Saab’s Phøenix moment?

June 12, 2009

Koenigsegg's boy racerThe great global automobile restructuring is throwing up some fairly unlikely bidders for some famous marques. Who would have thought Magna (who?) would end up buying Germany’s mighty Adam Opel? And who would have seen Fiat as Chrysler’s white knight?

Although, come to think of it, there’s a certain tragic inevitability about the ghastly Hummer ending up in a death embrace with the Sichaun Tenzhong Heavy Industrial Machine Co.

But when you get down to the true GM offcuts – like Saab for instance – you are really down in the weeds. It was a pretty motley trio that made it to the bidding stage. Ira Rennert, a private equity guy who once owned AM General, the maker of the Humvee armoured vehicle, was about the most credible.  Then there was Merbanco, a Wyoming-based investment company (no, me neither).

But the real biscuit is taken by the likely winner, the splendidly-named Koenigsegg. This is, um, something of a niche operation run by a Swedish toff. According to its website, it has five models in production. Last year’s sales? A juicy 18 motors, suggesting an average of 3.6 sales per model a year. Sounds like an ideal partner for Saab, an ailing manufacturer of souped up Vauxhalls while sells 100,000 a year.

So, what’s the deal here? Could the magical ingredient perhaps be the loan guarantees the Swedish government is planning to offer to tide Saab over as it is plucked from GM’s withered teat?

Students of such automotive rescues may remember the great rescue of Rover, the UK’s last volume carmaker, after it was cut loose by BMW in 2000. There wasnt a state-sponsored bailout, but the Germans left a dowry behind to keep the show on the road for a few years. The lure of this cash pot sucked in the Phoenix consortium, a quartet of chancers from the West Midlands, which essentially got the recapitalised company for nothing and spent the next few years running Rover into the ground, while flogging off various assets, before running up the white flag five years later. Swedish taxpayers can only hope that the great Saab sale – to which they will be contributing – wont just be a nordic re-run.

17 comments

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The great thing about being able to comment on blogs is that you can respond. . .

If K’segg is the final winner then they are more likely to be the rather catchy name infront of a serious investment group.

Plus the Swedish taxpayers will not be paying a cent – certainly no handout and they are not even likely to lend money. Therefore no effect to the taxpayer!

If finance is required then it will come from an EIB loan and this is where the govt come in. . . As they would be asked to provide a guarantee.

Posted by ANA | Report as abusive

Pretty poor commentary, Jon. First of all, Koenigsegg is the front for a consortium with solid financial backing, as already reported in the Swedish press. And who told you the Swedish taxpayers stand to lose a dime in the Koenigsegg/Saab deal? Or are you just assuming?

Because the Swedish government has rejected any calls for financing so far, apart from loan-guarantees for an EIB loan. Which Swedish media are reporting they may not even take.

Lastly, your attempt at being ironic and poking fun at the founders of AGCO (i.e. Merbanco) is unsuccessful – Google and Sec.gov are great websites for doing some research on “mystery” entities before writing.

You have no idea what you are talking about, suggest you stick to reading comic books as journalism is not your thing!!

Posted by P Bainbridge | Report as abusive

Expect GREAT things in 5 years. Those doubters will see how wrong they are.

Posted by Nate 9-3 | Report as abusive

Why do all you people call a saab a vauxhall, its only ever saab that gets these head lines, even though most companies help each other out. its over 12 years since you started saying it.

Posted by R M | Report as abusive

Huh? Vaux-what? Sorry – GM has trashed the SAAB brand completely. First of all: SAAB doesn’t make “souped up Vauxhalls”. They make 1 car. The 9-5. It is the same vehicle known as the 9000 introduced in 1984. It certainly isn’t a “money-loser” as the mainstream press contends. Anyone that knows auto production – the longer a specific model is in production, the more profitable it becomes as the development costs are recovered. Hmmm, let’s see 1984 to 2010 model w/ a few minor redesigns… that’s a long time of recovering initial costs. The GM crap that is SAAB-labelled the 9-3 (Pontiac G3 or somesuch thing), the 9-7 Chevy Trailblazer thing. And the 9-2 SAAB-aru (oy vey) – sorry – those aren’t losses to be dumped on SAAB’s shoulders – those are GM “ideas” and are sqaurely GM losses…

Posted by Russ | Report as abusive

First of all, what is wrong with Fiat? Fiat is the fastest growing group in Europe at the moment, and the makers of not only Fiat, but Lancia, Alfa Romeo, Abarth, Maserati, and …. FERRARI. Is the English-speaking World so utterly snooty that they can’t imagine others coming in to do a good job, or a better job, which will obviously be the case wrt to Chrysler. But again, the British are the great complainers about everyone else; maybe because their domestic auto industry has long since died? The same fork in the road now comes to America, and the arrogance is still there. Sorry to break it to many, but the products Fiat produces are many much more desirable than anything you’ll find from a US automaker. Here is wishing great luck to Fiat with Chrysler/Dodge/Jeep, as well as Koenigsegg (an incredibly innovative supercar producer) with Saab. Finally some hope that the US/UK arrogance finally comes to an end. All it ever does is make people dislike us.

Posted by Earth Ling | Report as abusive

You failed to mention that each car Koenigsegg sells is over $800,000.

Posted by J L | Report as abusive

I’m afraid you haven’t done your homework here. It would be helpful if you might rouse yourself.

The proffering of opinions is easy. Rendering judgement is a bit more difficult.

Personally, while I grant it’s a roll of the dice to a degree, I’d wager on Koenigsegg. If you want the other side of that bet, I’ll be happy to take your money.

It is, after all, what makes markets, isn’t it?

Big Al

Posted by Big Al | Report as abusive

The vicious editorialism that “writers” (I refuse to call these garbage vendors journalists) generate lately is shameful. Why not just present the facts?

Sneaky Jonathan forgot to mention that Koenigsegg is a Swedish manufacturer of handbuilt supercars, the price of the “base model” selling for $650,000. They have an interest in not only expanding their business to the consumer market, but taking the auto industry back to Sweden.

And Jonathan, please leave your melodramatic adjectives at home next time you decide to play journalist, it makes you sound like a hack. Tragic, ghastly, and motley are words that belong in a celebrity rag.

Posted by Stephen | Report as abusive

We can safely assume that any country that produces beautiful women can also produce exceptional automobiles. Nay sayers: hush yourselves. All hail Koenigsegg.

Posted by christian | Report as abusive

National pride, nostalgia, none of that substitutes for the industrial reality of today’s car industry. As Mr. Ford points out, there are NO! Saab or Volvo like independent car companies in the global marketplace. All are parts of global, integrated groups for a reason. The engineering, manufacturing and marketing resources to field cars today requires that, and Koenigsegg and it’s band of merry investors have virtually none of those . BMW is about the smallest you can get. And, that was the industrial logic under the pre-2007 market. Now with sales down 40%, the Saabs of the past will never come back.

Koenigsegg maybe able to engineer a super car, but they’re not manufacturers of vehicles on an industrial scale, and neither anymore is Saab, which do not have the resources to compete. Building a car company out of what is now Saab will require enormous fresh capital, in a rapidly consolidating industry against hyper competitive global behemoths . What is the point, Auto industry margins are razor thin, and this is a game for young industrializing countries, China, Brazil, and India.

What we will likely see out of Koenigsegg, if he’s not a fool, which he does not sound to be is a move way up-market to very specialty cars a la Rolls Royce, or a push towards new technologies, like electric vehicles, a la Tesla. Either way, the Saab as we know it will disappear in everything but name, it’s place in the world stage already gone, save for the Intensive care unit of GM, where it has lived for the last decade. Goodbye Saab, long live Koenigsegg.

Posted by egominimus | Report as abusive

Okay I know nothing about financial dither dather, but hells yeah: it’s time the Swedes took back Saab. General Motors did nothing for the brand other than turn out an awful SUV. Saab is the coolest car brand out there and for those of us who are passionate about the brand, this is great news. The Swedes do quirky, utilitarian design better than anyone else. Saab is one of the lone holdouts in a world of boring suburban vehicles for boring suburban people….

Posted by Yuki | Report as abusive

Jonathan ,
Based on comment above , we are all a little disappointed at the lack of research on this subject .
Firstly ….. SAAB is not and has never been a Vauxhall …… ( Vauxhall after all is a re-badged OPEL )
Current 93 and 95 were both designed by SAAB Engineering / Design in Trollhattan .
SAAB may share components with their GME counterparts but are the GM corporate leaders in the development of vehicle safety and GME power train development , particularly ‘ Turbo Charging ‘ which they are well known for and of recent ‘ Hybrid Systems ‘
Secondly …. Your need to do some serious research into the 3 bidders for SAAB …. Particularly their business history .
Having done this I am sure you will need to re-write your article ……..

Posted by M Wil | Report as abusive

Koenigsegg makes hand-build cars that eat Ferraris for breakfast. If they can get some mass production going, and tart up the Saab designs, woo-hoo!

Posted by Ross | Report as abusive

Why are Saab’s STILL being labelled as Vauxhalls? If you did a bit of research, you would discover that GM lifted a lot of technology from already advanced Saab cars. Not the other way around. As Saab drivers are generally loyal to the brand, Saab has an excellent future, unlike Rover who made second-rate cars.

Posted by M May | Report as abusive

Koenigsegg being splendidly named: depends on what language. Koenig is king in German, but segg is arse in Hungarian …

Posted by morrgo | Report as abusive