GM has forced Saab into bankruptcy

Send GM Coal for Putting Saab in Bankruptcy

In keeping with the themes of the season, the truth has to be told. GM is the Scrooge that has successfully put Saab into bankruptcy by refusing to let the company be sold to Chinese investors.
Advertisement


There is no clearer villain in the Saab bankruptcy than GM in spite of its attempt to look like the good guy in all of this. Backing some warranty claims while putting hundreds of people out of work, shuttering dealers, and, frankly, screwing people who bought Saabs in the last two years makes GM the Scrooge

A quick recap is in order for what GM has done to put out of business the beloved Swedish automaker. Saab had Chinese investors lined up to keep the company out of bankruptcy. Then GM stepped in and said no. It was worried about proprietary information getting leaked to the Chinese who were buying the company.

GM, in effect, said ABC – Anybody But the Chinese. The problem is nobody but the Chinese were interested in acquiring the company for the exact purpose of getting its hands on Saab technology. It's certainly not just to sell Saabs because the company never generated that kind of volume.

Yet, here's the kicker. By forcing Saab into bankruptcy and ultimate liquidation (a distinct possibility) the pieces of the company are going to be up for purchase by anybody. Sure, GM will fight these acquisitions but ultimately lose in Swedish bankruptcy court and its technology is going to be out there for the world to examine.

Technology that at this point is probably obsolete or been so closely pored over by the competition that it might as well be on Wikipedia for the world to see. Surely GM knows that if Chinese manufacturers want the technology, they already have the technology.

Let's say they don't. Then look for Chinese manufacturers to hire the scores of Swedish workers that are going to be laid off. Expect to see a Chinese firm setting up shop in Switzerland in the near future once the bankruptcy is finalized.

In the meantime, the Saab dealers in the United States, who toiled long and hard to make a go of the brand while GM owned it, have been told to go pound sand. GM has made the cars they sell, both new and used, lose significant value and made them next to impossible to sell because Saab can no longer offer incentives because it is in bankruptcy.

What if GM was right? That means Ford was wrong when it sold Jaguar/Land Rover to Tata, a company from India with a population close to rivaling China, and for selling Volvo to Gheely, a Chinese company.

But Ford wasn't wrong. It's a global player that understands the global marketplace. GM doesn't and possibly has risked its ability to do business going forward in China through its closed borders approach to Saab.

Saab News
Swedish automaker Saab files for Bankruptcy


Sign-up to our email newsletter for daily perspectives on car design, trends, events and news, not found elsewhere.

Comments

Not sure why a Chinese firm would set up shop in Switzerland. Youngman has already set up a firm (Saab Automobile Development AB) with SWAN which is not part of the bankruptcy. They recently stated they plan to use this new company to develop new cars (with Saab engineers) even if Saab is liquidated. Can'y post links but you can figure this out: saabsunited_dot_com/2011/11/youngman-taking-place-in-joint-venture-company_dot_html gminsidenews_dot_com/forums/f14/chinese-automaker-acquires-saab-s-new-phoenix-architecture-107736/
Ted - thanks for the follow up info. My point was any company could simply poach the Saab employees if its doors shut. I think GM just didn't think this through.
GM is to blame for Saab's demise. GM "technology" is what ruined Saab to begin with. GM aka Communist Motors robbed the American public of $53 billion and they are already investing it wastefully. They don't pay taxes for five years. Each Volt cost taxpayers $250,000. It should be GM going bankrupt, not Saab.
Walton - good point. This was just the last nail in the coffin. Remember the joint venture with Subaru that created the dreaded Saabaru that benefited neither company. GM just plain ran Saab into the ground and had no respect for the brand.
You might want to research the facts behind this story before coming to your coal fired conclusion. Saabs brief CEO Victor Muller signed an agreement with GM regarding ownership change when he bought Saab in 2010. Muller tried to sell Saab in a way that would break the agreement. GM said no deal. Why? Because GM already is a huge player in China, and didn't want to offend its existing partner there. By enforcing its existing agreements in both China and with Saab, GM clearly strengthened their already strong position in China. Why didn't Ford care (as you asked)? Simple. They don't have much business in China, and no existing partner agreement in China that selling Volvo would harm. They are very different situations, and if you get the facts about both you'll understand GM wanting to make Muller honor the deal he signed. Saab will be missed, but it was not a sustainable business.
Believe it or not, I agree with you that Saab is not a sustainable business especially now because of what GM did. Government Motors, thanks to the full support of the U.S. government in its bankruptcy bailout, has put Saab out of business. It could have made accommodations to its original agreement with Saab without weakening its position. After all, as many have said, Saab is not a high-volume company. GM would not have seen its partnership weakened. It could afford the competition in China without screwing so many Saab employees and car owners around the world.
Actually, with some irony, if you go back to when GM originally invested in Saab in 1989, there was a reason. Saab needed an investor - because it was not a sustainable business then. If one studies Saab's entire history as an automaker - it never was a successful business on its own. It was first subsidized by the Saab air business, then Scania trucks, and finally by GM. GM lost billions propping up Saab for 20 years. Muller signed an agreement with GM and GM made him follow it. It didn't have an escape clause for not being a "high volume company". I sincerely don't believe it was GM's obligation to hand over GM technology to a Chinese company to use against GM and GM's Chinese partner. "Saab Technology" is a bit of a misleading phrase - it was mostly GM. GM is big, and it seems an easy scapegoat in this. It just isn't accurate. Saab's problem was it didn't sell enough cars. Maybe we can agree on this. Saab will be missed. I liked those odd cars.
Neil, if you listen to Victor Muller's press conference (can be found at saabsunited dot com for example ), you'll see that he and Chinese worked hard to work out a deal that would fit the agreement with GM. In fact, the last version of it was such that NO GM technology at all would go to Chinese. GM said NO, and that was the end. As for the "non-existent Saab technology" -- that is ridiculous. All GM was after throughout the history of ownership (first part-, then full) was Saab technology and innovations, while at the same time they tried (successfully!) to kill it by making it one of GM's badge-engineering projects. Read at least something that contradicts official GM position. Say, excellent piece "Who Killed Saab" by Hilton Holloway at (can't post links, but it can be easily found).
The original deal for GM's purchase of SAAB incorporated provisions restricting the transfer of technology from SAAB to GM - SAAB was given exclusivity of components of their engine management systems until GM exercised their option to increase their holding. Presumably this was done in order to prevent GM from stripping the technology from SAAB. and walking away. Unfortunately, nothing was done to protect their dealer network and in Canada at least, the replacement of SAAB dealerships with a dependence on Saturn outlets hurt sales and service and "goodwill" for many years. The brand never really recovered. The restrictions on the restructuring of SAAB related to this technology and the Epsilon platform for the new 9-5. It is worth noting that the predecessor to the 95, the 9000, used a platform shared with FIAT (another former GM "partner" - shortly after GM cut its ties with FIAT, the company arose like a phoenix and it turn rescued Chrysler ). Chrysler & Mercedes continue to share platforms even after their corporate divorce & the joint development & sharing of engines is not uncommon in the industry. If GM felt any obligation to the continued operation of SAAB it could have facilitated it. Obviously, it decided that its former customers and employees weren't worth the bother and couldn't foresee the potential for future technology sharing with a restructured SAAB. When GM sold off its shares in Subaru, it said it wanted to concentrate its resources towards hybrids & electric power. Toyota bought a 25% share in Subaru in part because of a subsidiary's expertise in battery technology. Subaru has seen steadily increasing sales since GM bailed and is now at the head of the pack for quality & customer satisfaction. Notice a trend here?
You might want to do a little research yourself. It's GM that's breaking the contract. The last Muller/Youngman deal involved 0% Chinese ownership, it was essentially a loan. By contract, Muller was allowed up to 19.9% new ownership without GM approval. GM had no say and no right to terminate the agreement. However, there were just no funds or time for Saab to fight GM in court.
Ted, if the 0% had actually been true, I'd have to agree with you. But it plainly wasn't at all. It was a rather poor attempt at disguising a transfer of ownership, in order to avoid a contractual responsibility. The law recognizes what is called "intent". The agreement was for "Engineering Services" for a theoretical new entity. Yet it called for the Chinese to send salary payments for all of Saab's workforce, plus for production parts suppliers. Does that sound like a payment for engineering services? A court would take 2 minutes to realize that the payment was for for something else entirely. And that's why Muller wouldn't ever take it to court. Ultimately, he is smarter than that.
You have no idea that it was not a sustainable business, this is you talking out your rear end. You also are not stating what happened truthfully, or are perhaps ignorant. There was a contract and clearly it said GM could veto if a certain amount was sold to another company (it was 20% or over). The latest deal fulfilled the legal contract to the T, setting up a collaboration with Youngman until GM IP could be worked out of the current lineup. This was reasonable and a compromise. GM stated that ANY investment with a Chinese company, they would veto it. They knew it was against their own contract, but were going to force SAAB into court basically to fight them. This is dirty, disgusting, and will be remembered for a long time, not just by SAAB enthusiasts, but by the motor industry. You have no clue what other entities think of GM's behavior in this regard, and goes to show just how very wrong you are. Old GM and New GM are the same discussing culture, and their karma will bring them down one more time -- and next time they will go to hell, where they should have been in 2009. This is the company that destroyed the street cars in the US, killed the EV1 when people were begging to buy them off of them before being crushed, the company that has destroyed brands left and right. Any enthusiast of this company is quite literally a moron.
The final deal that Victor came up with complied with all GM conditions and GM couldn't stop it. However it told Saab that if it went through with the sale, it would end all license agreements with Saab concerning GM IP. This would have left Saab in the difficult position of not being able to manufacture any cars until it's new models came on stream. That was extremely unfair of GM and it deserves all condemnation.
Sorry, the VM version of "complying" with a contract was a poorly disguised method of hiding its true intent. Please, bring the issue to a court. I'll watch and enjoy. If you simply must believe GM bad, VM good, despite all the facts - well there you are. That mindset was much of Saab's problem under its brief Spyker rule - VM & VM synchophants blaming others for the companies crises.
The author of this article is an idiot. What sensible company would willingly support the sale of some small-time niche brand if it hurt its own sales in the process? GM can't be held responsible for lost jobs and broken warranties. Should have went to work or bought a car from a more stable employer folks. Kudos for GM on passing this rung up the ladder to cracking Toyo and being number one again!
Well, I won't respond in like fashion and call you an idiot but reasonable people can have their differences. GM is a government funded company that received a huge investment from the U.S. government to stay in business. It could have done the right thing and given a handout or hand up to Saab so that it didn't have to screw so many owners in the U.S. By the way, show some guts and sign your real name before calling somebody an idiot.
Keith, I on the other hand will call this guy an idiot and actually more like a complete moron. :] I don't like Toyota, or care for Ford, but they are MUCH better companies than GM will ever be. It is funny how GM does well only on the suffering of others. First, the tax payers having to bail out their incompetant business, and then beating Toyota only because of the tsunami (if you don't realize this, you are even more of an idiot). Your own statement is stupid, when you admit that SAAB is a small-time niche brand, and then say "hurt sales"? GM sells a few orders of magnitude more cars than SAAB, and they are worried they will hurt sales? Shows how pathetic GM is -- and their "enthusiasts".
GM sucks! I will never buy a GM product. Greedy Bastards
Let's all cut to the chase: Saab will always represent and stand for the best qualities in any industry, especially the automobile industry: Deep and tireless concern for the lives and safety (the absolute first principle), well-being and enjoyment of its customers. This key yet under-appreciated point is abundantly evidenced in Saab's brilliant safety/handling innovations and pioneering leadership in safety cage design, crumple zones, ergonomic instrumentation design--which maximizes road attention via minimizing distraction/over-looking for controls; reverse-opening hood to minimize collision intrusion into the passenger compartment, key placed between the seats to protect your right knee in a collision, front-wheel drive, disc brakes, egg-shaped total body design—mirroring nature's incredibly strong/resilient design principles; heated seats--reflecting the vital understanding that a cold driver is a more contracted/less flexible and responsive one, innovations in quality engineering... the list goes on and on and on... What amazing and unique DNA for a car company, yet no surprise considering Saab's direct aircraft design roots... Just because Saab was never a huge monetary success takes nothing away from its brilliant and vital contributions to fundamental automotive safety, which ought to ALWAYS be Job 1 for EVERY automobile company. The resultant driving experience was a delightful synergy of rock-solid road handling and feedback from car to driver, confidence, ergonomic ease, great driver visibility, and myriad other tangible and intangible qualities which result in pride in ownership, deep customer appreciation and brand loyalty, and simple happiness at feeling cared for by the combined intelligent and heartfelt efforts of a group of people turning out a great product which got you from point A to B in safety, comfort and quirky style. Judging Saab by mere monetary success also COMPLETELY misses the point. Saab was like a future-leaning R&D skunkworks, pioneering so many crucial and delightful innovations which proved foundational to automotive engineering and design. It's a known fact that many R&D departments in organizations "lose money," yet are so often the seeds for breakthrough success when viewed/valued for their contributions to the WHOLE company and/or greater industry. Additionally, many organizations would kill for the BRAND LOYALTY that the original Saab, prior to GM's involvement, and subsequent dilution/destruction of the brand and finally the company itself. As a footnote, what a tragic joke of a company GM is---how can anybody take a company seriously that accepts billions in taxpayer bailout money due to its utter incompetence---totally boring/low value product line, antiquated management/leadership practices, arrogance, poor quality, etc., etc. To be clear, this is NOT an attack on GM's vast and well-meaning workforce. As quality authority Dr. W. Edwards Deming has shown, 95% or more of the problems in any company are the fault of the system the people work within, which can only be improved with the support of the organization's top leadership/management. If all of the above sounds like something of a love letter to a car and the company that produced it, so be it. I view it more as a tribute to the highest ideals any company (especially an automotive company) and the people who are that company ought to aspire to: to care deeply about the safety FIRST of its customers and thus make a car that's safer, easier, more fun, more durable, more interesting---even different, if that's where it leads you---than all the other status quo cars on the road. Saab will always be great for putting safety first, allowing this principle to drive the design, form and function of the car. They truly epitomized "Thinking Different." My hope is that the spirit if not the company of Saab will one day be resurrected in new form, as reflected in the beautiful PhoeniX concept car from recent Saab designer Jason Castriota, who's vision and ethic embodied the true heart and soul of what made Saab timelessly great. Bravo and thank you Keith for your thoughtful original article which inspired this rather long yet heart-feft missive. Note: Author Matthew Cross is president of Leadership Alliance, a global strategic alignment and training organization and author/co-author of five books (see HoshinMedia.com and LeadershipAlliance.com). He drove his first Saab in 1983 and proudly owns three 1990's Saabs today.
Thank you Matthew. You've clearly reminded me why Saab is the only car I will ever drive.
What a well thought out response. It reminds me of a conversation I had with a Saab PR once. He was grumbling about Volvo hyping its safety record. He said, "There not even the safest car company in Sweden." Saab did amazing things, which is probably why I am fond of the company. Thanks for your comment.
GM only bought SAAB for their technology, especially the turbo. No wonder they fear another company doing exactly what they did. After they cannibalized what they wanted they let the company drift and then sold it off. In the end, they couldn't let a revived Saab compete with them in China. See Business Week 12/6/2011 "GM Sales in China Accelerate as Demand Shrinks for Ford, Honda"
Saab was also less expensive than the engineering to lower GM's CAFE compliance numbers.
I'm presently retired and for my retirement, I took a rare chance to purchase a new car for myself, thinking it would probably be my last and I wanted something that I could be proud of for all my years of hard work. I purchased my care in April of 2011. For the life of me, I cannot understand how General Motors, could become the stepchild of the banking industry by destroying or taking away what people have legitimately paid for and worked their whole lives to own. I also am extremely dismayed that the dealership that I bought the car from, Downtown Toyota, Saab and Suburu said nothing about the issues relating to the problems Saab was having and have yet to reach out to those who have been affected by this tragedy. I am not a wealthy person and this is going to hurt me financially as well as emotionally, At least those responsible should be "gi ving something" to those who have been affected if nothing but an apology for being part of this selfish act on the part of General motors. Shame on all of you.
Very well written. Appreciate such open but to the point comment. Hope GM management will read this too, even if it seems optimistic they care about it.