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Koenigsegg 'no wet dream' for Saab: expert

AFP/The Local · 12 Jun 2009, 10:48

Published: 12 Jun 2009 10:48 GMT+02:00

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“It sounds like a joke,” writes Aftonbladet’s automotive reporter Robert Collin.

Collin admits that 36-year-old Christian von Koenigsegg, who in 1994 founded the company which makes about twenty €1 million ($1.4 million) deluxe sports cars a year, is a man of many talents.

However, the seasoned observer of the Swedish auto world doubts that the entrepreneur has the ability to take on the challenge of managing Saab.

“I don’t think Saab will survive,” he continues.

Collin’s comments come following a report by Sveriges Television (SVT) on Thursday that luxury sports car maker Koenigsegg will buy Saab Automobile from US giant General Motors with the backing of Norwegian investors.

The buyers have signed a letter of intention to buy Saab, SVT said on its website, citing anonymous sources and naming Koenigsegg, adding that the negotiations could last for months.

“We are getting close to a deal done, but there are some final steps to be taken,” a source close to the matter told AFP, but would not confirm the identity of the leading bidder.

Both Saab and its parent company GM declined comment on the report.

According to Lasse Svärd with Dagens Nyheter (DN), the marriage of Saab and Koenigsegg is a positive development for Saab, at least in the short-term, as it signals that things are finally moving forward for the troubled Swedish brand after months of uncertainty.

“Saab needs to quickly find some peace and quiet with a far-sighted owner that can supply the company with the resources to help it create new models,” he told DN.

But Svärd stopped short of embracing Koenigsegg as an ideal owner for Saab, which owes 9.7 billion kronor ($1.3 billion) to GM -- its largest individual creditor -- as well as 347 million kronor to the Swedish government. Other creditors are owed 647 million kronor.

“It’s really a hard question to answer. Spontaneously, my answer is no, at least it’s hard to see how it will all work,” he said when asked if the exclusive sportscar manufacturer was the right partner to give Saab the lift it needs.

Saab has not officially named its suitors but British daily The Financial Times had previously named Koenigsegg plus two other bidders, the US investment firms Renco and Merbanco.

Media reports had also said Italy's Fiat was keen on buying Saab, but observers say such a move is now unlikely because of Fiat's failure to acquire GM's other European brand Opel.

Opel and its sister marque, Vauxhall, share a lot of technology with Saab.

The Saab automaker sold 93,000 cars worldwide in 2008, according to its website.

Expressen’s automotive reporter Jan-Erik Berggren was more direct in expressing his concerns about Koenigsegg’s suitability for Saab, despite the professed excitement from Saab enthusiasts, who for months have expressed their keenness for a Saab- Koenigsegg tie-up on blogs and internet forums.

Story continues below…

“For them, Koenigsegg is like a wet dream,” writes Berggren.

“But it’s time for them to wake up.”

According to Berggren, it’s “totally unrealistic” that a company with a turnover of around 100 million kronor per year ($13 million) could pull off a deal expected to be worth 5 to 10 billion kronor, no matter how much money the group of Norwegian investors rumoured to be behind the deal have in their pockets.

However, if the two companies can survive their first five or six years together, Berggren admitted that may be enough to prove the deal can succeed in the long-term as well.

Saab Automobile employs about 3,400 people in Sweden. Including suppliers, some 15,000 jobs in the country are believed to be at risk if the company were to disappear.

AFP/The Local (news@thelocal.se)

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Your comments about this article

11:29 June 12, 2009 by Nemesis
I hope that when Koenigsegg proves those journalists wrong, that they ban those journalists from there trade fairs, refuse to let them do car trials and generally freeze them out for thinking that only Americans can run a car company.
13:12 June 12, 2009 by Jan M
A more balanced view is that clearly Koenigsegg on its own does not have the resources to buy Saab and turn it round. Everything hinges on how much money and patience the anonymous 'Norwegian investors' have available. Assuming they have 9-10+ billion kronor to invest, why isn't this story about a Norwegian takeover of the Swedish car industry and a shift in Nordic power?
14:20 June 12, 2009 by Grippen
Great news! Finally SAAB again will have technology aware CEO. So there is a chance for SAAB to get back to its source and start building innovative cars rather than just assembling tweaked up Opels. The thing is that understanding the difference between ROI and TCO is not enough to make great cars.
15:22 June 12, 2009 by JosefEugen
Germany is managing the repurchase of Opel better. They understand that GM must be a stakeholder and that they must rule out certain buyers because if a competitor bought Opel (e.g., FIAT), GM would need to withhold essential technology and leave only paint on the walls. This is crucial because we are now passing into one of the most intensely technical phases in automotive history where alternative energy technology and safety engineering will largely decide the winners. The new SAAB without a big partner would have too much to reinvent to be cost effective. Then there is SAAB's quality problem. Koenigsegg would be buying a company whose cars are near the bottom of J.D Powers quality ranking. Here too SAAB needs a big partner since quality must be designed in and this is expensive. GM now has two cars in the top three which proves they know how. Last year SAAB improved too so maybe they can continue to improve.
16:25 June 12, 2009 by mkvgtired
I wish Koenigsegg the best. The owner of the company is a straight shooter and refuses to compromise on quality. I think he is exactly what Saab needs.
16:41 June 12, 2009 by Bumblebeetuna
That would rock if Koenigsegg bought Saab. Screw Fiat and GM! Swede and Norwegian ran companies would probably kick off a new world order of cars. Based on what comes out of their countries now. 2 thumbs up!
17:33 June 12, 2009 by spy
I am sure Saab are rejoicing that there has been so much interest in the company and that they could be linked to an exciting supercar manufacturer.

We do not yet know who is behind the bid - regardless of the names reported there is likely to be some serious investors involved.

I just feel sorry for Volvo and hope they can end up with a cool new owner - a Chinese company would be difficult to get excited about.
18:07 June 12, 2009 by RhodyDave
The enthusiasts should take a cold shower, the best preventative for wet dreams. Saab's problem is that with a WW volume of 93K units, they are cannot be competitive. I just bought a new '08 9-3 Aero XWD, after extensive shopping. It's a thrilling car (my last was a Volvo), but it's sticker price was US$42K, the same price point as a the small Mercedes and the mid-size Bimmers. I got the car at an $11K discount, comparable to a Toyota RAV4. If there weren't a Saab fire sale going on in the US now, I probably would have bought an Acura, a much safer bet. As a new owner, I hope Koenigsegg succeeds, and I'm certainly glad the private equity guys didn't win, but I'm with the skeptics.
18:21 June 12, 2009 by spy

Scale is interesting but GM, FORD, Chrysler, Toyota etc. aren't exactly profitable are they?

In my opinion the key is new product, short life-cycles, a wider range and a low break-even point. All could be acheived with investment.
18:44 June 12, 2009 by Gustav- Fælbönnran
Depends on what you mean by "a wider range", though, doesn't it? Saab is at its best when it is a niche vehicle maker. It will never compete with Toyota et al in terms of making vehicles for all climates and driving situations.

If you mean Saab should offer more vehicles within its particular niche, I think that we are in agreement. If you are saying let's make Saab minivans and so forth, I would have to disagree.

Saab needs to get back to doing one thing, and try to do that one thing better than anyone else.
19:06 June 12, 2009 by spy
I mean more cars in more segments.

Currently they have a 9-3, 9-5 and Convertible. If they updated the current models and added a 9-1 and 9-4 it would have a wider portfolio which would attract (and keep) more people within the brand.

And the cream of the crop would be a supercar to which would be . . . Mmmm
19:10 June 12, 2009 by High Priestess Kang - Slut
Because the 9-2 and the 9-7 were resounding successes?

In a fantasy world, I would love to see some of the concept vehicles go into production. In reality, I'll stick with my 9-3 (while cursing my husband who needs something sportier than the 9-5). The SAABuru and the Chevy/SAAB were total flops.
19:37 June 12, 2009 by High Priestess Kang - Slut
Bastard! You made kitteh cry!!!

(I have been in love with the Sonett since I was approximately four years old)
19:56 June 12, 2009 by Gustav- Fælbönnran
This is as close as I ever got. Never should have parted with my trusty 96.
20:01 June 12, 2009 by High Priestess Kang - Slut
I'm weeping with you.
20:09 June 12, 2009 by spy
High Priestess KS

I think that is the point: A wider range of proper Saabs. Re-badged goods do not 'cut it' with a sophisticated consumer.
20:14 June 12, 2009 by High Priestess Kang - Slut
Could be. For now, however, someone needs to work on ironing out the kinks in the 9-3 and updating the 9-5 (which, for all intents purposes) has been the same car for how many years, exactly?
20:23 June 12, 2009 by spy
I agree.

62 years of Saab 32 of the turbo and 13 of the 9-5.
21:04 June 12, 2009 by Jeff Nelson
I suppose Saab would have gone out of business quite a few years ago if it hadn't been for GM.

I am sure that when the takeover was complete, most of us thought that Saab would go from strength to strength and had no idea that GM would stuff Saab in a drawer and leave it to degenerate over all these years.

Despite little development, the 9.3 still just about holds its own but a fresh new design is needed. No degree needed to work that out!!

As some of you have already mentioned, a range of models was and is needed to appeal to a much wider customer base.

In my opinion, GM made a major mistake by not producing one particular model which would have appealed to many and grown the Saab customer base.

The problem as I see it, is that a small car producer however good, cannot fund the development of a new range of new Saab designs. Where will the money come from.

Is the future of Saab now to become a much smaller niche car producer.

I relly hope not!
21:12 June 12, 2009 by Gustav- Fælbönnran

Did you ever pitch for the Yankees? If so, you had one of the best sliders that I have ever seen.
21:20 June 12, 2009 by Jeff Nelson
I always thought I had kept it pretty well covered!!!. Well done for spotting it.


For 'relly' read 'really'

05:26 June 13, 2009 by RhodyDave
Well, it is a conundrum, isn't it. I think that Chrysler & GM have other problems. Ford was actually profitable before the economic meltdown. No, I don't think Saab can offer vehicles in every segment. Yes, I think Saab will always be a niche player. Even Volvo has more lines and wider appeal. That said, I believe that Saab needs to be plugged in - organizationally or via alliances - with other, bigger players to succeed. I think the story of the GM / Holden V6 - to which Saab engineers contributed - is a good example. The one in my Aero is a great thing, and BTW, uniquely Saab in the end. Other recent innovations - XWD, for example - were also outsourced, but Saab's engineering team is responsible for the overall personality and performance. Sorry to run on so.
10:03 June 13, 2009 by skane refugee
Seems to me that SAABs future (if there is a future beyond engineering and design consultancy and spare parts manufacture) is either to expand production and sales to become a stand-alone volume producer or to shrink to a small niche producer

Volvo needs 500k to 600k production and sales per year to break even with the support of Fords global sales/marketing network and purchasing power ... SAAB would need at least this level of sales to make money as a small 'volume' producer

Saabs pre-crisis sales were nowhere near this number and to triple SAABs sales in short order in this market is IMHO a total pipe dream even if good new models were immediately launched

The fact that a niche producer making custom built cars in very low volumes is bidding shows that the future is probably a dramatic shrinking of SAABs production and sales ...

But at least this way there could be new innovative SAABs appearing on the market for years to come (even if only a handfull per month) ... but the real payoff for Koenigsegg (as for any buyer) is the lucrative spares business supporting existing SAAB owners

But I would have thought that the future is bleak for the vast majority of the SAAB workforce, suppliers and their communities that depend on these jobs :-(
22:25 June 14, 2009 by spy
I don't think scale is the most important factor. Full utilisation of the factory is more important. The Caddy BLS was built in the Saab factory and it didn't ever reach US expectations (surprise surprise!!)there is room to build more Saabs. Combine this with a wider range, newer cars and shorter life-cycles and a modest volume can work.

I feel sorry for Volvo - it is a great brand but it has 2 obstacles to being sold. 1) Saab 2) Its relatively large size and price.
13:51 June 16, 2009 by skane refugee
There are 3,400 direct SAAB jobs on the line and 12,000 more via suppliers.

This is the equivalent of over 100,000 jobs in the UK or say 500,000 to 600,000 in the US!! (not to mention a significant chunk of Swedens trade surplus) ...

... which means that both the sellers (GM) and the buyers (Koenigsegg consortium) probably had the Swedish government by its sphericals ... ;o)

Will be important for the new owners to set out their strategy to assess if the USD600m loan reportedly guaranteed by the Swedish taxpayers is ever likely to be repaid.

The USD600m Swedish guaranteed EIB 'loan' is about TSEK320 for each of the 15,400 Swedish jobs at risk ... (must surely constitute state aid unless wrapped up in environmental model development etc?!?)

Interesting to find out about the fate of the USD1.3billion owed to GM (well their creditors/US taxpayers I guess!!) by SAAB ...

... who got the better of the negotiations I wonder? US or Swedish taxpayers?
20:30 June 16, 2009 by hamadani
I think it is wonderful for SAAB to have Koenigsegg behind it with its panache and driving oriented philosophy. SAAB makes reliable, safe, fuel efficient and functional cars that are fairly quick and unique in their design and Koenigsegg should capitalise on these Scandinavian elements. Koenigsegg should also involve SAAB cars in as many rally and GTO international races as possible and "win" them. GM should have marketed SAAB away from its local brands (i.e. Saturn) to give it more of a European/Scandinavian appeal as Ford did with Volvo. GM also made serious mistakes rebadging their trailblazer as a real SAAB !! SAAB needed an AWD system for quite a while and GM woke up way too late on that as well. GM also slowly kept injecting their components (e.g GM radio) and plastics into SAAB which essentially reduced its uniqueness to the keen eye of the SAAB buyer. I think SAAB has a brighter future with Koenigsegg's sporty flamboyance and true Scandinavian heritage.
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