A Saab Story?

Saab Automobile, the venerable brand from Sweden, entered bankruptcy last December. The trustees of the company have been seeking bids from international and Swedish investors looking to rescue and revive the now dormant company. Offers were due yesterday and the auto world is waiting anxiously to hear the results.

Saab Automobile was founded in Sweden in 1947. Originally, it was the auto manufacturing division of Swedish Aeroplane Limited, now an aerospace and defense company. The auto division was sold in 1990 to General Motors who, in turn, sold it to Spyker Cars N.V. in 2010 as part of their brand shedding. Spyker, now renamed Swedish Automobile, is a Dutch company that was founded in 1999 to design and manufacture supercars but itself is in bankruptcy with an uncertain future. Its collapse took the Saab brand down with it.

Saab’s future is tied to disentanglement from Spyker and recapitalization by another owner. In 2011 Chinese companies Pang Da Automobile Trade and Zhejiang Youngman Lotus Automobile attempted to buy Saab but the purchase was blocked by former owner GM. They opposed the transfer of GM technology to any Chinese company. GM has retained the licensing rights to the technology and has preference shares in Saab and thus has a say over the next steps.

The question is who wants Saab now, and why? The quirky automobile had a loyal cult-like following over the decades. Images of the 1948 92001, 1958 92B, the 93B, the 1960’s 96, the Sonetts, and the 1968 Saab 99 continue to resonate in car lovers’ minds. The 900 was introduced first in 1978 and sold nearly one million vehicles. The 9000 was introduced in 1985 and became Saab’s first true luxury car. Aficionados loved the funny, egg-shaped vehicle with its unique characteristics. But following GM’s purchase, the car was homogenized onto shared platforms and the brand lost its distinctiveness. Other than the nameplate, it became tough to recognize any attributes unique to Saab vehicles in the final years of GM’s ownership. Brand value has declined since 2001 and is about equal to Oldsmobile. That’s not encouraging.

So a new owner would need to work from a pipeline of new designs or go back to the drawing board to design a new generation using heritage cues. Then they would need to find modern technology including, presumably, hybrid-electric technology to reach future mileage requirements. They also would need to move beyond the GM technology licenses to have complete control over the vehicle. And finally they would need either to modernize production facilities in Sweden or find a source of manufacture that is cheaper but with high quality. So a buyer would need to redesign an entire line, re-engineer all platforms, re-launch a damaged brand, commit what is likely to take $1 billion of effort or more, and hope the market responds.

Bankruptcy trustees have confirmed that offers were filed before the deadline yesterday. One of them is China’s Zhejiang Youngman Lotus Automobile again. Other potential buyers are rumored to include Chinese automaker Geely, Swedish sports car maker Koenigsegg, Indian firm Mahindra and Mahindra, and Fiat. One speculative and maybe wishful rumor has BMW in the mix. BMW has done a great job with the revival of the Mini brand and has demonstrated a unique ability to take that unique brand and revive it successfully.

Of the possible buyers, it doesn’t make sense that GM would approve a sale to the Chinese given its past issues. So a sale to another automaker seems most likely. Let’s hope the new buyer is well capitalized, has deep manufacturing and technological resources, and understands what makes a Saab a Saab. Otherwise the brand will be destined for the ash heap of history and go from being a Saab story to a sob story.

By Steve Odland. From January 2001 to March 2005, Odland was the Chairman and Chief Executive Officer of AutoZone, Inc., an auto parts retailer.