Saab After GM II

Saab After GM II

         After the acquisitionon February 2010, Victor Muller, CEO and founder of Spyker Cars  and GeneralMotor had an agreement that General Motor would continue to supply Saab withengines, transmissions and also completed vehicles in the shape of the new Saab9-4x from General Motor’s Mexican factory. And then Saab announced that a newSaab 9-3 was confirmed for 2012 while production restarted at the Saab plant inTrollhattan, 

Sweden in 2010 and the company expected to sell between 50,000 to55,000 vehicles in 2010.These would be very great, if Saab achieves the goal.

Unfortunately, Saab has its own infrastructure or large amount of sale volumes. As Carlos Ghosn, CEO of Renaul-Nissan, and Sergio Marchionne, CEO ofFiat-Chrysler said all car manufacturers needed lots of sale volume to earnhuge cash flow on hand  for creating high technology innovation and launching anew shape of vehicle. Actually Muller plans to outsource a lot of  automotivetechnology ; for instance: it tried to move its production to China; the dealwould see 10 dealerships opened. 

Then the deal would be signed only with ChinaAutomobile Trading Co. Ltd. Another example, there was only one carmaker, who could catch a niche market and recover the business; that is Audi underVolkswagen Group. In 1980 after Audi’s net sales in U.S. declined to 20,000 cars, so the company cut the price, solved quality problems and released brandnew cars which crushed on customers’ mind. 

Today Audi can sell 1 million car ayear and it has very strong core competency. While Volkswagen Group was waitingfor an increase in net sales, Saab could not have time and money enough. Losing General Motor affected Saab because Saab had the second dominant market in Detroit  (the first one wasin New England).

 Here, General Motor’s employees in Detroit had right to getdiscount for buying a car.

 Refer to Experian Automotive’s information, in 2008 number of cars  which the employees of General Motor had bought, would be about 15% of Saab’s net sales in U.S. 

Even Muller also said we might loss all thesecustomers. Moreover, Saab decided to increase a 9-5 model’s selling price to$40,000 to $55,000 and expect to sell between 50,000 to 55,000 vehicles on July2010. Eric Noble, President of the CarLab which is a automobile consultant company in Orange, California, said it would be very difficult to persuadecustomers to pay more because this amount of money they could buy Audi or BMW. 

On October, the company revised its production target for the year to 30,000 to35,00 vehicles from 45,000 vehicles  as a result of longer time was needed to recover from plant shutdown for two months at the beginning of the year andreverse liquidation proceeding . It was report that it was the second timeforecast was cut in less than three months. Eventually Saab sold 31,696 cars in 2010.

There reasons wouldbe obstacles for Saab to use benefit of economic of scale and it seem impossibleto reach break-even point. As the result, on June 2011 Saab announced that they were unable to pay June salaries to the entire workforce of 3,800 employees dueto lack of funding.

 The trade union IF Metall gave Saab seven days to pay thesalaries to their employees; otherwise,IF Metall threatened to force aliquidation of the company. On June 29, Saab employees were paid. 

The liquidation problem should be clean, but Saab had problems to pay July and Augustsalaries again.

 

End of Saab wasannounced on 19 December 2011; Saab Automobile Press Office released “SaabAutomobile Files for Bankruptcy”. There is nothing to say for this endingbecause 20 years with General Motor destroyed Saab too much to heal.

 

To conclude, there is no exist for Saab. It goes to wrong direction by the inexperience leader  and it has very bad basement with poor financial statements. Saab has little of cashon hand, so it is unquestionably that why it is going to be liquidation.

Finally, lack of technology and inappropriate selling price force Saab to theend. This situation is like “we put the first button in the wrong place, so it would be impossible to have the right for the last one”.

 

Bibliographies

 David Shepardson,2011, Saab bankruptcy, Detroit News Washington Bureau,//www.detroitnews.com/article/20111219/AUTO01/112190368, 19/12/2011.

 Annual Report 2010 Spyker Cars N.V. including SaabAutomobile AB,//www.spykercars.nl/download/artikel/JV2011SpykerSaab.pdf,31/3/2011.

 Swedish Automobile N.V. including Saab Automobile ABReports its Third-Quarter Results 2011,//www.spykercars.nl/download/investor/2011.11.30_SWEDISH_AUTOMOBILE_N.V._including_SAAB_AUTOMOBILE_AB_REPORTS_ITS_THIRD-QUARTER_RESULTS_2011_.pdf,30/11/2011.

 Saab Automobile Press Office, 2011, Saab AutomobileFiles for Bankruptcy,//www.spykercars.nl/download/investor/2011.12.19_SAAB_AUTOMOBILE_FILES_FOR_BANKRUPTCY.pdf,19/12/2011

 Christina Zander, Anna Molin, 2011, Saab Automobile,1950-2011 

Underfunded and Lacking Approval for Sale to Chinese Investor, CarMaker to Sell Assets,

//online.wsj.com/article/SB10001424052970204791104577107812414053178.html,20/12/2011.

OlaKinnander, 2010, Spyker Drops as Saab Production Goal Cut, Loss Widens,

//www.bloomberg.com/news/2010-10-29/spyker-stock-drops-as-saab-auto-2010-production-goal-cut-net-loss-widens.html,29/10/2010.

 Brett LoGiurato, 2011, Saab Bankruptcy: How GM’sMissteps Let Down the Iconic Brand,

//www.ibtimes.com/articles/270276/20111220/saab-bankruptcy-general-motor-gm-fail-china.htm,20/12/2011.

Nils Friewald, Rainer Jankowitsh, Marti G. Subrahmanya,2011,

Illiquidity or credit deterioration: A study of liquidity in the  UScoporporate bond market during financial crises,

//people.stern.nyu.edu/msubrahm/papers/Liquidity%20Crisis.pdf,9/8/2011.

 Michael Corkery, 2010, Breaking News: Spyker Buys Saabfor $74 Million in Cash,

//blogs.wsj.com/deals/2010/01/26/breaking-news-spyker-buys-saab-for-74-million/,26/1/2010.

 A History of High Technology,//www.saabgroup.com/en/About-Saab/Company-profile/History/

DuncanReekie, Jonathan Crook, Managerial Economics, 4th ed, Pearson Educationplc, London.

 John J.Wild, Kenneth L. Wild, Jerry C.Y. Han, International Business, 4th ed,Pearson Education Inc, New York.

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