Bankruptcy: Saab, GM and the Banks

There’s an interesting article/blog over at Forbes

The author, John Tamny, writes that the United States government feared that jobs would disappear if they allowed the auto-makers and banks in the United States to go into bankruptcy. So the United States government stepped in with bailout packages.

Tamny then goes on to look at Saab and how they dispelled the myth that bankruptcy means that the jobs will disappear. Saab went into the Swedish equivalent of Chapter 11 bankruptcy and came out the other side at its “market clearing level”. He then goes on to outline bankruptcy as a positive, and companies come out of it with better management practices ready to succeed.

Saab’s story is a reminder that as opposed to something we should fear, bankruptcy often is what ensures the perpetuation of things we like. Saab survived bankruptcy and lived to tell the story, and it’s time we apply the lessons of Saab to other corporate entities living off of the money of others.

Feel free to pop over and read for yourselves.
http://blogs.forbes.com/johntamny/2011/03/20/bailouts-bankruptcy-and-the-revival-of-saab-automobile/

Brendan

The story behind the Detroit bankruptcies

The Detroit News has published a long, long story today about the bankruptcies of GM and Chrysler.
For those of you who checked in day to day, watching and wondering what would happen to Saab and its corporate parent, this is a great reminder of the times we all went through.
It’s amazing to read some of the close calls that were made and some of the things were done and said behind the scenes.
For example:

  • Chrysler were incredibly close to dying. The auto task force was split 4-4 on whether to save the company or ditch it. “None of us were brave enough,” Rattner said. “We just said to ourselves, ‘That’s 300,000 jobs in one day, when you have an alternative that’s not stupid.”
  • GM quite possibly would have taken over Chrysler if more Chrysler jobs were in the US. The task force discovered that allowing that merger would have been cheaper and saved more jobs, but those jobs would have mostly been in Canada. They also found this out too late in the piece, so the merge with Fiat went ahead with a merger with GM held as a fallback option.
  • GM’s financial chief claimed their complex accounting system wouldn’t allow them to exit bankruptcy in the timeframe the task force wanted. His proposed delays would have cost as much as one billion dollars. One of the taskforce members wasn’t impressed, and said “I can’t think of a problem in the world I can’t solve for a $1 billion.” They got it done on time.

It’s a very interesting read and highly recommended.
——
One interesting side note…..
It does mention the offloading of Saab, Hummer, Saturn and Pontiac, but there’s no mention of the sale of Opel. I’ve always had the impression that this was part of the undertaking GM gave as a condition for assistance, but perhaps it wasn’t. That would go a long way to explaining why they could about-face they way they did.

GM Board meeting the next two days

Bloomberg report that the new GM board are getting for the first time in the normal course of business since exiting bankruptcy.

Aug. 3 (Bloomberg) — General Motors Co.’s 13-member board, overhauled with 7 new directors after bankruptcy, will review bids for the Opel brand as part of its first meeting beginning today, people familiar with the planning said.
The two-day gathering in Detroit includes a discussion of asset sales, committee assignments and company goals, said the people, who asked not to be identified because the talks are private. Directors also will receive a product overview at GM’s technical center and test-drive vehicles, the people said.

The probably won’t be test driving the new Saab 9-5 in that tranche of new vehicles, but here’s to hoping that Saab is one of the asset sales they get around to talking about.
With GM out of bankruptcy and the Swedish summer holiday coming to a halt, things need to get moving. Is it just me, or have we all been in this state of suspended animation way too long?
If you see a bunch of Koenigsegg executives and lawyers hanging around in Motor City, say hi to them for me and plead with them to get a move on, eh?

GM and Saab Wednesday snippets

I haven’t covered GM much at all in the last few weeks. The less written about them the better as far as I’m concerned.
But does their recent backflipping on several things reek to anyone else?
Leading up to bankruptcy they were as contrite as a swagger-driven company could be. Yes sir, no sir, three bags full, sir. Want us to change the old guard? Yessir! Our went Wagoner and Bob Lutz announced his pending retirement as well.
Then the very same day they emerge from bankruptcy proceedings as “New GM”, Lutz reverses his decision to retire and is retained as head of marketing.
Leading up to bankruptcy they were all about small cars and Volt Volt Volt. Now they’re out relative danger, they’re talking about keeping the RWD Commodore/G8 and talking up the Chevy Camaro like it’s an automotive god.
It’s salesmanship at its best and worst all at the same time. I wish them well, but I really can’t wait for Saab to separate from this crew.
——
Automotive News report that RHJ International have put a figure on their bid for Opel, at around 300 million Euros in equity plus a whole heap in state guaranteed loans.
Magna is still the frontrunner, though, and I’ll be very surprised if Opel goes elsewhere. Talks with RHJ are nothing more than a sideshow.
——
The mainstream automotive press has been given access to the 2010 Saab 9-5. The press must be preparing their reports for upcoming editions. These are real, photographable versions of the car rather than the test mules we’ve been seeing. The cars were handbuilt in Russelsheim and after doing their initial rounds for the cameras at press events and motorshows, they’ll most likely be used for crash testing or sent to the crusher.
The press are also having a chat with Saab people whilst they’re there and the results are starting to pop up in the press.
Unfortunately, I can’t get the links to work at the moment (not even the front pages of these sites will show up on my computer right now), but Whatcar and Car Magazine, both from the UK, should both have stories up there at the moment or in the next day or so.
Obviously, we’ll have to wait a little longer to see the photos, but hopefully the stories will give a good read.
——
The latest info coming through on the Saab 9-3 is that it’s due to get another facelift for the 2011 model year.
This will not mean much in terms of exterior changes as I’m led to believe that the main focus of the facelift will be the interior.
And it’ll be most welcome.
The changes will most likely be to bring the car into line with the new Saab 9-5 and 9-4x that should be out by then.
——
The NY Times keeps up some reporting pressure on JD Power over those Initial Quality Surveys.
Last report, we read how the Mini fared badly but sells incredibly well. The contrast was due to customer perceptions of initial quality being turned around by actual quality once they’d got used to the car.
Read: the customer isn’t always right. Sometimes the customer is an ass.
This time, the NYT is focusing on the inclusion of “brake dust” on the JD Power survey.
——
A link was placed in comments by Gunnar and emailed to me by Mike L.
Nice.
TurboXcoupe.jpg

GM to exit Chapter 11 – no word about Saab

UPDATE at the bottom

A US judge has approved the sale of GM’s good assets (sic) to the new GM, allowing them to exit bankruptcy proceedings a fair bit earlier than expected.
From the press release:

NEW YORK – General Motors achieved another milestone in its reinvention last night when Judge Robert E. Gerber of the U.S. Bankruptcy Court for the Southern District of New York approved the sale of substantially all of General Motors Corporation’s assets to NGMCO, Inc., an entity funded by the U.S. Department of the Treasury. In connection with the closing of the sale transaction, NGMCO, Inc. will change its name to General Motors Company and continue to operate under GM’s historic corporate and sub brands. The approval marks another step toward the launch of an independent new GM.
The new company will acquire GM’s strongest operations and will have a competitive operating cost structure, partly as a result of recent agreements with the United Auto Workers (UAW) and Canadian Auto Workers (CAW).
The new GM will have lower leverage and a stronger balance sheet, which when combined with a lower break-even point, will allow it to reduce its risk, operate profitably at much lower volume levels, and to reinvest in the business in the key areas of advanced technology and product development. GM’s subsidiaries outside the United States will be acquired by the new company and are expected to continue to operate without interruption.

That last sentence is interesting in that the press release doesn’t mention which subsidiaries will be acquired by the new company. We’re pretty sure Daewoo and Holden will be part of the new GM, but what of Opel and Saab? It’s assumed they’re part of the old GM, which according to Automotive News, is being liquidated.

Under the deal, ‘New GM’ will operate the best parts of the old company, including its Chevrolet and Cadillac brands, with a less expensive workforce, smaller dealer network, and much less debt. The rest of the company will be liquidated.

It’s an interesting aside – who’s selling Saab? New GM or old GM? It’s always been assumed it would be Old GM, but it’s not being liquidated and I assume all future dealings will be with new GM so maybe it’s going as part of the new deal?
Either way, Saab will be sold.
And that’s the news we’ll be waiting for later this week. Will Koenigsegg be able to sweet-talk the Swedish government into loan guarantees? Will there come a time in the next five days when GM are led to believe that their preferred partner can’t close the Saab transaction, forcing them to open the bidding up once again?
The game isn’t over yet, folks.
And geez it’s been nice to not talk about General Motors for a few weeks. A sign for the future.
——
UPDATE:
Just as I was finishing this post and hitting ‘save’, the following was posted in comments by Börjesson:

Göteborgs-Posten reports that SAAB surprisingly ended up in the “healthy” part of new GM.

So it seems the new-GM theory, above, is true.
Still to be sold, but it’s nice to beat the assumption that Saab was one their crappy assets.

Are Saab the biggest beneficiary of the Carpocalypse?

Consider the following:

  • Opel may end up part of a US/Canadian/Russian consortium
  • Volvo may well end up in Beijing
  • Porsche are going to need a bailout by Qatar
  • Saturn lives in name only.
  • Hummer has gone to an unknown machinery firm in China.
  • Many of Chrysler’s nameplates will disappear.
  • Pontiac is flat out dead (the last sign of life, the Vibe, was snuffed out today).

….and there’s probably more that I can’t think of as I write this.
Out of all the car companies being affected by the Carpocalypse (copyright, Jalopnik), could Saab be considered the biggest beneficiary?
It was a good article at Examiner.com that prompted this question.

……if Koenigsegg injects some of its own remarkable automotive insight and engineering prowess into Saab, then I truly believe we will see one of the greatest resurgences of intelligent and progressive automobile manufacturing of the 21st century.

I agree.
Of course, the big IF there is largely dependent upon Saab’s ability to turn their sales around with new models, and the Koenigsegg Group’s ability to invest in developing all-new models, particularly a new 9-3, in the future.
Saab grew an awesome reputation from the 60’s through the early 90’s, only to lose it to a large degree in the last 15 years (despite what were still some pretty good cars).
It’s not often that a company goes through that and had a chance to genuinely return to it’s geographical and technological roots.
Saab could well be the biggest automotive winner in this current crisis.

Confirmed: Penske buys Saturn

I’m not sure what they’re going to sell there when GM stop producing Saturn vehicles. Whatever they want, I guess.
Here’s the press release. Saab will be last to get GM’s sales attention. Imagine that.
——
Detroit — General Motors Corp. and Penske Automotive Group today confirmed details of a proposed transaction under which Penske would acquire the Saturn brand. If completed, the deal would save more than 350 dealerships and 13,000 jobs at Saturn and its retailers in the United States, and would preserve the customer-focused Saturn brand.
The proposed transaction is part of GM’s rebuilding efforts outlined in the viability plan that was submitted to the U.S. government earlier this year. Under the terms in the memorandum of understanding, Penske would obtain the rights to the brand as well as certain other Saturn assets. GM would continue production, on a contract basis, of the Saturn Aura, Vue and Outlook.
“This is the combination of two iconic teams: Saturn and Penske,” said Saturn general manager Jill Lajdziak. “GM had the vision to create Saturn and has the desire to see it succeed in the future.”
“Saturn has a passionate customer base and outstanding dealer network,” said Roger Penske, chairman of Penske Automotive Group. “For nearly 20 years Saturn has focused on treating the customer right. We share that philosophy, and we want to build on those strengths.”
Saturn began selling cars in 1990 and has sold more than 4 million vehicles. More than 80 percent of those vehicles are still in operation, according to data from R.L. Polk. Saturn has regularly scored among the industry leaders for non-luxury brands in customer satisfaction surveys.
“There has been a groundswell of support for Saturn, with our retailers and owners urging us to save the brand,” said Lajdziak. “We heard their call loud and clear, and it inspired us as we worked to secure Saturn’s future.”
The transaction is expected to close in the third quarter of this year and is subject to customary closing conditions and regulatory approvals. Financial terms of the agreement will not be disclosed at this time.

Burn Notice = cancelled

Saab had a product placement deal for a few years in the US television show, Burn Notice. I know a few people here were fans of the show, perhaps a little moreso because of the convertible that was often featured on it.
Apparently the new season started yesterday and as you might imagine – with virtually no SaabUSA any more, let alone an advertising budget – there was no sexy convertible being driven by the show’s leading lady, Fiona.
BurnNoticeSaab.jpg
Gripen gave me the update:

There was no mention of and no appearance by Fiona’s Saab 9-3 ‘vert.
Also, the only General Motors vehicle seen was the really old convertible Buick introduced in the last episode of last season (Michael Weston’s friend Sam drives it).
They showed the whole gang (Michael, Fiona, Sam, and a new guy who turned out to be bad) in Michael’s old Dodge Charger.
All the other vehicles (mostly bad guys’ vehicles, but also a service van the good guys used) were all Ford vehicles and the badging was prominently displayed.
At one point they showed a shot of the good guys’ van pulling right up to the camera and you can see the Ford oval directly in center of the screen but it was solid black and didn’t say “Ford”. I’m wondering if this was a stab by the show’s producers at GM.

Now, on to a burn notice of a different type.
For those who are interested, this is the letter GM dealers received last month to tell them that their dealership was not part of the new GM’s future.
One page of text. So many consequences.
Click to enlarge.
gmclosingletter.jpg
Thanks to you-know-who-you-are.

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