Life goes on after the termination notice

Yesterday afternoon several news sites on the web featured stories about Saab/Svan still being in talks with Pang Da and Youngman. This is not a big surprise. Some deals that the parties have agreed on earlier are still standing so there is definetely need for further talks, even if not on the highest level. From ttela.se:

“There are ongoing discussions between for example lawyers to see what solutions exist. I will personally not be there until the conditions exist for a deal to really take place,” said Victor Muller to news agency TT on Monday afternoon.

On Bloomberg Businessweek we can see quotes fron Pang Da

“All plans that are beneficial for Saab should be discussed during the reorganization,” Pang Qinghua, chairman of Pang Da, China’s biggest auto dealer by market value, said in a telephone interview. “We have been in touch after the weekend announcement and continue to look at new proposals.”

and Youngman:

“We would still like to continue helping Saab, directly providing short-term and long-term funding to Saab by way of other investment schemes,” Youngman Lotus said in a statement today, adding that it regretted Saab’s “unilateral” decision.

No surprise in that.

On a personal note I can say that the indications we get about North Street Capital are quite promising and I have high hopes in them not only to provide the bridge financing but also a further partnership. Rest assured that behind the scenes there are a lot of things going on right now. Another piece from the ttela.se article:

“It is not clear what the next step is right now,” the company’s Ms. Gustav’s said this morning, and that in the current situation there is no evidence that the promised investment from North Street Capital would not be going on. The way the news of the U.S. investment came on the last Thursday might otherwise be interpreted as also was part of the negotiation game with Chinese companies.

ADDITION FROM JEFF: NSC was not a part of a negotiation ploy, they’ve been working on this deal for some time now and are there to make sure Saab has an exit strategy an avoids bankruptcy.

And of course the automotive analysts also jump the train now (from Bloomberg Businessweek again):

“Failure of the Saab deal may be a good thing because Pang Da and Youngman can’t save Saab no matter how much they invest,” John Zeng,a Shanghai-based analyst at J.D. Power & Associates, said in a telephone interview. “Only a big automaker has the means to revive Saab, which is not only debt-ridden but also having problems on their branding and technologies.”

I tend to disagree with that, especially the last part. There are quite a few state of the art technologies like eAAM in Saab. I would not want to see Saab under the roof of a big automaker again as the benefit of independence is the ability to choose different partners when it comes to sourcing technologies (see the BMW engine agreement) When it comes to saving the company what is really needed is a stable partner with deep pockets that can finance the process of building up the company over three to five years. At best, someone like Tata is to Jaguar/Land rover, someone who is providing financing but leaves the strategy of the brand to those who work there as they should know it.

Regardless of a possible new partner Pang Da and Youngman can still be in the picture as partners for distribution and manufacturing in China as this is something that Saab definetely needs. I would imagine that Pang Da would like to get the cars they already paid for. The development of a sub brand for China as it has been mentioned before may be an additional income for Saab. There just can’t be enough things to make money on for Saab.

In the meantime we will again be forced to join the rollercoaster ride as passengers. But as the court decision about reorganization will already be this week I expect many things to happen within the next few days. No need to panic on the home stretch. Just wait and see.

22 thoughts on “Life goes on after the termination notice”

  1. And of course the automotive analysts also jump the train now (from Bloomberg Businessweek again):

    “Failure of the Saab deal may be a good thing because Pang Da and Youngman can’t save Saab no matter how much they invest,” John Zeng a Shanghai-based analyst at J.D. Power & Associates, said in a telephone interview. “Only a big automaker has the means to revive Saab, which is not only debt-ridden but also having problems on their branding and technologies.”

    I tend to disagree with that, especially the last part. There are quite a few state of the art technologies like eAAM in Saab. […]

    I agree, Till. Debt-ridden? There are debts, yes. But I agree with Steven, this is a liquidity crisis. Depending on where a company is in a cycle there might be more or less debts, but always some; Saab brought home production, created routines to work as an independent manufacturer, worked on different projects for new models and technology. They where in a vulnerable position when all this happened this spring.

    Anyhow, there seems to be ongoing discussions; on different levels at different places, which is good.

  2. I agree that Saab has technology others may be interested in.

    I don’t agree with a big automaker as a dissaster for Saab. If it is the right automaker there would be nothing to be scared of. The VW group as owner would just rebrand Skoda as a Saab in the same way they rebrand Skoda to be an Audi today by adding some bling bling.

    BMW would probably understand the value of independence but also the value of sharing some components.

    I still think BMW would be great owner even if I personally never would buy a BMW.

      • That is true but Saab are experts on FWD and by using Saab’s expertise they can build a better FWD platform that also can be used in future Saabs (Phoeinx will not be around forever).

        • The would be quite a few synergies. Did you see what is in the new 328i? A 4-banger turbo with 245 hp. I could imagine that Saab and BMW keep cooperating in the future but I don’t see any ownership thing.

      • Not really overlap, as apparently (from what I read in a car mag) BMW’s FWD models will be something like an MPV (think Mercebes B-Class but hopefully without the B-Class ugliness) and a SUV-type vehicle (a BMW badge and design on top of the Countryman platform).

  3. Assuming that we haven’t heard anything about finalizing paperwork with North Street Capital yesterday, this deal is not going forward either?

    “The object of the parties is to finalize documentation no later than Monday October 24, 2011 with subsequent funding within two days thereof. “

    • At this very delicate point time, this week, with upcoming hearing etc. I don’t think you will hear news at every step, until something more substantial is presented.

      The press release, from Thursday 20 October, said it was the “object of the parties is to finalize documentation”; things also happened during the weekend, as you might know, things might be delayed just slightly due to several ongoing processes; people can’t be everywhere at the same time, so why do you have to nitpick about that; now?

  4. i disagree with John Zeng.

    Only a big automaker has the means to revive Saab

    Totally wrong, how many automakers bigger than GM?

    and Skoda, if you sit inside, without look at logo on the wheel, and look around, it’s very hard to find a different than mass VM cars. Skoda does not have a soul.

    and the engine , think about 2.8T in 9-5 and 9-4x, GM just don’t build it soon. buy engine from BMW because SAAB just no choice, customer don’t want buy a high price car with a cheap engine. looks so cheap.
    That is way 9-5 can’t sell a big volume, with cheap components, it’s impossible.

    and e-AAM, if SAAB has enough resource, that should be used by SAAB only, not share to others. Will BMW share their most advanced technology to others? they sell engine to SAAB, because SAAB is too small, if SAAB grown up, be more stronger, they will cut the deal.

    SAAB need it’s own engine, not build by GM or BMW, but build by SAAB. All the key technology also. like Volvo doing now.

    Jagur/Land Rover already submit a application to NDRC, they want partner with Chery Auto from Anhui Province, the producing cars in china. and British Gov had a agreement with china gov, Next year’s quota of import of Jagur/Land Rover is 40,000 cars.

    • Hold your horses there Fido. There is nothing wrong with 2.8T and it’s most certainly not made of cheap parts.
      Personally I think they should also have something above that in the future but nobody knows the full story of the GM’s power restrictions for Saab. Which BTW is totally insane!

      • I think only thing make SAAB unique is design.
        e-AAM or e-power or phoenix’s modular platform will not be SAAB’s unique technology, BMW/VM/Volvo already have the similar technology or developing now.

        • Fido, no it is not, it is the ensemble, the overall combination of design, functionality, safety and advanced technologies, that is unique. The 2.8l is very good, not at all cheap, has been refined by Saab over time. There are now – few – better engines in the marketplace, above all with respect to fuel efficiency, for example the new announced future BMW engines. They will run with 2-3l/100km less. Against the rest of the crowd, the 2.8 is still very much competitive. What Saab really lacks, is a smooth, powerful 6-cylinder Diesel for the European market.
          The current 4-wheel drive is the best or among the best in the marketplace, the eAAM surely one step ahead of competition, as it allows for proper torque vectoring and significant reduction in fuel consumption. Electric drive Saab is also top. The biggest weakness was interior, but apparently both for the 9-5 and 9-4x it has been substantially improved again for planned 2012 model year. Safety wise there is no competition, as I can tell you from talks with specialized multi-brand body shops.

          • i mean SAAB must develop its own engine. the supply can be controlled by GM or BMW.

            No rival will offer you their best components with right price.

          • @fido

            >i mean SAAB must develop its own engine. the supply can be controlled by GM or BMW.

            An entire engine isn’t practical. It would be easy enough for SAAB to do what they did with the GM engine; their own intake and exhaust designs using proven off-the-shelf components (turbochargers, etc.) and whether it’s from BMW or GM, or even VW, who cares, as long as the reliability and availability are there?

            As far as “supply controlled by GM” – GM really can’t prevent anyone from buying their engines – heck, even if GM were to attempt to put a stop to it, a buyer could just go through a third-party, even if it’s someone like Summit Racing to buy long blocks. The only thing GM could really do is refuse preferred discounts.

            Going to ramble a little as I toss down some thoughts about the 2.8T:

            Also, as far as the 2.8L V6 goes – it’s a good engine, but not the be-all-end-all in the small performance engine world. Economy and performance are derived more from the cylinder head and intake design than block design, and to a great extent engine management (ECU programming). The block just needs to be fairly low friction without sacrificing compression, and be reliable to hold together regardless of what Joe Sixpack might put it through on the street. A bonus would be a timing chain rather than the retarded timing belt in the 2.8T, for durability – especially important in an interference engine (i.e., an “interference engine” is one where if the timing belt snaps, the valves will kiss the pistons and kill the engine). When you consider the timing belt, the 2.8T is kind of a crappy choice for a performance vehicle, actually.

            I do think dropping the 2.8T from the 9-3 was a big mistake, but that’s because performance from the 2.0T (with the stock programming) is abysmal, at least compared to SAAB’s purported competition.

      • but nobody knows the full story of the GM’s power restrictions for Saab.

        I always wondered how a normally aspirated 3-litre V6 could have more hp in an Opel/Vauxhall Omega than turbocharged in a Saab 9-5. I figured that the torque would differ (which I’m certain it does) and that Saab somehow presented the car with engine figures a little on the low side. Something that also Porsche does. 🙂
        But apparently it was GM that ordered Saab not to surpass Opel. Why would they do that???? When the whole point of buying Saab was to get a european “premium brand”, something that Opel never managed. Probably “thanks” to the same GM beancounters.

        Does anybody know?

  5. Most important thing is to get sufficient liquidity immediately in order to survive likely end of reconstruction. Then complex negotiations with the Chinese to maintain the JV, getting in a new shareholder with financial muscle, in order to restart production. Then look for a long term solution, that makes sense business wise.

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