyist groups might block it before it even gets off the ground. I’m not going to disagree, the idea is at best embryonic and certainly has been vetted by every major automaker before. I also know that some will suggest that Victor should have just stayed on topic and talk about the 9-4X at the event. But that he actually has the gumption to suggest it in public shows he’s dealing with the reality of the elephant in the room, that Chinese cars are rapidly improving and that Saab isn’t going to sit idly by while some other company steals the opportunity of cashing in on the opportunity. You have to give him credit for that.

As I’ve been saying since I saw him a few weeks ago in New York, Victor has taken a very humble approach to the cash crunch, and is not only apologetic about the situation but is taking the blame for most of it.

“There’s only one person to blame for this, and that’s me; because I should have been prepared,” (he told reporters in D.C.). “It should have never happened. But it did.”

And that’s really at the core of this whole mess. Victor Muller, despite his incredible work ethic, his astounding intelligence, and his charismatic personality, can’t save Saab by himself. Since the Koenigsegg deal fell through in November 2009, the man has quite literally not stopped fighting for the company that he helped rescue. His optimism fueled the deal, allowed GM to sell Saab, and went a pretty damn long way towards boosting sales back to GM levels, despite a deluge of bad press. But that optimism is simultaneously a blessing and a curse– while many of us in the Saab community have embraced Victor’s words, for those rigid individuals who expected all of Victor’s promises to happen overnight, the fact that *gasp* some might be delayed a few months is enough for them to walk away from the company and declare it a lost cause. Certainly if you read casual commentary about Saab in any of the articles on other sites, you’ll see that negativism prevail.

I’ve read a lot of this negative commentary the last few days, especially coming out of Sweden. To those who want to cast Saab in that light, I want you to step back from your monitors, newspapers, and television screens and try to remember what Saab has been through since GM cast them aside, and ask yourself what would have happened to the company if Spyker hadn’t stepped up to the plate? Do you think that anyone else besides Victor Muller could have been able to pull as many rabbits out of hats to make these deals happen, in the face of so many doubters? While you’re still thinking back to 2009, try to recall all the press outlets saying that Saab didn’t stand a chance to make it a year, that no small car company could ever survive in this business climate, and then read the same press outlets explain that Saab’s business model might just have a shot. The reason they’re changing their tune is because of Victor Muller’s vision.

Yes, Victor makes bold statements, yes he sometimes speaks in hyperbole, and absolutely he sees things in a more favorable light than most any Swede I’ve ever known. But without that vision, I don’t think Saab stands a chance. It’s that same outlook that gives his closest business partners enough confidence to invest in the company, that convinces executives like Tim Colbeck to leave great positions with solid companies like Subaru to take jobs at Saab. As Tim said in his interview filmed on Monday, “Everything that Victor said, he’s kept his word…it all has happened the way he said it would happen. And what’s interesting about the man is his passion for the brand and his passion for cars…it’s infectious.” It’s the same vision that the Swedish NDO has said they believe in, that they backed it with the guarantee of the Swedish crown. It’s because the business plan isn’t even that optimistic, it’s based on solid product and has several very powerful groups staking their fortunes on it, not the least of which is Hawtai, a company that has more recently made conservative plays like on the Bank of Beijing.

Victor Muller is and has been essential for Saab, no matter many different ways you try to paint the picture. If you truly care about Saab, if you really believe that its cars are different from anything else on the road, then you have to have the same faith in the cars that it sells. By that same logic, it makes sense that you should there be a few month delay in the business plan, you’ll stand by the company. Hell, I wanted to buy a 9-4X two years ago, but the uncertainty of the sale process meant that I couldn’t. Guess what? In the meantime our current car held up just fine, the wheels didn’t fall off, and no other CUV was introduced during that delay to make me question our decision. We even saved some money in the process by waiting. Should the next 9-3 be delayed because of the liquidity shortage, I’ll still be first at my dealer to put in an order once I’m able to. Now isn’t the time to start questioning Saab’s chances.

While I’m aware I’m preaching to the choir, what I’m hoping is that the external skeptics or journalists who occasionally read SU stop nitpicking every little detail of what Victor says and start to consider the big picture. Whatever happens with the Chinese partnership, rest assured it’s happening for a reason and that Victor, Vladimir, and other management at Saab think it’s an essential part of the picture. They have high expectations for Saab, and when goals aren’t met it doesn’t mean that the company isn’t on the right track. When a milestone is delayed, when the business plan doesn’t fire on all cylinders, or when a fork in the road like Chinese partnership opens up, don’t try to use it as an example of why you think Saab is bound to fail. If history shows us anything it’s that Saab will do what it takes to survive. Give Victor Muller some credit for what he’s done and let’s pray that he is able to quickly assemble an executive team that can keep up with his own lofty expectations. The patience and optimism most have shown at SaabsUnited has been needed and helpful, let’s all continue to exhibit it while everyone at Saab does their best to teach the company to walk once again.

55 thoughts on “Victor Muller’s Essential Optimism”

  1. What great BIG snippet of things. Very impressed by this piece of writing. The SU staff need to tap themself on the shoulder for very good work. I wish all comments was as good and positive. 🙂

  2. Jeff, your are a great writer and this was a very well written article as always and it put a smile.
    Keep up the good work.

  3. Nice and good comment on VM his actions and interviews.
    These people are rare and we must be glad that VM is so interested in Saab and in cars in general.
    These managers are needed to keep the business alive and kicking.

  4. Thank you!
    1. DI.se should read the end of the post.
    2. I’ve decided that I’ll never buy another brand than Saab again.

  5. Amen to that… If SAAB wasn’t already like a religion to me, it sure has become one after reading this. Swade’s term “SAABology” has a new meaning to me. Thanks man, for sitting down and putting this in writing. My thoughts exactly…

  6. The confidence and fighting spirit is very welcome, optimism might be dangerous however. Given the negative press of the last month, it will be an incredibly tight race, above all financially. Sales won’t rebound from alone. To be optimistic in such a situation, might be dangerous. Better to be on the safe side by adding sufficient equity and liquidity through credit lines to reassure stakeholders – potential customers, suppliers, strategic business partners from cooperations, dealers, and not to forget employees, key staff. For the rest – strategically and in terms of technology – I can see more and more the business case, why to be optimistic. Will elaborate on it soon. Btw I found it correct and convincing to take the blame for the cash crisis. But without a tight situation due to insufficient equity and credit lines, such a mistake would never have had such impacts.

    • You’re right Michael, blind optimism isn’t healthy. The product is enough reason for me though. While the Saab faithful would love to be able to snap our fingers and solve Saab’s liquidity problems, we have to trust the company’s leadership to do their best. They’ve gotten this far and have staked their reputations and livelihoods on the company, I trust that they’re doing everything in their power to ensure such a situation doesn’t happen again. After all, the only way Saab is going to reach its sales targets is if they can inspire consumer confidence, and the only way that can happen is if they can keep the assembly line rolling this time around. It’s clear that they understand just how big a deal this whole event was.

      • I agree with Michael. Optimism is good, but in a critical situation like this, one should also be careful navigating the risks. It is easy to criticize in retrospect, but the supplier payment problems and production stop is a disaster that should have been avoided. As a prospective Saab customer, I would much have preferred if the factory had skipped the Phoenix concept in order to avoid the cash crunch. (Personally I would have been happy to see the 2008 9-X biohybrid and the 9-3 SC Electric at the stand in Geneva, rather than the Phoenix.)

        Now it is essential to restart production and avoid further delays with the next gen 9-3. If Victor with his optimism can secure the funding for this, hats off!

  7. Excellent piece, Jeff. Despite all hurdles that may occur I think Victor has a strong belief in his vision. And when times get tough he’s pretty good at this thing with the hat and the rabbit…

    Thanks Victor for all you did and all you will do for Saab.

  8. Jeff, you write excellent pieces with great insight and thought. In this article however, you are trying to reach the journalists who write sensational pieces without seeing the big picture. I don’t think these types will be patient enough to read through an entire essay. If they would be, they would know their facts. Often writers write what they would read, especially online. Newsreaders online like small snippets to browse through. If something is interesting, people will read more. If not, they skip over to the next article. Therefor I would like to suggest you use the part of the post that is shown on the homepage to summarize with an actual conclusion and use the section after the jump to build up to or defend that conclusion. Hopefully that way the non-Saab minded audience will be tempted to read it too.

    • It’s called a synopsis, that succint summary/preview with a short conclusion. It is often used in articles in scientific journals. I agree with Millerman that this may help in reaching lazy writers and those pressed for time.

      But I also believe that much of the one-sided slant many writers adopt is caused by a lack of clear information on the part of Saab and also by either professional incompetence (mostly where online-only publications are concerned) or time pressure caused by the ultrashort deadlines journalists nowadays have to work with. That said, it is another reason to compose the story in the way Millerman indicates.

      Ivo

    • I concur. Nowadays, you have to make it VERY easy for journalists to read anything.
      As another ex-editor in chief: Bravo for this well-felt piece.

    • So let me complete the trio of exes: I’m also an ex-editor in chief 🙂 . And I’m quite sure there are more like that here.

      Ivo

    • Will do. I put enough time into the article that I’ll get a synopsis up for later. That said, I have a few friends who work at major publications (car and driver, motortrend) who already emailed my facebook and told me they enjoyed reading it and it will help them frame their arguments in regard to Saab. I never realized the reach SU had until I started tinkering behind the scenes. For every commenter, there’s at least 100 people behind them reading the site.

  9. in austria 9 saabs were registered in the first ten days of may. so it’s in line with the previous months. maybe the production stop will show it’s influence in the end of the month because austria isn’t a market where you buy from the dealer stock.

  10. Keep leading Victor, the rest will take care of itself. It may take some of the old boys network 20+ years to understand what you were explaining about China.

    Having seen the 9-4X in-person now, I predict it will be the best selling Saab to date if given a fair review in the media. I can’t believe the press has the head of the company, Chief Designer and NA President attend their product test drives very often. It is obvious that Saab is not just an investment of yours, but a passion – how often do they see that too? Thanks for keeping Saab moving forward!
    – Dan

    • The only problem with the 9-4x is timing. Pickup sales in NA are nose-diving already. It’s very hard for a company with limited resources to be at the right place with the right product at the right moment. Let’s hope a little luck (and of course a lot of hard work) will go a long way to give SAAB enough time to rebuild itself.
      Griffen up!

      • Exactly. It’s the right car for Saab…just 10 years too late. On the plus side, the market for larger cars is always cyclical so the current gas-price induced downturn might only last a year to 18 months. With any luck, 9-5 sales will take up the slack…

        • Perhaps this is where the stylish 9-5 wagon can be taken advantage of in the US, with its large interior space and practicality, coupled with its lower emissions? A pretty good alternative to CUVS/SUVS

      • The best indicator of how well the 9-4X should do is sales of the Cadillac SRX. They’re on track for their biggest year ever, despite high gas prices. We’re talking 80,000 units. If there’s that much room for a vehicle with identical underpinnings, I think the 9-4X should do just fine.

        What will be interesting to see is how the 9-4X affects SRX sales.

        • Jeff, if the SRX sells 80,000 units in 2011, I’ll buy you dinner. 🙂 Gas prices only started to spike in the last two months, and that’s before the anticipated summer rise. That should cool sales considerably

          Another thing to consider is that if you’re in the market for an SRX, is there really a compelling reason to buy the 9-4x over it? For us, the members of the congregation, we’re already converted…but what about Joe and Jane CUV Buyer? Is “Saabishness” a premium? It will be an intriguing year.

  11. Sorry, off topic. But is there any news on when production will start again? Just feeling nervous that things have gone on too long.

  12. Actually what I like the most about the carconnection article refenced above is that it actually states that the production of the 9-4X has started about a week ago. Will be interesting to read the reviews.

  13. Connecting Victor’s optimism with his ability to project and act upon a vision for the future was well worth presenting to provide a broader context for Saab’s future. We all know about the three-year “fully-funded” business plan with the intent of being a niche premium vehicle manufacturer. We certainly want Saab to achieve its plan and sales success with new Saab models would be a good indicator.

    Lets assume Saab can succeed with that plan. Then what? That’s where the vision comes in. With that vision comes planning, decisoins and actions to implement strategies for the longer term. Put another way, Victor and the Saab team are thinking and acting beyond the publicly announced plan.

    Have you ever imagined a vision for Saab beyond a niche manufacturer profitably selling 120,000 vehicles? Can you imagine Saab becoming a global powerhouse? Past history makes you wonder. However, real vision and passion this time around can make the difference. We’ll just have to find out and have the same faith Victor has.

    • To succeed Saab (and their partner) need to come out with cars that are not to expensive, but fun to drive, beeing safe, nice and useful, like Saabs always have been.
      Saab must of course have more expensive versions, but plase let´s get real Saabs with a lot of Saab dna that are not too expensive. 🙂

    • Ah, Steve. You’re so smart. You add a great voice to the discussion, take your comment, condense it into a paragraph, and then stick the whole thing into the middle of the article, cool? 😛

      It’s all about thinking on your feet in this industry. Victor never sits down, have you noticed?

      • My wife remarked that Victor looks older than when we met him last October. He never sits down, doesn’t sleep much and seems to be burning the candle from both sides. This is how he likes it, but can be pretty detrimental to your health. Very wisely, JaJ figured out that he couldn’t keep up. It would be equally wise to start grooming a second in command.

        • For sure he looks bushed on the 9-4x video. Running back and forth across the world will do that to you. That tight jacket, buttoned in the middle, didn’t help either. I hope he takes a break ounce the cars roll off the line again.

  14. Thanks for the editorial Jeff. As part of the choir I’d like to make some comments, though.
    I like Victor, his enthusiasm is contagious. He’s a dreamer, in the good sense of the word, and works 24/7 to see his dreams come true. He’s an outstanding deal maker, he managed to start up Spyker from scratch and kept it alive, against many odds he’s now doing the same on a much bigger scale with Saab.
    However, Tim Colbeck’s remark “Everything that Victor said, he’s kept his word…it all has happened the way he said it would happen.” is flawed with respect to the car sales numbers. Selling cars and having cars visibly on the road is the most important aspect of a large car company and Saab, especially in the US, has fallen far short of Victor’s first (and second, and third) estimates. With Victor as the deal maker Spyker managed to keep making great cars even while losing money. But this was on a rather small scale. Similar problems at Saab led to huge losses in a short time, in Victor’s own words about the supplier problems “soon, 20 million euros had turned into 90 million euros”. Filling holes in the order of hundreds of millions is way more difficult than scraping together a couple of million to get Spyker through another year.
    It’s great that Saab has such a charismatic leader, but Saab will only survive if he surrounds himself with exceptionally driven and experienced people AND gives them the chance to do their work. Charismatic leaders are not always good at delegating tasks! Finally having been able to get Vladimir Antonov into the Saab fold to help arrange the financing and hiring Tim Colbeck to work his Subaru magic at SaabNA are great steps in the right direction.
    Victor and I are both Dutch and inflating his halo would be quite UnDutchable. But I have to state the obvious; without Victor Saab would be dead for more than a year already and now for the second time he has pulled a rabbit (or rather a Vlaamse reus) out of his hat with the new investing deals. A truly remarkable person!

    • Your point about the sales numbers is correct but I believe you took Tim Colbeck’s quote out of the original context. Tim was responding to a question regarding what got him to move over to Saab and Victor keeping his word relates to the specific items Victor told Tim.

    • He actually said something about the money being moved, etc. It was related to the deals. But those are things that Victor had direct control and negotiations with…sales, not so much. The biggest mistake they made was publicly releasing targeted sales goals for 2010-11, if there was any way (or is) to give ranges and then explain expected responses including new share issues, partnerships, loans, etc. ahead of time, this situation could have been avoided. That was the critical mistake, and perhaps the suppliers would still have had credibility in the business plan if that grounded explanation was provided. As always Gerrit, you give me nothing to disagree with. Victor’s optimism is crucial, but it’s good to see him learning when it’s appropriate to temper it.

    • Yeah, looks like I took Tim’s remark out of its context in the interview. Like a good politician I’ll just claim that I took it to a broader context to further the cause. As far as giving projected sales numbers, that’s a lose-lose situation. Right now Saab ends up with egg on their face because the expectations were set too high. If they would have given lower numbers everyone would have said that they were too low to provide viability.

  15. From Automotive News:

    A quote attributed to Muller: “In China “you can get a $10,000 SUV with air conditioning and electric windows, everything that was ever invented for a car. Do you really worry about a five-star (crash rating)? They look good,” he said.”

    I have neither a face nor a palm big enough to convey the proper emotion that quote generates. Where are his handlers?

    And where was the coverage of this statement from this blog?

    • “If they make the proper cars, can you image how much simpler it will be to push product through the distribution network that is already there? It is like a railway network that is already there.”

      Mike,
      If we’re going to quote the five-star crash rating quote, is it not fair to quote this one that was said first in the article? From what I understand and someone can correct me if they’d like, but these possible cars would not be Saab labelled cars, kind of like Saturn Saab dealer of the past and I think reading what he said, that a $10,000 non Saab car with a crash rating less then 5 stars would not be a big deal to most people buying a car like that. People buy non Saab cars with crash ratings of 4 stars all day everyday. Let’s not be so ready to jump all over this and think that he’s saying ” can you imagine if we took a piece of junk Chinese car and sold it as a Saab, it would be so easy” I don’t think we have to worry about anything like that.

      • Right, he makes the comment about “If they make proper cars…” then cuts off that premise at the knees with a quote that essentially says “Who cares about safety…They’re cheap!” I literally almost spit out my coffee at that one.

        Saab doesn’t want to be mentioned anywhere in the same breath as anything that’s considered unsafe and cheap, even if it’s not Saab branded. He’s talking about using the US dealer network to peddle cheap Chinese cars. ..

        (BTW, the Saturn Vue got five stars…..) 😉

        • (BTW, the Saturn Vue got five stars…..)

          I know, we sold them and a lot of them which is why we’re excited about the 9-4X. Mike, I don’t know a lot of Saab dealers that would be totally apposed to selling another brand in their showroom if it meant more volume (volume helps keep your parts and service departments busy). I don’t think also that having another brand being available through the Saab network would tarnish Saab. Do you really think he would allow the Saab network to sell the worst cars possible and would it be such a bad thing to not have 5 star rating on “B” brand car? Do we know their crash ratings on what they sell now? We must stress that he never said they would be branded as Saab, did he?

    • Mike, of what I’ve heard from the people in the room, that wasn’t the full conversation, and Rick’s quote of Victor was incomplete. It’s thus gotten a slew of bad press, which is why I wrote this whole article in the first place, to stem sloppy journalism from ruining Victor’s intent. Perhaps that whole section of the article flew over your head, maybe I wasn’t explicit enough, my bad. You’ll notice that the piece you link to is the foundation of this whole article (and I quoted it extensively). Drawing a conclusion between a statement about consumers wanting cheap new cars that look good and whether or not Saab would be willing to sell them along side their own models wasn’t what most people in the room took away from the statement, more that sooner or later China will come here and that business model may just be compelling enough to work. It’s why he followed up with the statement that if Saab were to find a Chinese partner with the right strategy that aligned with its interests, they’re willing to act.
      To infer that Victor is dumb enough to want to sell an unsafe Chinese crapmobile alongside Saabs means you actually believe that he could be that stupid. He’s not, and if you read the article above you’ll see that. It’s amazing what a twist of a quote or lack of follow up questions can do to twist someone’s words. Hopefully this got the point home to you Mike. Victor’s not an idiot.

      • Jeff, that section of the article didn’t fly over my head, but what I must have missed was the rationale for selectively omitting a pivotal quote, despite quoting extensively from the piece from which it came.

        That’s the kind of subjective, cherry-picking journalism that you’re rightly railing against, but you’re doing it here.

        The point is moot now, but c’mon…

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