September 7, 2011

Confession #29: Admit to a big problem

'Save Saab' rally in Taiwan, Jan. 2010
Somehow it seems fitting that news of Saab’s intent to reorganize under Swedish law comes on a very cloudy, drizzly day in Boston. This is the land of many colleges and therefore many Saabs, if you believe the stereotype that all professors drive Saabs.

The company has filed for protection from creditors before. I remember the day in February 2009 when it was more likely that Saab’s former parent, General Motors, would go under than its Swedish division. And sure enough, Saab found a buyer in Spyker Cars – after a lengthy sale period.

2012 Saab 9-3 Independence Edition
Convertible (Saab Automobile photo)

Spyker, and its founder Victor Muller, have always had a problem of over-promising. Maybe it’s biting off more than they can chew. Either way, it’s led to disappointing results. Sales of Saab’s 9-3 range, last redesigned in late 2002, are pretty much what’s keeping the company afloat. The new BMW 5-series competitor, the 9-5, has earned mixed reviews from the press and is generally considered too expensive and not good enough, something I hate to admit given that I am a Saab fan and like the look of the new 9-5. The 9-4x crossover, launched just this summer, looks the part and deserves to do well in crossover-hungry markets like the US.

But anyway you cut the situation, Saab’s goal of breaking even at 80,000 units per year seems more and more unrealistic. Especially when they haven’t produced many cars since April because they can’t afford to pay their suppliers. Sure, it’s a catch-22 for the company: They can’t sell cars to raise money to pay suppliers because they can’t afford the parts.

2010 Saab 9-3X
(Saab Automobile photo)
Saab has plenty to offer the global automotive industry. Never mind their legacy powertrains and gear from their 20-year marriage to GM, Saab has always struck me as an engineering company first, and a car company second – one that’s always been hamstrung by a lack of financial resources. After all, these are the Swedes who thought to put a heating element in the driver’s seat and add a turbocharger to a family hatchback, among other innovations. But a car company cannot stay afloat as an engineering consultant. Just ask Lotus Cars.

I have no doubt, given adequate financial resources, Saab can achieve profitability and turn out products better than ones in their showroom now. But I can’t feel sorry for the amount of negative press and feelings bestowed on the company this year. Muller, try as he might to defend his company, has steadfastly denied Saab would seek reorganization and praised the potential tie-ups with Chinese companies (one of which fell through, the other two have spent the summer seeking regulatory approval).

I’m all for entrepreneurial carmakers and CEOs who don’t act like bureaucrats. But I can't help but feel Muller and Co.'s series of prosperous visions and downplay of the doom-and-gloom in Trollhattan has severely cheapened their credibility. It doesn't help the devout worshipers at Saab blogs and forums (SaabsUnited, in particular) sharply criticize every media outlet shedding negative light on an equally negative situation. Sorry guys, but these are dire times – own up to it.

It's not that I want Saab to go down in flames, but admitting these are precarious times (again) is the right thing to do. In the meantime, don't hound me for making passing glances at BMWs, Audis, Volvos, etc.