Keep Calm And Hold On Tight

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As you know, Saab’s owners and prospective buyers are feverishly working out details on a way to complete a deal to get the company back on sure footing. There are so many moving parts at the moment that the only reasonable thing we can ask for is that everyone brace themselves for an extremely bumpy week.

Two weeks ago I requested that everyone take a deep breath and relax for a few days as there wasn’t going to be any important news emerging for a few days. I took flack for it, but I’m still glad that I asked for it since it gave everyone a break to reflect and clear their heads. Today I’m asking for another deep breath, not because there won’t be any big news- quite the contrary. This week there will be volumes written about Saab, but not all of it will have a firm grasp on the real situation behind the scenes. There were times when our DNS server struggled with the incredible load placed upon it, and there may be moments where the site is slow to load. Not only are loyal readers checking the site, but international media, dealers, and even Saab employees themselves using SU as a check to be sure that there is a consistent message across the company. Be patient if the site loads slowly, even though the server has been upgraded, we’re dealing with monumental traffic.

Through all of this, we have been cautious to report about behind the scenes details out of concern that any small leak could blow up into a full blown flood.  There’s a reason you don’t see us guessing too much on here, or only posting certain articles. Our goal is to eliminate the noise and use the news coverage to give SU readers insight into what’s actually happening behind the scenes. As I read through most of the coverage of Saab over the weekend, I was pretty amazed at how completely uninformed most journalists and bloggers are about the company’s situation. The same can be said for our comments section, and while some theories are completely off the wall, others have been spot on accurate.

I volunteered to become a writer here earlier this year because I was wanted to be able to get closer to the company so I could promote a closer dialogue between the company and the drivers who love Saab. I felt at the time that the sale had seriously damaged Saab’s reputation and wanted to contribute to promoting the company to the greater public. Never did I imagine that we would be so tuned into every twist and turn in the management’s fight to save the company from liquidation. And yet, I feel more than ever that we have a responsibility not just to report the news but to cut through the clutter and report the real story. Swade did his best to calm the Saab masses during the GM sale to Spyker, and he clued us in through Djup Strup’s insight. We have tried to do the same in this situation, but we also owe it to all the players to give them space to craft the best deal for Saab.

What everyone needs to remember, critics especially, is that Victor Muller makes every single move for a reason- to protect Saab, himself, and SWAN shareholders. After all, that’s his fiduciary duty. Rather than nitpick every statement he makes or dissect every word of his statements, to truly understand his strategy one must zoom out to a macro level and analyze major events simultaneously. Add to that the fact that Victor is always prepared with a backup plan that he keeps tight to his chest. There’s a reason why he’s considered such a remarkable deal maker, he is able to think like Wayne Gretzky- positioning the company where he thinks the best deal will be. He purposely downplays expectations while working tirelessly behind the scenes to secure a solid result. There were times especially these past few weeks that obstacles have been placed in SWAN’s way, namely by Guy Lofalk, yet they have done their best to work with the conditions on the ground. Sadly, if only the Swedish government could end their preoccupation with trying to replace Saab’s management, and give them the protection they need long enough to move forward with a reasonable plan, they might finally see that SWAN has their country’s best interests at heart.

One consistent theme at the core of all the writers here is that we want Saab to succeed, to clear these hurdles, and finally have capable owners that can bear the fruit of all the plans Spyker put in place over the last year. What’s incredible is how at the beginning of the year, we were making predictions for Saab to sell over 70K vehicles this year, we sometimes forget that. Their business plan was never the problem, their liquidity and overhead has been the stumbling point. Before anyone suggests that they need billions of dollars to be able to move forward (at the advice of auto “experts” who are clueless about Saab’s actual asset sheet), remember that had they maintained the pace of the first few months of this year, they’d be very close to meeting their guidance and potentially being profitable by the end of next year. No doubt SWAN made mistakes, but they have learned precious lessons that will surely inform their cost reduction strategies going forward. Add to that they understand that whatever deal they strike needs to be strong enough to ensure proper liquidity, and that whoever they make a deal with is prepared to provide it in the long term.

We at SaabsUnited firmly believe in the potential for Saab going forward. We want to see the partnerships with BMW, Vicura, eAAM, ZF, Boston Power, GM and others continue and prove that the company can thrive independently through partnerships. The whole idea that Saab needs Chinese production to survive is contrived, and while it does offer opportunities for growth, it’s not an essential component that should determine the future of the company. Despite what Guy Lofalk or anyone else may say, Saab’s problem was never its business strategy, but its undercapitalization and liquidity. Rather than disrupting the process or throwing more road blocks in front of Saab, we implore the court, the government, and the stakeholders to clear the road for Saab to form the best deal for their own mutual interest. There will be a lot less fallout from a successful reconstruction than a failed one.

So as you read the coverage around the net, pay careful attention as much to what is said here as what isn’t. If there’s a story we’re not reporting, it’s not because we haven’t read it, but that we think it strays from the real story. We’ll be presenting you the most direct and reasoned coverage we can based on what we know and have known for some time. We simply ask that no matter what happens, everyone steers clear of panic. There are contingencies. Hold on tight, this is about to get very, very interesting.

with

35 thoughts on “Keep Calm And Hold On Tight”

    • I think a deal will be done, but probably not any of the deals we’ve seen so far. Saab is like a cat with nine lives and it still has a couple left.

  2. You are dead right about an interesting week ahead.

    As to VM doing everything for a reason, and keeping back up plans close to his chest….. Color me skeptical. Too many rabbits have come out of the hat and proven to be mirages up to this point.

      • This is why it would make sense to have back up plans and if VM didn’t, that would be when I would take issue with how he does things. This is when we get to see him shine, so lets sit back and wait to see what comes next.

  3. “We simply ask that no matter what happens, everyone steers clear of panic. ”

    Yeah right. People around here can’t seem to hold themselves together on a good day much less the bumpy ones like we are about to experience. I sincerely wish they would listen to you though. It would make everyone’s life easier.

    I very much appreciate your presence here at SU Jeff. Keep up the good work.

  6. I volunteered to become a writer here earlier this year because I was wanted to be able to get closer to the company so I could promote a closer dialogue between the company and the drivers who love Saab.

    So glad you did Jeff, as usual, very good read and thanks for providing details that you are allowed to share. Anyone that has followed any of your posts will know that when you report something, it’s always on good authority and from the horses mouth. I truly appreciate your ability to open doors and get answers.

  9. Best thing to do is get in your Saab and drive a long way: just enjoying the pleasure of experiencing this: over and over again.
    Come on VM and co-workers; beat “them” another time and then for good.

    • Which is a damn shame. The delays we have seen this past month were unacceptable, and I only hope that SWAN and associated teams can implement a plan as soon as possible. There’s not much we can do but watch now.

  11. Quick analysis of the situation.

    GM would never directly accept to let YP use the licenses for use in China due to their interest there (now a larger market than US). They had two choices, to say No before or after NDRC. As GM is big in China, they have probable some contacts within NDRC and they might have got signals that NDRC is positive to YP’s plans. As such, they choose to go out before NDRC and say No, to put pressure on NDRC to also say No.

    If GM would have expected NDRC to say Yes, they would not have need to make a statement.

    What happens now is negotiations. GM is selling their licenses on their technical platform to their Chinese partners for X$ each. Probably SAAB is already paying more for their licenses. GM could be willing to sell their licenses to YP for a sum > X$ and probably some other restrictions (like that YP cannot make cars in China and sell outside of China).

    The YP / SAAB cars will always be more expensive than the GM made ones in China and will not really threaten the GM interests in China. By allowing YP / SAAB to use their technical platform, GM will loose some percentage of their sales, but that will also happen to their direct competitors. Say that YP / SAAB sells 50 000 cars in China and because of this 12 500 less GM cars are sold (with the rest 37 500 spread out on the competitors). Then GM will earn an extra (50 000* X$ * P – 12 500*X$), where P > 1 is the extra percentage that YP / SAAB pays for the licens. This is a win-win for GM in the end and if YP / SAAB and GM can agree on the size of P, then I cannot see that the deal will fall through.

    • Makes perfect sense, however it seems GM’s main priority is protecting their IP from unauthorized copy and distribution around China. It’s not just that they’re worried about the sales that come from the new Youngman plant in China that builds using their old tech, that’s one thing. It’s about the fact that Saab’s current and future plans call for the use of GM technology that is years ahead of anything in China outside of SGM, and they can’t take the risk that a company who has an extremely spotty record when it comes to protecting IP and being honest about the content of their cars, let alone their intentions in this sale. For years, Youngman has slapped “Engineered by Lotus” badges on the back of many of its compact cars, even though very little of the Malaysian sourced Proton models, which are the parent company, own Lotus.

      They just wanted the brand cachet. Perhaps GM took note of the fact that Youngman even went to the trouble of trademarking the term Lianhua (Lotus) in China thus blocking the actual Lotus from being able to use the term. Either way, it’s pretty clear that GM isn’t playing ball with them. When they said, “This statement is final,” I take them at their word. From all the signs I gather having spoken with several people close to them, GM is just playing out what Youngman might do with actual trade secrets, and they are now having serious reservations.

      • Youngman need better graphic designers… the “engineered by” and the “LOTUS” are not even the same length (but are close)… sloppy + speaks volumes imho…

        James…

      • Jeff, that’s an extremely astute take on the situation, noting both the risks and challenges of protecting IP in a marketplace that willfully disregards common international IP agreements.

    • I would say that, contrary to what you write in your second paragraph, if GM knew NDRC was about to say ‘no’ then they wouldn’t have had to make this statement. The need for some extra pressure on NDRC would only arise if they knew that NDRC is about to say ‘yes’. And all the signals indicate that NDRC would approve the YPD deal if YPD can acquire 100% of Saab shares.

      A typo perhaps? Because what you say in your first paragraph is correct from a logical point of view.

      Ivo

  12. 1. I can’t believe the Oct 28th deal was just for “buying more time”;

    2. Liquidity comes with reason, improper busisness strategy = poor profitability = underinvestment;

    3. Chinese production is not essential? Have a look at German, and go back to the 2nd point.

    • No replacement for Swade, he’s a hero. But thanks. There’s a serious test for all partners ahead, and the more time that passes, the more serious it gets.

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