Or Daily Saab: A Wale Of A Botched Sale

GM’s China chief Kevin Wale poured a huge bucket of ice-cold water over hopes that China’s Pangda and Youngman will rescue Saab. The deal needs to be approved by the Chinese government, the European Investment Bank, the Swedish government and – GM.

Wale told Reuters today:

“It doesn’t make sense for us to support any change that might adversely affect us. We use global architectures and those global architectures are used in a number of products we make at SGM.”

In the last few days, Saab had been busy spinning the story that the Chinese government is all for the deal and that GM won’t dare to mess with it. Reality looks different.

Last Friday, GM spokesman Jim Cain told everybody who asked:

“GM would not be able to support a change in the ownership of Saab which could negatively impact GM’s existing relationships in China or otherwise adversely affect GM’s interests worldwide.”

The technology that is in current Saabs is all by GM, and is shared by many models produced in China at GM’s joint venture with SAIC. Even the new PhoeniX platform is not completely GM-free. The Chinese buyers want technology, and GM made it clear that they will not get it.

Just in case the subtlety of the GM comments went unnoticed by Saab et al (a crowd that tends to live in a parallel universe at times), the pouring of cold water went transcontinental. Later in the day, GM spokesman Jim Cain told Reuters and everybody who asked:

“Although General Motors is open to the continued supply of powertrains and other components to Saab under appropriate terms and conditions, GM will not agree to the continuation of the existing technology licenses or the continued supply of 9-4X vehicles to Saab following the proposed change in ownership as it would not be in the best interests of GM shareholders.”

Translation for the dense: We will sell parts to all comers with cash, but we will never agree that technology we own will be sold by someone else to someone else, dig?

Saabsunited still needed clarification, and Jim Cain provided it:

“As you can see in our statement, the issue of supplying components and power train and other things to Saab is something we’d be open to continuing under the right conditions, but when you talk about the 9-4X and the technology licenses, that is something we have to manage so carefully because it potentially impacts us in markets all over the world. We need to be able to control our own technology in order to be successful for the long term.”

“It’s a decision that we’ve made and wanted to be as clear as we possibly we could. How that impacts the way things develop from this day forward is something that Saab and Pang Da and Youngman have to discuss. Our piece has always been related to our role as a supplier and as a technology licensor.”

As reality began to sink in, Victor Muller claimed he had known it all along. In an interview with Sweden’s TTELA, Muller said:

“I warned about this all the time.”

“It required no great knowledge to predict this. I warned the Chinese all along that they wanted something that would not go down well at GM.”

This must have been a different Muller than the one that had said on Friday, October 28, when quizzed by Sverigesradio about the viability of the deal:

“This is very good news for Trollhättan, very good news for Saab.”

And when he was asked whether GM would agree, Muller had answered:

“This is up for the buyers and General Motors to agree on, but I am very confident that that will be achieved.”

No word about warning the Chinese all along that this won’t work. Of course, this was on the Friday before the creditors meeting, where Saab received the stay of execution, based on the very good news.

Having been administered ample amounts of cold water all day, Saab finally issued a terse press release:

“Swedish Automobile N.V. (Swan) and Saab Automobile AB (Saab Automobile announce they have taken notice of a press statement issued by General Motors Company (General Motors) today regarding the proposed sale of all shares in Saab Automobile and Saab Great Britain Ltd. (Saab GB) to Pang Da Automobile Trade Company Ltd (Pang Da) and Youngman Automotive Group Company Ltd (Youngman).

Swan and Saab Automobile acknowledge the position taken by General Motors and will now discuss with Pang Da and Youngman to see whether a structure can be agreed which is acceptable to all parties concerned.”

Or as Muller had said to TTELA: “It’s back to the drawing board again.”

What Muller seems to be drawing is the old plan of Youngman and Pangda taking a hair less than 50 percent in Saab, with Muller back in the driver’s seat. He thinks that will avoid the change of control problems a 100 percent sale caused. The problem is that the Chinese don’t want Saab, they want technology. The Chinese government has given a clear mandate to its industry to get as much technology as possible under Chinese control.

A control problem avoided at GM creates a control problem in China. No technology, no deal.

There simply are too many parties with diametric interests who have to say yes to this deal. Saying no or nothing is always easier.