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New Saab 9-5 may never be released: GM exec

TT/David Landes · 11 Jan 2010, 08:22

Published: 11 Jan 2010 08:22 GMT+01:00

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“It would be so sad that it never sees the light of day despite the fact that it’s a fantastic car,” GM vice chairman Bob Lutz told the TT news agency.

In admitting that the long-anticipated 9-5 may never make it to market, Lutz also rejected rumours that the car, which is ready for production at Saab’s plant in Trollhättan in western Sweden, would be released under a Buick badge.

“No, that’s completely wrong. It’s not going to be a Buick. Not in the United States, not in China, and not anywhere else,” he said.

According to Lutz, GM would rather shut down Saab Automobile than sell it to a company the US auto giant didn’t believe in.

“Otherwise we still risk being stuck with all the costs,” said the 78-year-old auto executive, adding that it was unlikely that GM would change course at this point.

“We’ve pushed the wind down button and now we intend to wind down the company.

He was also less than optimistic about the chances of anyone saving Saab.

“If you want to earn a small fortune on Saab, you have to start with a huge fortune,” he said.

While not directly involved with negotiations over a potential sale of Saab, Lutz said that chances of a sale are slim and that, while offers are under review, GM had to start winding down Saab at some point.

“Rather an end filled with terror than terror with no end,” he said.

“If a really good offer comes down the road, then we’ll obviously take it. It all depends on us getting more back than the cost of shutting down.”

Story continues below…

But cash isn’t the only consideration, according to Lutz. In addition, GM needs to be sure about a potential buyer’s long-term capacity to run Saab successfully.

“We know what it costs to shut down. We can budget for that and then it’s over. But if we sell and it doesn’t work, we’re at risk for all the costs anyway,” he said.

TT/David Landes (news@thelocal.se)

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Your comments about this article

11:17 January 11, 2010 by Jeanette
"We know what it costs to shut down. We can budget for that and then it's over. But if we sell and it doesn't work, we're at risk for all the costs anyway," he said.

I don't understand. If they sell and it doesn't work, why would GM face more costs? Surely the buyer would take on all liabilities after it's sold?
11:38 January 11, 2010 by Fernandis
"We know what it costs to shut down. We can budget for that and then it's over. But if we sell and it doesn't work, we're at risk for all the costs anyway," he said.

Its very clear that GM just want to end the story of SAAB brand from the market, simply. They don't sell to Dutch company because they have big shares from a russian, what the hell is this...why is GM concerned whether buyer is russian or someone else. And i agree with jeanette that winding down will cost them more than selling it....but their intentions are not fair with SAAB. Swedes must learn this lesson and never ever sell their brands or companies to US.
12:48 January 11, 2010 by michalino
From the beginning: GM plays the game. If it's fair unfair that's no question today. The bidders collect the money now. Does GM think to say them "we will not sell..." It's extortion only. It could be the end of GM because it's possible to place a sue to the court. Sweden should wake up and act right now to save SAAB!
12:52 January 11, 2010 by Nemesis
This translates as GM saying people are to be made unemployed in Sweden at all costs.

It has become obvious they are refusing to sell as some of the potential buyers would be case buyers.
13:01 January 11, 2010 by Keith #5083
Does anyone know what percentage of parts/components in a modern SAAB are produced in Sweden?
13:27 January 11, 2010 by Nemesis
@ Keith #5083

People are bandying about various figures so it is hard to get an actual accurate figure.

My neighbour who works in a smaller supplier of SAAB says it is about 70%. The components that fit an opel are made outside Sweden. He has been told that he will be working 50% in february as they have no more SAAB orders and don't expect anymore. They have orders from other companiesw but not enough to keep them fulltime. His wife is working so they can still pay there mortgage, only just though.
14:40 January 11, 2010 by Kevin Harris
Many years ago SAAB chose to list its shares on a public stock exchange. That means whoever buys a controlling interest in the company (in this case GM) can do whatever they choose to with it. That is how it works, what is fair or unfair is irrelevant (as long as it is legal).

Sadly SAAB has not been able to sell enough cars for GM to consider it to be viable and it have chosen to shut it down, rather than sell it. That is GM's decision and it is entitled to make it. GM bought that entitlement when it bought the shares.

The SAAB story seems to have reached its end. The people of Trollhättan seem a dynamic bunch. I am sure they will start a few new stories, perhaps with a little help from the Swedish government. A much better use of taxpayers' money than propping up a company that builds unsellable cars.
14:48 January 11, 2010 by spy
I smell BS. They would not scrap plans for a car that they had spent a fortune devoloping or let tools that could cost upto $300million go to waste - their doctrine is to rebadge cars all over the world - it's what they do. This is just unbeleivable - perhaps it's just more deciept.

Also if you truly want to sell a company why contantly run it down in the media and why start to liquidate when there are offers on the table that have not been evaluated? Either these guys really don't want to sell Saab or they are just as stupid as Old GM.
15:28 January 11, 2010 by Nemesis

Check what comes of the next Chinese production line.

The full details of the sale of 9 3 SAAB tooling have still not been made public. For a company that has been publicly listed, that is a bit weird.

When it shuts down there will be tooling left in the factory. That way no Trollhatan Swedes can do either small start ups or a restart. The factory will be an empty shell.
16:04 January 11, 2010 by Great Scott
I have heard gossip that the Swedish government is behind a lot of this, the talk that I have heard going around is that the bidders are only small players and the Swedish government fear that in a very short time they could be holding their hands out for money.

$300million is much to lower figure for tooling cost, even if you tripled that it would be cheap.

I would also say that parts produced in Sweden would be very low, power train made outside of Sweden, the main platform made outside of Sweden, exterior parts lighting etc made outside of Sweden, much of the interior made outside of Sweden.

Work it out.
19:17 January 11, 2010 by spy
Great Scott

I think that it's likely that it is just gossip. For Spyker to come back with a revised bid they must have gone some way to address GM's issues relating to their first offer. It remains to be seen if GM move the goal posts again.
20:45 January 11, 2010 by ABuB
So strange that that the Swedes are sittting back and watching when it got both political and personal about one of their Auto industry historical marques?

If we had a marque like Saab at my home that produce and research, ((we would be biting on it with our hands, teeth, and legs, to protect it from damage, to take to safety,)) and ensure our country prosperous future and a place among top innovative research countries.

Alas? Maybe Sweden is not only for Swedes alone now? Foreigners also make decsions as well maybe? I dont know its up to you to assess.

God bless
21:08 January 11, 2010 by Scotsaab
It's becoming clearer by the minute that GM have no intention of allowing Saab to "escape" to a caring new owner. They plan to kill this wonderful marque off despite all the sensible suggestions put forward for its salvation.

This is what happens when you commit a small and iconic marque like Saab to a US/global giant and swallow the promises of "investment and growth" we heard 20 years ago.

They are cruelly playing with it like a cat does with a dying mouse. They obviously feel nothing for the workforce, it's support network, sub-contractors or loyal owners - as always -it's the Buck that rules.
22:34 January 11, 2010 by americanska
It's amazing how much some of you guys defend Sweden by complaining about the world around it.

It's the same with people. You'll find that unsuccessful people constantly complain about the "system". And successful people find where they fit into that system and make it work for them.
01:36 January 12, 2010 by repat_xpat

That's the sticking point. Either the buyers are unwilling to accept the liability or it is not possible for GM to absolve themselves from it. Remember Delphi? GM picked up something like a billion in liability from Delphi when it went bankrupt and still had to create the GM Holdings LLC to run what's left of Delphi for some time. GM isn't out to get SAAB or afraid of competition, they are just trying to survive. A bad sale is worse than a shutdown, and the people at Trollhattan would be no better off.

Michalino, who will be sued? The old GM is gone under bankruptcy last summer and the new GM has limited liability to SAAB.

$300 million is $200 million less than GM lost at SAAB last year alone.

Scott, it's not a US/Sweden issue. You must remember that GM laid off more people in North America last year than all of SAAB. SAAB just didn't make money and there have been no deals on the table that will save it without GM giving up its prime technology. GM spent half a billion last year to keep SAAB alive in hopes to save it. They weren't so kind to thousands of employees in South East Michigan. Show some respect for their efforts to save SAAB.
04:53 January 12, 2010 by porksteak
Does he really have to throw out the old insulting line about making a small fortune..... A more fair assessment might be that anyone who wanted to loose a large fortune would have invested it in GM ten years ago at $80 per share so that they would be poor today at $0.63 per share. Now tell me about unsuccessful people.

GM through it's own incompetant management had to come with it's hat extended for a bailout. The so called giant of a company he runs owes it's continued existance to the US government and taxpayers. He should do the right thing and sell SAAB to the Spyker group to recover the most value to return to his lenders. Bailing out the company was the right thing to do but he needs a boot up his crack for this hubris and lack of sense.

A company that does not know how to stay profitable is in no position to decide who they have confidence in. All confidence in GM is already gone. They need to earn it back.
07:31 January 12, 2010 by lingonberrie
No matter how much of their taxpayers' money that the United States throws at their corrupt and incompetent and dying auto industry the patient is moribund.

Saab has set the standard, as did Volvo, for not ever trusting the American versions of vicious "free market" capitalism that was pushed for eight years by their Texas moron.

Sweden would have been much better off had they turned to Germany.
07:43 January 12, 2010 by spy

Well said.

Also I am seeing similarities in Ed Whitacre's GM strategy to sell Saab with George Bush's invasion of Iraq. Specifically the gung-ho attitude, lack of global context, weak plan and minimal long-term vision. Like Bush, if he doesn't handle this situation well it will come back to bite him on the arse - especially if Saab is not sold and there are the liabilities of numerous dealer court cases hanging over GM. I see the US dealers have written to GM telling them they will hold GM fully accountable if they do not act in good faith. Insignificant as this may seem court cases do strangle the life out of companies.
16:18 January 12, 2010 by falcon
Spyker loses money and is owned by gangsters. Genii has been involved in a major acquisition for one week - they can't have any idea what they are buying. The US group has experience but never gets picked - maybe they know too much.

Doesn't look good.
01:55 January 14, 2010 by repat_xpat
Back to bashing Bush. Spy, will you ever get over it?
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