Jan Åke Jonsson, the soon-to-retire CEO of Saab Automobile, and his successor, Victor Muller, who is also Saab’s existing president, talk about their plans for the company’s future
The mid-winter days of 2010 were even darker than usual for a small corner of south-west Sweden. Trollhättan, the town where Saab Automobile has both its main manufacturing plant and its headquarters, was in mourning. General Motors had begun the process of liquidating its lossmaking Saab Cars division after about 20 years in control, during which profits had been rare. Enter Victor Muller, Dutch entrepreneur and owner of supercar manufacturer Spyker Cars, who went on to negotiate a purchase of the company and its remaining assets. Saab was saved. Workers at Saab and its suppliers, both employed and redundant, celebrated the deal.
Over the next 15 months plans started to take shape. Production of the Saab 9-3 Convertible, previously carried out by Magna Steyr in Graz, Austria, was brought back in-house, joining the 9-3 saloon, SportCombi (wagon) and 9-3X crossover. Next, plans were put in place to have the allnew 9-5 saloon rolling down the same single line.
Signed off in the last days of GM ownership, the big saloon was scheduled to enter production at Opel’s Rüsselsheim plant, rather than at Saab’s Trollhättan facility. Building the car in Germany would have seen the 9-5 produced alongside the Opel Insignia, which shares the Epsilon 2 front- and all-wheel drive architecture, albeit in a stretched-wheelbase form.
By late March 2010, Saab had succeeded in converting the single line at Trollhättan to also take the 9-5. As the Swedish plant had been redesigned according to GM’s global production parameters, the necessary changes - while complex - presented no insurmountable problems. Now, the facility not only producing all 9-3 models and the 9-5 saloon, but plans were in place to add the 9-5 SportCombi wagon from June this year.
“From a point of liquidation back in early 2010, we have achieved a lot,” says Victor Muller. “We moved from 220 jobs per day in the first quarter of last year to 304 on one shift. But we lost a lot of production in the early part of the year due to the partial liquidation of the assets of the company – we couldn’t just restart production straight away, and of course we are even now still restarting or starting sales and distribution operations in countries such as China and Russia.”
Following on from the momentum that built up through first-quarter 2011, Saab then started to run into difficulties, with problems centring on production stoppages. In April this year, a limited number of suppliers put parts deliveries on temporary hold due to claimed late payments. Whilst acknowledging that the company’s liquidity had come under pressure, Muller remains positive about the company’s overall future, insisting that the firm has the right plans in place for break-even or better in 2012. This, he notes, comes on the back of a decision taken earlier in 2011 to sell his Spyker Cars in order to give Saab more financial security.
“I actually proposed [the decision to sell Spyker] to the board. Spyker needed cash and unlike Saab, it didn’t have a fully-funded business plan. Within the confines of a public company, for instance issuing $25 million of shares to fund the development of the four-door car, the Peking To Paris (a concept that first appeared at the 2006 Geneva Motor Show), would have caused a dilution of existing shareholders. So there were two options. Either keep the company simmering in the background or sell it off to the best supporter the company has ever had.”
The man to whom Victor Muller sold Spyker was Russian entrepreneur Vladimir Antonov. The businessman has stated a keen interest in also taking a shareholding in Saab, but has been prevented from doing so by out-going owner General Motors. At time of press, Antonov had tabled an offer to purchase up to 30% of Saab.
“The decision to sell Spyker was difficult,” says Muller. “Did I like seeing my little baby go? No. But the company can now have the proper funding to make it flourish as a really top-level sportscar maker - and now Saab has the benefit of my total focus.”
With Muller having spent the first three months of the year concentrating on Saab’s financial future, Jan Åke Jonsson, the firm’s CEO, has been working to ensure the viability of Saab’s current and future product portfolio.
“The 9-3 has just had a 2012 model year update, mostly styling and mechanical changes. These changes can keep the car fresh, keep the sales going, until we replace it with a new model in October 2012.” Jonsson also reveals that this will be the first model to benefit from a previously-announced agreement with BMW Group for the supply of turbocharged 1.6-litre petrol engines. There will be other powertrain and drivetrain alliances too, as a recent deal with ZF Chassis Systems illustrates (see box, page 24).
“The PhoeniX concept (unveiled at the Geneva Motor Show in March this year) was the first time we have shown eXWD, our electrical all-wheel drive system, which operates on the rear axle. I think we will see more of these sorts of technology partnerships,” adds Jonsson.
The PhoeniX show car’s eXWD system comprises a rear-drive unit housing a 2kW (34bhp) electric motor/ generator. This charges a small battery pack, while regenerative braking sustains the battery’s charge. This hybrid propulsion system, which Saab says is now under development for production applications, promises various all-wheel drive configurations, each of which is driver selected.
Jan Åke Jonsson is adamant that Saab can also deliver on the technological promise of the PhoeniX concept. “We will offer a hybrid solution with the next 9-3. Remember, we were building four-cylinder turbo engines as long ago as the 1970s. Then of course there is our expertise with BioPower (E85). So in a way, low CO2 requirements, low fuel consumption requirements – the things that legislation is driving and that consumer demand is driving – these are things that we have already being doing for decades.”
Having spent 37 years at Saab, Jonsson also has interesting thoughts on where the current race for low CO2 numbers is leading the automotive industry. “You can have sub-100g (of CO2 per 100km) and then also fuel consumption of three litres per 100 kilometres. Those are great numbers. And sure, you can then go lower, take consumption down to one litre per 100 kilometres, with zero emissions. But how much is the customer prepared to pay to get there? We have experimental battery-electric powertrains in a test fleet of 9-3s today. But is there a large market out there for electrical cars at the price levels where they make money for the manufacturer? I don’t know. The customers will decide.”
Returning to manufacturing, Jonsson covers the contract build deal Saab now has with General Motors, noting that new 9-4X is about to be produced at a GM plant in Mexico on the same line as the closely-related Cadillac SRX crossover. “If you go to Ramos Arizpe and see those cars being built there, you see a typical GM plant, the way it’s laid out - just as it is in Trollhättan. We have a good relationship with GM, and not just on the 9-4X build and supply programme. Then, if you look at the commonality of parts that the (Trollhättan-built) 9-5 has with some GM vehicles, and also the 9-3, why wouldn’t we work together in areas like parts supply?”
One of the best legacies of Saab’s GM heritage is the Epsilon platform, as well as the related - but more recent - Epsilon 2 architecture. These respectively underpin the current 9-3 and 9-5 models. “Our PhoeniX platform that you will see in production form when we launch the new 9-3 in 2012 is really all-new, so much is being changed (from its Epsilon and Epsilon 2 origins). This is the basis for our next larger vehicles, but if we choose to introduce a smaller car, then the cost becomes a big factor and we wouldn’t have a decent business case to use it for that.
“A large benefit we gain by using a more sophisticated version of what we have now as the basis of the 9-3 is cost.
As an independent company, we can make fast decisions, money-saving decisions. We can modify our powertrains and we can build everything in one plant – Trollhättan is a very flexible plant – and when you have already had major investments not too long ago in the facilities, in the whole manufacturing system, you are in a good position.
“By late 2012, the 9-5 will be the oldest car in our showrooms. We have never had a range of cars that will be so young.” Jonsson won’t be drawn on what additional products might follow the next 9-3 after its late-2012 launch, but he admits that the firm may produce a crossover variant of the new 9-5 SportCombi as a rival to the Audi A6 allroad. “I won’t say that we will do such a car, but if we did, it would be a relatively low investment – it would not be a big job, a model like that.”
On the topic of the proposed small Saab, the so-called 9-1 that is in the early planning stages, Jonsson remains tightlipped, though he admits the door to BMW technology might well have been left open. Could there be, for example, a sharing or licensing of the next Mini platform?
“We have such a good relationship with BMW, we are just at the start of that. So of course we are talking to them – we also have strengths in engineering that maybe they don’t have, things like our BioPower E85 expertise – but it’s too early to say specifically what we might explore next.”
From early to mid April 2011, Saab Automobile experienced several production stoppages at its Trollhättan works. The company’s owner spoke of “discussions about payments and supply terms” in various cautiously-worded statements. Saab insisted it would continue to work towards solutions to these problems to prevent their recurrence.
“Saab Automobile expects to resolve these issues in the short term, also to prevent any further disruptions in supply,” Spyker Cars, the controlling shareholder stated in early April. “Saab has sufficient means to meet its immediate liquidity needs from existing and available sources.” One week later, the Swedish debt office revealed that it had received a proposal aimed at solving what had by then become a funding crisis, as the Trollhättan plant remained idle. The debt office had become involved due to the backing of the Swedish state for a $400m loan from the European Investment Bank pledged to Saab in 2010.
Speculation over the future of Saab Automobile seems certain to continue, particularly with the company’s finances remaining in question, while the company’s chance of long-term success will also be open for debate. And yet, it is little short of miraculous that Saab is even operating today, considering where it was only 18 months ago. A lot has happened since then and, as recent events have proved, within Saab’s corporate DNA there remains a quiet, defiant spirit of survival against difficult odds.