I’ll probably talk a bit more about this as time goes by so I figure it’s best to have a copy of it on the record here.
I’m quite surprised by this and intrigued as to how this could possibly be achieved and what might be the end game because right now, I don’t know how the things planned in this release could possibly come to pass. But hey, I’m totally up for listening to any reasonable explanations from people in the know.
——
SPYKER AND YOUNGMAN SIGN FRAMEWORK AGREEMENT FOR 29.9 PERCENT STAKE, JOINT VENTURE FOR SPYKER D8 SSUV AND JOINT VENTURE FOR NEW PRODUCT RANGE BASED ON PHOENIX PLATFORM
Zeewolde, the Netherlands, 27 August 2012 – Spyker N.V. ( Spyker ) announces that it signed a Framework Agreement with the Chinese car manufacturer Zhejiang Youngman Passenger Car Group Co, Ltd ( Youngman ) today.
Today’s Framework Agreement entails the following:
Subject to satisfactory completion by Youngman of a due diligence on Spyker and the satisfaction of relevant conditions to be set forth in the definitive transaction documentation, Youngman will invest Euro 10,000,000 in Spyker of which approximately Euro 6,700,000 as subscription for such number of Class A shares in Spyker as will constitute 29.9% of the issued and outstanding share capital of Spyker on a fully diluted basis for a price of Euro 0.05 per share, and the remaining approximately Euro 3,300,000 shall be provided to Spyker in the form of a shareholder loan. Youngman undertakes to not exceed the 29.9 percent threshold and therefore has no ambition to make a mandatory offer on all outstanding shares in Spyker.
Youngman shall pay the first tranche of the share subscription in an amount of Euro 2,300,000 to Spyker within 7 days as of today.
Youngman shall pay the remaining Euro 7,700,000 no later than 45 days after the execution of the definitive transaction documentation.
I just got my regular State of Nine email in the inbox and noted that Dan is going to be at Swedish Car Day this weekend doing some work for Maptun.
This brings together some of my favourite Saaby people all in the one place. Both Maptun and State of Nine were sponsors of mine at SU. More than that, though, both companies are run by dedicated Saab nuts who just happen to be fantastic blokes, as well. I’ve met both Dan (State of Nine) and Fredrik (Maptun) on numerous occasions and the reason they’ve both been successful in the Saab aftermarket business for such a long time is twofold: they offer great stuff, and they’re great people.
And of course, Swedish Car Day, which is run by one of the best Saab guys on the planet – Pierre Belperron – is one of the best Saab gatherings I’ve had the pleasure of attending.
So whilst I no longer have any sponsorship dealings with anyone whatsoever, I’m happy to point out to those who aren’t aware, that State of Nine will be doing on-site tuning of Saab vehicles at Swedish Car Day using Maptun performance software.
There’s a few different offers on the table.
You can currently get $150 off the regular price of a Stage 1 tune. That offer lasts until Monday night (27 August).
You can also pre-order a custom tune and get it done at Swedish Car Day. State of Nine will have a specialist on site to get the job done right.
I had Maptun tuning on my 1999 Saab 9-3 Monte Carlo and I can tell you, hand on heart, that this is a first class product. If you’ve been interested in getting a little more out of your Saab and you’re in the area, then make some plans to attend Swedish Car Day and check out what State of Nine and Maptun have got to offer for the day. You won’t be disappointed in the change it makes to your Saab.
Older Saabs might need an ECU swap (like my T5 Monte did) but newer ones get the quick upgrade via the Maptuner box. How quick is it? Check the video I made a few years ago….. amazing.
——
This post was not solicited in any way. In fact, neither Dan, Fredrik or Pierre had any idea it was coming. I just like all three of them and am happy to show off what they’re doing.
It’s hard to call a 2,000+ word article a “nutshell” but it’s a lot less than the original at 7,000 words. If you want the one paragraph Swade-view nutshell, here it is:
Spyker/Saab claim that GM gave indications they were willing to accept a Chinese solution to Saab’s financial problems early in the piece. They even steered them towards it to some degree, only to perform what Spyker/Saab see as a game-changing backflip with GM’s 100% refusal to accept propositions made to them involving Youngman and Pang Da. GM’s attitude was so aggressively negative that it was THE factor that scared Youngman away from deal that should have been executable (one where there were built-in protections for GM’s interests) at the final hour.
The bigger nutshell is below.
There are 152 numbered points in the submission made by Spyker to the District Court in the Eastern District, in Michigan yesterday. These form the basis of Spyker’s lawsuit against General Motors following the bankruptcy of Saab Automobile in December 2011.
Of those 152 points, about 20 of them are crucial to the case, as I see it. The rest provide some color and context. Let’s have a look at the whole thing, section by section, figuring out the important parts as we go.
——
Parties (points 3 to 13)
The plaintiffs are Saab Automobile AB and Spyker Cars NV. The defendant is General Motors.
It’s not included in these points, but the lawsuit has been prepared by Spyker by agreement with Saab. Spyker has secured what it sees to be sufficient funding from an unnamed third party to see the suit through to conclusion and in an article on AFP, Victor Muller stated that Spyker would retain around 90% of the proceeds if they are successful (with a share going to the anonymous funder, of course).
Points 3 to 13 merely establish the corporate cast in this drama and their background in the ownership of Saab, which was established in 1947, purchased 50% by GM in 1990 and 100% in 2000 before being sold to Spyker in February 2010.
One important bit:
9. On February 23, 2010, Spyker finalized a deal with GM to purchase Saab. Through the transaction, Spyker contributed $74 million in cash, and the European Investment Bank provided a €400 million loan guaranteed by the Swedish government. As a result of the transaction, Spyker acquired a majority interest in Saab, and GM retained a minority interest through preferred shares valued in January 2010 at approximately $326 million. GM’s minority interest represented just 0.000005% of shareholder voting power.
——
Relevant non-parties (points 14 to 25)
These points introduce the individual persons that were most important in speaking for their companies during the period in question. Identities from Saab/Spyker, GM, Hawtai, Pang Da and Youngman are introduced here.
When I was at Saab I was amazed at some of the services we were outsourcing and how much they cost. My perception was that the costs associated with this were negotiated to some degree, but mostly just accepted. It seemed to have become an ingrained behaviour, most likely under GM’s ownership of the previous 20 years. Saab’s ownership changed, but the culture of the company didn’t change nearly enough.
Or maybe this is just the way it is in the world of big, global businesses.
Ewanick famously saved $48,000 by using just $2,000 of the $50,000 allowance he received to redecorate his Detroit Renaissance Center office by going to Ikea rather than ordering pricier furniture.
OK, so he’s a top tier executive, but $50K just to redecorate an office? Kudos to him for not using it all.
If you’re wondering why some car companies struggle to be profitable, then rest un-assured that there’s quite a bit of waste going on in most of them.
At Saab, we had a cost-cutting program called Cheetah in our final months. One could rightly say that it should have happened in the first months of Spyker’s ownership rather than as an attempted salvage operation at the end. There were indeed some wasteful spending decisions well before then.
I remember reading some complaints about the PhoeniX concept, which I never thought was a valid complaint for people to have. PhoeniX was absolutely appropriate for a company looking to re-stamp itself on the automotive scene after all the negative news surrounding the GM sale. It got Saab plenty of magazine articles and covers, too.
But I did wonder about the big ‘Independence’ party that happened in the factory just before production stopped in 2011. It seemed a little bit presumptuous and the way history has turned out, it seems suppliers probably didn’t appreciate it, either.
They might take solace in the fact, though, that as far as I know there weren’t any $50,000 office decorations.
Much as I appreciate Steve’s letter and all the comments from fellow Saabists, I fear it will have absolutely no impact with NEVS.
When I wrote that letter, I knew there was around a 0.5% chance of Mr Jiang ever seeing it. Maybe he googles himself. Maybe he has someone watching the web for content about NEVS/Saab. Maybe someone still at Saab from the old days showed it to him. However he might come across it is largely irrelevant because the chances he’d ever see it were very, very remote.
And the chances he’d act on any part of it? Even more remote.
As Hughw also points out:
If you’re going to spend millions of dollars, you probably do enough due diligence to know what you’re buying. I’m sure they know better than us what technology is sitting on Saab’s shelves, what technology is out there in the world, and what technology is coming on line.
I’d up those millions to billions-with-a-‘b’ because that’s most likely what it’s going to take to produce car #1.
What Hughw points out so eloquently is that this is a company with a plan. I’ve already given words to the thoughts of many people in saying that I don’t understand how they’re going to accomplish that plan, but that doesn’t take away from the fact that they have one and that none of us really know what it is.
And here’s the kicker – Any businessman in Jiang’s position who’s worth his salt won’t be altering that plan because a blogger in Tasmania, or a handful of pundits or commenters from other parts of the world asked him to consider them.
As much as I think it would be reassuring/wise for NEVS to be more forthcoming about their business plan, I also acknowledge that it’s their business and not mine.
I also know this – the future of the brand (that might be) called Saab may not be the future that Saab enthusiasts want it to be. Those people will have to make a decision of their own because no amount of pleading or self-expression is going to change the plans that NEVS will put in place for this company.
True story: I remember a time when I was a young kid growing up in Melbourne. I was playing in our front yard. It was a summer’s day and the ground was dry, but the clouds were menacing. I heard a noise growing louder in the distance and as I stood up, I could see hard rain falling on Mrs Groves’ house, on the other side of the street. The rain moved slowly across the road towards our place and soon I was running towards the house, but I was soaked before I got to the door.
Sometimes you can see stuff coming but try as you might, you still can’t avoid it.
——
There have been a few interesting articles in the last few days that make a few interesting statements when it comes to Saab’s situation – if you’ve got the eyes to see and the memory to put them in context. They speak not only to Saab’s current sale status but also to the way some things happened as Saab struggled for life in 2011.
I should write to Saab’s bankruptcy administrators and ask for a commission. Every time I write that the sale to NEVS is imminent, Youngman submit what one has to presume is an improved offer. It’s not helping, though, because the process just drags on even longer and the only people acting as if Youngman are still a realistic prospect in this process are Youngman themselves.
Everyone else is acting and preparing for the fact that they won’t be buying Saab. Saab Parts AB provides one example.
The head of Sweden’s National Debt Office, Bo Lundgren, was happy to talk on the record last week about what they’ll have to do as Saab Parts AB’s long term owners if that’s how things turn out. They’re even looking at expanding into selling parts for other brands so as to prolong the life of the business. The presumption underpinning all this is twofold: 1) That Saab Parts AB will not be sold (as NEVS don’t want it), and 2) there won’t be any new Saabs like the old ones and therefore, Saab Parts AB’s major pool of customers will dry up within the decade.
Of course, it’s prudent to plan for both scenarios – Saab Parts AB being sold or being left unsold – but every article I read about this last week pointed to the unsold scenario.
Another article shown to me today comes from Bloomberg and is written by Ola Kinnander (who, personally speaking, is my most trusted journo in Sweden). The article is concerned with discussions over the use of the Saab name by a prospective new owner.
I can’t find an online link, but here’s part of what I received via email today:
Ever since the Top Gear story on Saab, I’ve had a steady flow of web searchers landing here looking for information on the Saab 99Turbo Extra button.
People seem to want to know what the extra button was for. James and Jeremy gave us no real insight other than proving that the button doesn’t make Jeremy any more attractive or intelligent.
In simplest terms, it’s a dummy switch. It was there for use with a number of possible accessories, such as foglamps, etc.
But don’t just take my word for it. Just to make sure you’ve got an authoritative answer on this, I wrote to Peter Backstrom at the Saab Museum in Trollhattan. His response:
…..regarding the Extra button in the 99 (and also other Saabs) It was a button located in the panel [to be used] if the owner of the car wanted to add some electrical equipment to the car, like foglights etc. In Swedish we call [it] Extraljus. So we can say that it is a bit of Swinglish in our cars.
The button was also available off the shelf at our dealers if people wanted to have more in their Saab. We probably sold MANY of them in the good old times when the staus of the cars was connected to how many switches you had on the dashboard…..
So now you know.
The Extra button is exactly what it says it is: An extra button.
——
Update
I’ve seen various suggestions for use of this button:
– Use it as an APC switch so that you could run the car on full boost or part boost
– Front fog lamps (the ‘extraljus’ that Peter referred to)
– bypass the thermoswitch and turn the radiator fan on a hot day
If you come up with a useful – or creative – way to use it, let me know!!
I figured I better catch up with what’s happening in Saab-land.
It’s been a busy week with Youngman “pulling out” of negotiations to buy the company and a new company gaining momentum as a possible buyer. They say a week is a long time in either politics or football. It seems a lot can happen in a bankruptcy, too.
Youngman
Reports are a little vague and they depend on which one you read; did Youngman jump or were they pushed from negotiations to buy Saab? Either way, they’re reported to be out of the picture. There are theories that Youngman were dismissed because they were too dependent on Chinese government approval, etc, etc. Let me pose my own theory based on a little prior knowledge and some educated guesswork.
Youngman were a mess of an organisation and my guess is that the administrators finally saw through their well-intended public statements and realised that they really are what they appear to be – a rabble. NDRC approval was never a concern as far as I can remember, so that’s just an excuse. Youngman are very well connected with the Chinese government and they’re in need of a company like Saab to justify all the G-money they’ve spent on empty factories back home in China. But they were also a bloody mess, which is why I’ve never favoured their bid to buy Saab. It seems the administrators finally think the same way.
I have to say that I’m pleased on Trollhattan’s behalf for their absence.
What’s Sven backwards?
It’s NEVS. And that’s an acronym for National Electric Vehicle Sweden.
NEVS is the new, emerging party looking to buy Saab with an eye to possibly making either/both hybrid and/or pure electric vehicles. At the top of the company is a former Volvo Trucks boss named Karl-Erling Trogen and another guy named Mikael Kubu, who’s said to have some history with insolvency and corporate reconstructions. They’re the front for some more Chinese and possibly Japanese money.
“It’s not just about electric cars, but also about larger volumes of hybrid cars related to a long term development in electric cars,” a source said.
That tells me they’d be very interested in the work Saab did with eAAM on the rear-electric drive system that Saab were going to use in the new 9-3. They’ll need to be quick, though. eAAM is a business and I’ll wager they haven’t been hanging around, putting off talks with other OEM’s while Saab get their act together.
The big question is whether NEVS will also be interested in the new Phoenix platform (the 9-3 replacement) as well. I certainly hope so as it’s said to be a cracking design and mostly finished.
NEVS seems to be gaining momentum in the race for Saab with some suggestions the Swedish government favour their interest. This wouldn’t surprise me in the least, but don’t expect a flat-out statement to that effect.
Possibility and Stickability
The other big question that people are pondering in light of this consortium’s emergence is “Do I find the prospect of Saab owned by NEVS an exciting one?”
Swade warned me this could be a tough row to hoe. After all, isn’t a company going into bankruptcy a pretty clear sign that their marketing has failed? It’s certainly not the most positive demonstration of engagement with their customers. However, putting all that aside (even if you can’t, humour me…) I still think that Saab marketing got some things incredibly, timelessly right.
Let’s set aside the merciless taunting by the Top Gear chaps throughout their recent Saab piece about Saabs apparent fixation with jets – even ones they didn’t make. Yes, it’s arguable that in many ways Saab marketing missed their mark and I too struggle with any of the marketing that tried to trade off the aircraft business. However, I believe that there is a also a case for Saab being one of the best marketed marques in the world. How so?
Bear with me while I take a mild digression to a comment made by a Swedish colleague of mine a few years ago. Knowing my affection for Saab, this fellow loved to rib me about the company’s trials and tribulations as they unfolded. On one particular occasion, he said something that more or less went like this:
“What is Saab, really? I mean, come on, try to define it for me. Volvo is a car company that is very easy to understand, one that make cars. A lot of cars. But Saab…. Saab is really just a very, very appealing idea.”
The fact he is from Gothenburg can perhaps account for something…… but nevertheless, it has remained as a telling comment in my mind. A very appealing idea. Perhaps that is part of the Saab magic after all?
If you consider that Saab’s market share in any market except Sweden was never more than marginal in comparison to its competitors, the iconic nature of the brand is quite amazing. Even now with the business completely removed from the market, I would bet that anyone you ask (literally, anyone) can offer a few words of recognition if you showed them a Saab logo. It might be that they recognise a Swedish car company. Or perhaps more. This is how I propose, that Saab is in fact, a true success of branding and positioning – admittedly only a part of the whole marketing spectrum – far beyond the commercial value of its business.
Nevertheless, if it’s not clear already, I’m not an advertsing guru or marketing academic and this is a not a comprehensive analysis of the Saab marketing campaigns. I’m simply an enthusiastic bystander who sees beyond the current failure of the Saab business and finds a timeless element to the Saab brand that is irressistable.
For the record, I think the answer to the question is ‘Yes’. But it’s worth exploring nonetheless.
There are plenty of cars that don’t get sold in the United States. Alfa Romeo, Peugeot, most Fiats, Renault, Skoda, just to name a few. Even Volvo have been re-thinking what they offer in the US and plenty of other car companies offer a restricted range, keeping some of their hotter models away from the US.
Why?
First and foremost, the margins are so small in the US market. You really need to have the economies of scale that Saab won’t have (for some time, if at all) to drive the cost down. Local manufacturing helps, too, as it avoids most of the freight costs that overseas manufacturers have to deal with.
The reason why margins are so small, of course, is that the US is such a cutthroat market. I’ve covered it many, many times over the years, but new car prices in the US are very, very low compared to nearly every other market.
Some of you might remember my Turbo X comparative price chart from a few years ago…. (click)
That pretty much sums it up. That was back in 2008 and nothing’s changed from then to now.
US customers are very vocal, very aggressive, demanding the most features and at the absolute lowest price. The majority will unashamedly abandon you if you don’t meet those demands. Unless a product is overwhelmingly compelling, it’s likely that it will win the attention of only the most rusted on Saab fans.
Let’s assume a best case scenario and say that a re-born Saab may be able to manufacture the 9-3 in the near term after takeover, perhaps after modifying some bits and pieces. It’s not going to be a new car by any means and whether or not it would be beneficial to the brand to sell that vehicle in the US would make for an interesting discussion. The 9-3 is still an excellent car, but the automotive press in the US won’t be gentle when it comes to pointing out its ageing platform. Unless any pre-sale modifications are substantial, it’s arguable that an ageing 9-3 being the debut vehicle from a re-born Saab might actually be damaging to what should be a brand aspiring to move upmarket (for reasons discussed earlier in the week).
Another point to consider is the advertising investment required in order to make a dent in the US. It’s one of the world’s noisiest markets, requiring BIG dollars to make an impression. You could easily make a case for a new corporate owner keeping their powder dry for when they’ve got a new car to debut there.
——
Of course, the reason Saab should go back into the US market is because it’s still a place with huge potential. The brand is known there, it has a following there and it will have customers there. Those brands that don’t sell in the US are doing OK, but the US is still widely regarded as one of those essential markets for a successful company.
Over all, I think it will be important for a re-born Saab to return to the US. Any debate on the subject might relate to the timing. Perhaps they should wait for a genuine new vehicle to be ready prior to a re-entry there. They can work on established European markets first and build them as a beachhead prior to marketing in the US. There were plenty of European markets that should have done better for Saab in the last few years and concentrating on those, with their higher margins and cultural similarities might prove to be a better initial strategy.
