The Truth About Cars » bankruptcy The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. Thu, 24 Jul 2014 10:00:54 +0000 en-US hourly 1 The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars no The Truth About Cars (The Truth About Cars) 2006-2009 The Truth About Cars The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars » bankruptcy Dealers Still Waiting For Replacements, DeGiorgio Linked To Original Design And Upgrade Mon, 14 Apr 2014 14:00:51 +0000 GM ignition diagram

Automotive News reports dealers are still waiting for the ignition switches meant to replace the out-of-spec switch at the center of the ongoing recall crisis at General Motors. The switch was to have arrived at dealerships beginning this week, yet most dealers are in a “holding pattern” on deliveries. Once the parts do arrive, service bays will begin work on affected customer vehicles immediately before turning toward the used lot, where vehicles under the recall are currently parked until the customer vehicles are fixed.

As for GM seeking help from NASA with its woes, however, The Detroit Bureau learned from NASA Deputy Associate Administrator for Communications Bob Jacobs that his employer “is not working with General Motors on its ignition switch issue”; a separate source claimed “low-level” discussions between the two were taking place, but hasn’t gone any further thus far. He added that while NASA would be more than willing to help GM, a formal request would require some coordination between the agency and both the National Highway Traffic Safety Administration and the Justice Department so as to not interfere “with their own, ongoing investigations of the GM ignition switch recall.”

Speaking of the Justice Department, Reuters says five senators, including Richard Blumenthal of Connecticut and Barbara Boxer of California, penned a letter asking Attorney General Eric Holder to “intervene in pending civil actions to oppose any action by GM to deny responsibility for damages”:

We write to request your immediate intervention and assistance on behalf of victims of severe damage – financial harm, physical injury, and death – resulting from serious ignition switch defects in General Motors (‘GM’) cars.

The aforementioned actions may be in reference to the liability shield erected upon the automaker’s 2009 exit from Chapter 11 bankruptcy, where “New GM” is only responsible for the claims linked to the switch from June 2009 forward.

That division within the company may be more of a thin line than a 4-inch-thick steel plate, however, as Autoblog reports an investigation by the House Energy and Commerce Committee uncovered an email exchange between the NHTSA and GM last July to discuss the latter’s “indifferent attitude toward safety issues” face-to-face. The agency cited the automaker’s slow response to urgent matters and preference toward regional recalls over full recalls as two examples of GM not having changed much since leaving bankruptcy.

Bloomberg adds the agency itself didn’t do enough to take GM to task on its attitude toward safety, though, based on a memo unearthed by the committee regarding airbag failures on a number of Chevrolet Cobalts and Saturn Ions with warranty claims being four times’ higher than similar competitors. The decision to investigate those claims was rejected by a review group within the NHTSA, believing the airbag issue “did not stand out” among other incidences of failure.

Automotive News reports the committee also found an email chain that ties GM engineer Ray DeGiorgio — who denied having knowledge of the April 2006 change to the ignition without a change to the part number — with said change. In short: DeGiorgio signed-off on both changes to the spring and plunger to help prevent the slipping issue now linked to 13 fatalities and 33 accidents, as well as on the decision to retain the original number issued to the part he designed for the Saturn Ion as his first project for GM in 2001.

Regarding the Ion, Reuters says the troubled development of the compact vehicle — and the equally troubled relationship between GM and supplier Delphi — may have laid the groundwork for the current recall crisis. The supplier alerted the automaker about the out-of-spec switch, but fearing an embarrassing introduction, money issues, and the possible wrath of then-vice chairman of product development Bob Lutz, GM pressed ahead with the switch as-is.


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“New” GM Only Responsible For Post-Bankruptcy Ignition-Related Accidents Mon, 10 Mar 2014 14:15:38 +0000 GM

In addition to pledging to do business differently in the wake of a 1.6-million vehicle recall over a faulty ignition switch and the decade-long delay behind the recall, post-bankruptcy General Motors may find itself protected by its former self before the court of law for any accidents resulting from the switch.

Automotive News reports that under the terms of reorganization that helped the current structure at GM emerge from bankruptcy in July 2009, the automaker would only be responsible for accidents post-bankruptcy, while accidents before the aforementioned point in time would need to seek compensation from “old GM” in bankruptcy court.

However, the original plan would have shut the door on liability for any product made pre-bankruptcy — including the 1.6 million vehicles under the recall — had not GM bowed to pressure from critics and consumer advocates.

The division has proven successful thus far for “new GM,” as lawsuits made for pre-2009 claims against the automaker have failed thus far, as spokesman Greg Martin acknowledged:

It is true that new GM did not assume liability for claims arising from incidents or accidents occurring prior to July 2009. Our principle throughout this process has been to the put the customer first, and that will continue to guide us.

With 31 known accidents and 13 deaths tied to the faulty ignition switch — discovered in 2004 prior to the introduction of the Chevrolet Cobalt, but only corrected beginning last month — the more that fall under “old GM,” the more potential for savings for “new GM” in litigation that could come as a result; the automaker paid $601 million in 2012 for liability claims, according to a filing with the Securities and Exchange Commission.

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Delaware Bankruptcy Judge Approves Sale Of Fisker Automotive to China’s Wanxiang Tue, 18 Feb 2014 17:50:27 +0000 800px-Fisker_Karma_2
Last week, Rueters reported that Wanxiang, a Chinese parts supplier, had won the bankruptcy auction for Fisker Automotive. The bid was valued around $149.2 million. The deal comes to close after a bidding war between Wanxiang and Hybrid LLC — a group who includes Richard Li, a Fisker investor and Hong Kong billionaire. In November, Fisker asked for Hybrid Technology LLC to purchase the bankrupt company for $25 million, but creditors objected the deal in November and brought Wanxiang into the case in December.

Today Delaware, U.S. Bankruptcy Judge Kevin Gross approved of the sale to Wanxiang. He stated that the auction “shows that a fair process is a good thing.”

The sale came after a 19 round biding war between Wanxiang and Hybrid Technology LLC, and includes the shuttered General Motors assembly plant that Fisker purchased in 2010. Bloomberg reports, “[the] offer includes $126.2 million in cash, plus equity and $8 million in assumed liabilities.”

Wanxiang also bought A123 Systems Inc. last year after its bankruptcy for $256.6 million. A123 produced the Fisker batteries, which Henrick Fisker attributed to the failure of Fisker after A123 went through bankruptcy in October of 2012, and exiting in March of 2013.


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Judge Will Allow Wanxiang to Bid on Fisker, Sets Feb. 12 Auction. Lutz Mum Mon, 20 Jan 2014 15:57:17 +0000 fisker karma_lReuters reports that U.S. Bankruptcy Judge Kevin Gross ruled that an auction for the assets of defunct hybrid sports car maker Fisker Automotive will be held on February 12. The auction will be held in the New York offices of the law firm of Kirkland & Ellis and attendance will be limited to representatives of Fisker, the unsecured creditors’ committee, and the two bidders, the American unit of China’s Wanxiang Group, an automotive supplier, and Hybrid Tech Holdings, which is affiliated with Hong Kong investor Richard Li. Other potential bidders have until February 7th to tender offers.

Hybrid Tech has made an initial bid that it says is worth $55 million. That bid, known as a “credit bid” involves forgiving some of what the company owes on a $168 secured loan, which Li’s team has already bought for $25 million at a government auction last year. That loan had been part of a Department of Energy program intended to foster the growth of alternative energy vehicles. Li had already been a longtime investor in Fisker. Wanxiang, for its part, made a last minute stalking horse bid of $35.7 million in cash. Wanxiang bought Fisker’s battery supplier A123 Systems when that company filed for bankruptcy last year.

Wanxiang’s bid is seen as favorable by the unsecured creditors, who would get nothing in a complete credit bid, and also has the approval of officials in Delaware. Fisker had purchased the former GM assembly plant in Wilmington. Hybrid Tech has indicated that it would probably sell that asset whereas Wanxiang has said that it would like to build Fiskers there.

Last week, in an oral opinion, Judge Gross ordered that all bids will require some cash and he limited Hybrid Tech’s credit bid to the $25 million it paid for the loan.

Li’s lawyer is appealing, and called the ruling a “terrible precedent.” Judge Gross defended his decision in court on Friday. “Sometimes I’m right, and sometimes I’m wrong, and I think I’m right on this,” Gross said. “It was argued I was setting new precedent. I think I’m really following the law.” The judge then said that he’d be issuing a written opinion of his credit bid decision later today.

Fisker stopped production of the $100,000 Karma in 2012 and filed for protection from its creditors in November of 2013.

VL Motors Destino. A Fisker Karma with a LS9 engine.

VL Motors Destino. A Fisker Karma with a LS9 engine.

Meanwhile, at the media preview of the Detroit auto show earlier in the week Bob Lutz and his partner Gilbert Villoreal were showing their VL Motors Destino, a Karma retrofitted with a Corvette ZR1 drivetrain, new front and rear fascias and a custom interior by seat supplier Katzskin. Lutz said that they already owned 20 Karmas to convert for a delivered price of $200,000, though they would be starting out converting customers’ cars for half that price. He said there was no shortage of Fiskers to convert. Reportedly there are about 700 unsold Karmas in either Fisker Automotive’s hands or in dealers’ stock. Lutz said at the press conference for VL Motors that earlier in the day they’d already spoken to a dealer who wanted them to convert at least 4 Karmas he had in stock.

A 638 HP LS9 V8 where a four cylinder Ecotec genset used to sit.

A 638 HP LS9 V8 where a four cylinder Ecotec genset used to sit.

Lutz had been part of an attempt last spring by Wanxiang to buy Fisker. When asked by TTAC if he was part of the current bid he said that he could not comment. He did, however, comment about what possible assets Fisker could have that would be worth buying, since the heart of Fisker’s hybrid drivetrain is based on technology owned by a company (and investor in Fisker) named Quantum. In addition to the design of the Karma, it’s chassis and body, Fisker has the right to use Quantum’s serial hybrid technology providing they pay a per vehicle royalty. Lutz said that any buyer of Fisker’s assets would then have the same access to Quantum’s hybrid tech.

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Wiesmann Petitions to Dismiss Bankruptcy Fri, 29 Nov 2013 16:04:47 +0000 01-w-mann-gt4-roadster

Wiesmann, the German maker of BMW powered retro sports cars, looked like it was going to join other European specialist automakers that have declared bankruptcy like Cosworth, Gumpert, Artega, Lola and the London Taxi Company, but the small company has apparently cleaned up its balance sheet and has applied to have its insolvency proceedings dismissed. Wiesmann has been operating since 1993 in Dülmen, Germany. No further explanation was given in the company’s announcement beyond stating that the application to dismiss the bankruptcy was “due to abolition of the insolvency reasons”. A meeting with Wiesmann’s creditors is scheduled for mid-December.

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Chancery Judge Rejects Fiat’s Valuation of UAW VEBA’s Chrysler Shares, Merger Delayed Thu, 01 Aug 2013 01:59:15 +0000 Delaware-Court-Of-Chancery1

Sergio Marchionne’s plans to merge Chrysler and Fiat have been delayed because Fiat failed to convince a Delaware Chancery Court judge to set the value of Chrysler stock owned by the UAW’s health care fund known as VEBA. Judge Donald Parsons rejected Fiat’s request to find that a call-option agreement covering at least 54,000 Chrysler shares valued the stock at slightly less than $140 million. That decision means that the dispute over the shares’ value will now proceed to trial.

According to Bloomberg Judge Parsons ruled that Fiat officials haven’t shown the union fund “is required to deliver the shares in return for Fiat’s payment of $139.7 million. It would be premature for me to enter an order requiring” VEBA to turn the stock over to Fiat.

The decision may in fact encourage the two parties to settle the dispute, now about a year old, out of court.

The court’s decision may push Fiat and the union’s trust to find an agreement on the shares and end the dispute over the value of the holdings that’s gone on for about a year. Analysts estimate that when that agreement is eventually made, it will cost Fiat about $4 billion to take full control of the Auburn Hills automaker.

Fiat now owns 58.5 percent of Chrysler. The UAW healthcare fund came out of Chrysler’s bankruptcy owning the remaining 41.5% of the company in exchange for the union taking on the responsibility of Chrysler UAW retirees’ health care.  Those responsibilities had made the UAW one of pre-bankruptcy Chrysler’s largest creditors.

Fiat puts the value of the first tranche of available union shares at ~$140 million, about $200 million shy of the UAW trust’s valuation. On the UAW’s full stake, the difference could be as much as a billion dollars. Hence the parties’ presence in Delaware Chancery Court.

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Cop Won’t Drive Cop Car: Carbon Motors Declares Bankruptcy Fri, 14 Jun 2013 16:26:51 +0000 Click here to view the embedded video.

The video above is the closest we’ll ever have to enjoying a World’s Wildest Police Chases segment featuring the Carbon Motors E7. Somewhat lost in the breaking news of March regarding the bankruptcy of Fisker Automotive and Coda was the demise of the nation’s other other startup vehicle manufacturer, the Carbon Motors Corporation. Although Bertel correctly predicted Carbon’s death shortly after they failed to qualify for a DOE loan last year, the company maintained a brave public face and soldiered on defiantly until the end of March. As late as mid March they were announcing the introduction of two new vehicles: an armored truck called the TX 7 and a skateboard shaped drone called the CT 7.  Two weeks later they would be slipping out of their Indiana state taxpayer funded digs  without so much as a “Dear John” letter to the desperate Hoosiers who needed the jobs they’d promised

I’d been watching and waiting for an official announcement that the company had liqudated before poking the body with a stick. That moment finally came on June 7 with a Chapter 7 filing in Indianapolis. The bankruptcy filing shows that Carbon Motors had assets of less than $19,000 and outstanding liabilities of over $21 million. It seems that the dream of a purpose-built police car is dead.

In the post-mortem analysis, there are three questions that I think need to be answered. The first, which this piece will attempt to address is “Was there really ever a market for a dedicated police vehicle?” The second question is “Was Carbon Motors all just a big scam to suck at the government teat?” The third question is “Did the Big 3 learn anything from Carbon Motors that will benefit police and emergency vehicles in the future?’ Those opinion pieces will be forthcoming, but for now I just want to focus on the first question of whether it was ever a good idea.

To narrow the scope of this piece even further, I’m also going to limit my analysis to the fiscal case against Carbon Motors. There were other bad ideas, such as using a BMW powertrain combo that would be difficult to get serviced in wide swaths of flyover America, but I believe what would have really killed the Carbon E7 was it’s projected cost. Yes, I know many of you will laugh when I say that fiscal austerity matters to government, but the truth is that at the state and local level it does. State, county, and local governments buy the vast majority of patrol cars, not the Federal government. Unlike the Feds, they can’t print money.

The E7 concept struck me as the answer to a question that nobody asked. While readers will no doubt recall my documentation of and endless bitching about the shortcomings of the Ford Police Interceptor Sedan and the Dodge Charger, I just didn’t see the need for a dedicated patrol vehicle, particularly for one at the price point that the Carbon E7 was rumored to cost. The price point was a moving target and never officially disclosed by Carbon. Their representatives were always cagey, claiming that their car would come straight from the factory at a price that was “competitive” to a “completely equipped” patrol car.

“Completely equipped” in Carbon’s viewpoint meant a car loaded down with every crime fighting tool and toy ever invented, from the necessary and mundane stuff like lights and a siren to the fantastic yet probably not necessary such as their biological and chemical agent detectors. The first estimate that I can remember hearing was $70,000. A search of articles about the E7 archived through the Wayback Machine gave me estimates ranging from $50K in a 2009 article to a statement in 2008 by Carbon Motors officials that the average cost of a fully equipped police car was $80,000.

That’s an insane amount of money for a patrol car. I spoke with the technicians at my department’s fleet services unit and asked how much extra it costs to completely outfit a new cruiser. The reply was “About $10,000.” That sounds like a lot of money, but through the magic of the public bid process, it’s actually not. The taxpayers get a lot of stuff for ten large that really is necessary to turn a Taurus with blacked out trim and a cheap interior into a functional patrol unit. The Carbon Motors’ estimate of $80K per completed unit is way off. It raises the question of whether or not you could even spend that much money on a patrol car if you tried, so I did.

Using the fleet pricing information I got when I wrote my article on the Dodge Charger, I started off with a basic V-8 powered RWD Charger Pursuit for $23,585. I added $1,460 worth of factory options (wheel covers, Bluetooth, a few other odds and ends) for a total price of $25,045 for the basic car delivered from Dodge.

I then used retail pricing from Gall’s and other emergency equipment vendors to add everything else I could dream of to a patrol car. Whenever there was a choice in a piece of equipment, I picked the mid- range/ mid- priced option. I “spent” $2,375 on lights, which included a full light bar as well as a UFO’s worth of extra strobes hidden in the foglights, grille, and other places on the car. A mid- level RADAR unit went for $2,300, while a video recording system costs $3,200. A Panasonic Toughbook, which is one of the most popular choices for use as a Mobile Data Computer, was $3,500.

By the time all was said and done I came up with a total of $14,440 worth of additional pieces and parts. Add that to the base price of the car and you get $39,485 for a complete patrol car, less than half of what Carbon Motors claimed a fully equipped patrol car would cost in 2008.

No, a cash strapped police department (and there isn’t any other kind these days) could have two fully equipped patrol cars for $80,000 and that’s only if the person in charge of purchasing was stupid enough to pay retail for everything and the agency insisted on adding every bell and whistle invented to every car. The vast majority of department’s don’t add half of the stuff I added to my dream cruiser and none of them add everything to every car.

Carbon Motors appeared to operate on the theory that police departments do. One of the innovations that Carbon claimed was the establishment of their “Carbon Council,” which did manage to achieve some acclaim as an early example of crowd sourcing. While Carbon’s website makes the “Carbon Council” sound like a highly screened and elite panel of law enforcement experts selected to give valuable input into the police car of the future, in practice the group appears to have served up the law enforcement equivalent of The Car Built For Homer.

As a low-level cog in the Big Blue Machine of an urban police department I’m always more than happy to grumble about the condition of various pieces of my equipment to my fellow low-level cogs, but I don’t want the high level cogs to spend $80,000 on a single super cruiser. One of the (many) hats I wear is that of union goon Grievance Committee Chairperson for Bluegrass Lodge #4 of the Fraternal Order of Police. Our fleet has been neglected over the last couple of budget cycles and we’ve got some pretty ancient Crown Vics on the road. It appears we’re finally going to be getting a decent number of new cars this coming fiscal year. If the powers that be were going to buy only half the number of cars to replace some of our more ragged out units because they wanted to buy Carbon E7s instead of Ford Police Interceptors, I can assure you that the union would throw a very public fit. Municipal financing is a zero sum game.

The fiscal case for Carbon Motors never made sense, which explains why the company was never able to attract private investment. If a simple union goon with an Associate’s Degree in Police Studies gets that, than obviously people who are paid to make and manage money for other people would get it too. The only entity silly enough to invest in Carbon Motors appears to have been the state of Indiana. Part two will examine how that happened.


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Reuters Explains Why The Miles Bankruptcy Is Relevant To Other EV Bankruptcies Wed, 12 Jun 2013 16:26:01 +0000 Milesev

Yesterday, battery acolytes who hate to see stories of EV makers going bankrupt complained about a TTAC story of another EV maker going bankrupt.  They said the story was unfair, because Miles Electric made electric essential services vehicles, used for parking enforcement and the like, whereas bankrupt EV makers such as Coda tried to sell real cars,so where’s the connection?

Our story actually went to great pains trying to explain this promising niche, in an attempt to say “well, if it doesn’t work here, where will it?”

Wire services such as Reuters are less subtle.  In its article about Miles going bust, Reuters says that the Miles bankruptcy highlights ”the difficulties faced by battery-powered vehicles in gaining wide market acceptance.” Reuters goes on to say:

“Consumers have been slow to gravitate to electric vehicles due to their high cost and concerns about their driving range.

The U.S. Department of Energy in January backed off on President Barack Obama’s goal of putting 1 million electric cars on the road by 2015, and laid out what experts called a more realistic strategy of promoting advanced-drive vehicles and lowering their cost.”

(Expect to read something similar – or identical – in future reports of EV bankruptcies. These paragraphs read like handy boilerplate.)

Today, Reuters comes to the rescue of readers who miss a connection between Miles and makers of real EVs.   It turns out that bankrupt Coda  and bankrupt Miles are connected, so much that, writes Reuters,

“Lio Energy Systems Holdings, based in Delaware, and Hong Kong-based Miles Electric Vehicles Ltd are seeking to have their cases jointly administered with those of parent Coda Holdings and its affiliates, including Coda Automotive, which filed for bankruptcy on May 1.”

According to Reuters, Coda’s founder Miles Rubin is the same Miles Rubin that founded Miles Electric, a company, Reuters says, “that is separate from, but related to, Coda.”

In its new article about Miles & Co., Reuters again uses a lot of the boilerplate language that soon will become very familiar:

“Consumers have been slow to gravitate to electric vehicles due to their high cost, lack of convenience and concerns about their driving range. Among the prominent “green” car makers that face an uncertain future is southern California-based Fisker Automotive Inc, which is seeking a buyer after hiring bankruptcy advisers.”

The U.S. Department of Energy in January backed away from President Barack Obama’s goal of putting 1 million electric cars on the road by 2015, and laid out what experts called a more realistic strategy of promoting advanced-drive vehicles and lowering their cost.

Tesla has put thousands of cars on the road, but Fisker is considering a bankruptcy filing. Fisker’s lithium-ion battery maker, A123 Systems Inc, filed for bankruptcy late last year.”

In my humble opinion, the mere act of starting a new car company in a hope of striking it rich is a symptom of dementia. This industry is very unkind to new entries. Electric propulsion, and producing the cars in China simply add to the already daunting odds. But as long as people invest in these companies, Reuters will be able to re-use its handy boilerplate paragraphs.

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Yet Another One Bites The Dust: Miles Electric Gone Bust Tue, 11 Jun 2013 14:05:30 +0000


The electric vehicle revolution has eaten another one of its children. “U.S. electric car manufacturer Miles Electric Vehicles filed for chapter 11 bankruptcy protection early on Tuesday, court documents showed, highlighting the difficulties faced by battery-powered vehicles in gaining wide market acceptance,” says Reuters.

TTAC has never been bullish about EVs. This has nothing to do with ideology. Cars by nature will have a very limited market as long as they take hours to fill up, are for all intents and purposes unusable beyond a 40 mile radius from your home, and are priced out of the market.

Miles Electric, founded in 2004, made headlines with the  first street-legal Chinese-made automobile sold in the United States.  Its ZX40 was made by FAW Tianjin, a subsidiary of Volkswagen and Toyota joint venture partner FAW.

Miles sold into one of the few niches where EVs make sense: It made what usually are called ESVs, essential services vehicles, low-speed all-electric means of transportation used in parking enforcement, security, shipping and delivery, and grounds maintenance.

There, the usage pattern matches the technology.

This small, but possibly lucrative fleet market is now pretty much left to little-known Texas-based Good Earth Inc., makers of the even lesser known FireFly  electric three-wheelers that help police departments all over the U.S. put parking tickets under your wipers.

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Fisker: How To Light $529 Million On Fire Fri, 05 Apr 2013 16:55:28 +0000

Fisker has laid off nearly all of its rank and file employees. Reuters reports that 160 people were out of a job as of today, while 53 senior employees will stay on, apparently to help find a buyer for Fisker’s assets. Fisker is also hoping to re-negotiate a loan payment to the Department of Energy, due on April 22nd.

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Court OKs Suzuki Bankruptcy Plans Mon, 04 Mar 2013 11:00:28 +0000

The 30 year run of Suzuki auto sales in the United States is one step closer to coming to an end, as a California bankruptcy court approved Suzuki’s restructuring plans.

Suzuki Motor of America will be the new entity responsible for selling motorcycles and powersports equipment once Suzuki sells off its remaining new car inventory. Meanwhile, Suzuki sales outlets will continue to honor warranties and provide parts and service for the company’s automobiles.

A report by Automotive News scribe and Suzuki expert Ryan Beene highlights a bleak picture for Suzuki; sales fell from over 100,000 units in 2007 to a paltry 25,357 units in 2012 – about as many Camrys as Toyota sells in a month. An unfavorable exchange rate and contraction in the sub-prime auto market ultimately spelled doom for the auto maker in America.

Fans of the brand hoping for a return look to be out of luck as well. Chairman Osamu Suzuki ruled out a future return to America, stating

“Taking into account the issue of the exchange rates and the fact that we have no future outlook for making large vehicles, I think re-entry would be extremely hopeless.”

As for the status of Suzuki’s inventory – if you want an SX4 or Kizashi, you better act fast. A Suzuky spokesman was unable to tell Beene how many cars were left in America, while listed just 1376 Suzuki cars nationwide.

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Super Piston Slap: The Saab Secure Program. Yes, Really. Thu, 31 Jan 2013 12:00:51 +0000

NOTE: I received the following email from Saab Automobile Parts North America. As I was not aware of the recent details behind Saab’s parts/service operation (my bad) I felt obligated to share this, unedited, with everyone. – SM


We read, with great interest, your latest Piston Slap post and the many comments in response to “The Last Saab = good Deal?” We wanted to take this opportunity to let you know about Saab Automobile Parts North America, the exclusive authorized provider of Saab Genuine Parts in North America. Venues like yours help us to get the message out that Saab Genuine Parts and Service are available.

For your review, I’ve attached a copy of our recent press release, which announces our newest initiative, the Saab Secure Program; but also provides more detail on our company, ownership and highlights of our very busy start-up period. In a short period of time, we’ve made notable progress on many fronts, to provide a structure of strong support to current and future Saab owners:

  • Established a network of 179 Official Service Centers in the US and Canada.
  • Returned availability of Saab parts back to the high levels that existed prior to the Saab Automobile AB bankruptcy.
  • Entered into an agreement with General Motors to administer warranty services on 2009 and prior model years, providing a seamless warranty experience for those Saab owners.
  • Launched the Saab Secure program to support owners of 2010 and 2011 Saab models.
  • Launched a North America Technical Assistance Center to provide technical help for Saab Service Centers in providing high quality repairs for Saab owners.
  • Launched a North America Customer Assistance Center on January 7, 2013 to support all Saab customers in North America needing assistance with inquiries about parts, accessories, service and technical support.
  • Launched a new SPNA website, and Facebook page to share up to date information about the company, service facilities and current promotions.

We welcome the opportunity to discuss Saab Automobile Parts North America with you in more detail. Please feel free to contact me at any time to set up an interview.

Thank you!

The Saab Secure Press Release_FINAL


Sajeev answers:

There you have it, dear readers. The press release, dated 1/10/13, is here to clear up any Saab-related quandaries. And since the Saab mother ship is listening, this is a great time to give them some more unfiltered feedback.

Click here to view the embedded video.

If you think I’m a typical media shill for posting a press release, I can dig it.  But some releases are too, um, valuable to ignore. Plus, with the above music video in mind, you’ll see I’m merely keeping an Angry God from sending a Turbo Saab with Juan Manuel Fangio behind the wheel to my doorstep.  I really, honestly, love the engineering in Saab’s seats…don’t put me in the same hole Ford left the Panther Chassis!!! 

And to the detractors, it begs the question: would you consider buying a Saab now?  I re-checked my link, and 6 more new Saabs showed up online!

Any other questions? Apparently Saab is listening, so speak up.

Send your queries to Spare no details and ask for a speedy resolution if you’re in a hurry.


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Piston Slap: The Last SAAB = Good Deal? Wed, 23 Jan 2013 12:08:14 +0000
Bruce writes:

I got my 2007 9-3 serviced at the Falls Church, VA Saab dealership. My question: They had new (2011) 9-5s for $20,000 off the sticker price. Almost half off. Are they a good deal? Would you buy one?

Sajeev answers:

I initially regretted my delay in answering this Piston Slap email, as the queue is long and unfortunate to a time sensitive matter like leftover Saab inventory. But then I found 167 new SAABS still for sale as of yesterday.  Who-hoo! I dodged a bullet while these poor dealers still have laggards on their floorplan.

The question isn’t about buying this Saab, but about buying any Saab: are they ever a good deal?  NO!

But that’s not the point…if you actually like Saabs, you don’t mind spending far too much money on these repair/maintenance whores. Or you love them enough to make their repair a personal hobby, complete with all the tools of the trade.  Either way, yes, this is the BEST time to buy a new Saab.  The prices will be good and you’ll never have this opportunity! Ever again!

You wrote to TTAC because you like Saabs. And you get them serviced at the dealer, which implies you have the money to keep them running properly.  So if you want to run a 2011 model into the ground, you might have that opportunity.  And who knows, the whole GM-SAAB-China thing is still unfolding, perhaps you will have ample supply of spare parts in the future.

Your last question: would I buy one?  I already bought one of the last Ford Rangers back in 2011…so no, I’m gonna enjoy that same feeling but without the nightmarish downsides of Turbo Saab ownership.  And yes, there are still 98 new Rangers for saletwo are of the 4-cyl, 5MT variety like mine–if you wish to join me on the dark side. Or bright side. Either way.


Send your queries to Spare no details and ask for a speedy resolution if you’re in a hurry.


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Suzuki Death Watch 12: Over 98 Percent Of Suzuki Dealers Take The Money And Run Wed, 05 Dec 2012 14:00:00 +0000 Click here to view the embedded video.

Only 6 dealers haven’t taken a buyout offer from Suzuki – of the 219 Suzuki dealers in America, 213 took the offer from American Suzuki, including the top 50 dealers by volume.

Automotive News reports that dealers can expect 50 person of the money within 10 days of agreeing to the settlement, and the rest will come following the bankruptcy proceedings. Dealers will now be service and parts outlets. In some cases, dealers are attempting to clear out their inventory of over 5,000 cars by offering 72 month interest free loans among other incentives. Suzuki sales were up 22 percent year-over-year by AN‘s count, no doubt spurred on by the incentives.

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Suzuki Death Watch 10: Dealers Deciding Whether To Take The Money Or Fight Wed, 14 Nov 2012 17:58:09 +0000

Being a Suzuki dealer is surely one of America’s least enviable jobs; franchise holders must choose whether to accept a cash settlement and a contract to provide parts and service in exchange for their franchises, or whether they want to fight the matter in court.

Based on Suzuki’s estimate of $50 million in total, the settlements average out to about $227,000 per dealer. Payouts are set to be calculated based on sales volume, rent, how much inventory is held, facility investment and other factors. But by taking the deal, they waive the right to any future claims against Suzuki.

Automotive News highlights the main question on the minds of Suzuki’s former sales force; will a payout be comparable to what dealers would receive in accordance with state franchise laws. The predicament, according to AN, is this

Had Suzuki simply canceled the franchises, outside bankruptcy court, state franchise laws would have compelled the automaker to buy back new-vehicle inventory and parts and to compensate dealers for facilities and other costs.

A National Automobile Dealers Association official last week said Suzuki dealers should receive what they would be entitled to under franchise laws and advised them to consult attorneys. Dealers were receiving the offers late last week and were bound by confidentiality agreements.

Suzuki dealers can choose not to sign the settlement offers and file a claim in the bankruptcy case for what they believe they are owed. But such a move means a dealer’s claim could be worth just pennies on the dollar by the time Suzuki pays off other, higher-priority creditors.

While one attorney says that the dealers will represent the largest unsecured creditors, only a small percentage of Suzuki dealers sell most of the cars. A majority of them sell fewer than 5 new Suzukis per month.



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Suzuki Death Watch 9: American Suzuki To Get $45 Million Loan For Restructuring Dealer Network Thu, 08 Nov 2012 16:56:31 +0000 Click here to view the embedded video.

American Suzuki has received court approval to borrow $45 million to help restructure their dealer network following a Chapter 11 filing.

Dealers will be offered cash payments within 10 days if they agree to scrap their franchise agreements.

Bloomberg has their own quick and dirty explanation

“Should dealers agree to end their contracts by Nov. 30, Suzuki Motor would pay them half of what they’re owed by the distributor within 10 days, according to court documents.

The dealers could later attempt to collect the rest of what they are owed through the bankruptcy process.

The company may owe dealers about $50 million…”

Dealer franchise laws vary by state and offer dealers a fair amount from protection from attempts to shut them down by the manufacturers. But Suzuki is hoping the payouts will provide a clean break for their dealers. And with nearly 70 percent of them selling less than 5 cars a month, it would be hard for them not to take the money and run. There are also 4,000 or so unsold Suzuki cars that dealers can legally return to the manufacturer – so if you’re really hankering for an SX4, act now.

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Will Creditors’ Lawsuit Undo GM Bailout? Bankruptcy Judge ‘Shocked’ By Undisclosed GM Canada Deal Tue, 09 Oct 2012 13:00:18 +0000

A couple of weeks ago the Wall Street Journal published an article about a “little-noticed” lawsuit in U.S. Bankruptcy Court filed by a trust representing “old” GM’s unsecured creditors. Those creditors are challenging a 2009 deal between GM Canada and a group of hedge funds that helped keep GM’s Canadian subsidiary out of its own bankrupcy. It’s a bit surprising to me that the WSJ article itself got very little notice in the automotive world because, if successful, the lawsuit could undo at least part of GM’s restructuring or result in a $1.3 billion price tag for the automaker. In regulatory filings GM has said its possible exposure will be less than that, $918 million, though in theory the bankruptcy court could reopen the entire bankruptcy, which would be much more disruptive to GM than just paying out a billion dollars.

The plaintiffs in the suit claim that the deal not only treated them unfairly compared to other creditors , but that it was also not properly disclosed to Judge Robert E. Garber, who presided over General Motors’ bankruptcy and restructuring in the U.S. Bankruptcy Court for the Southern District of New York. Perhaps ominously for GM, Judge Garber has already expressed “shock” over the fact that he was not informed of the deal, which the claimants allege was consummated after the Detroit based automaker filed for bankruptcy in his court. Had GM Canada been forced to file its own bankruptcy over that debt it would have likely substantially stretched out GM’s bankruptcy process from weeks to possibly years.

Earlier this year, Judge Garber said,

“When I heard about that, it wasn’t just a surprise, it was a shock. When I approved the sale agreement and entered the sale approval order I mistakenly thought that I was merely saving GM, the supply chain, and about a million jobs. It never once occurred to me, and nobody bothered to disclose, that amongst all of the assigned contracts was this lock-up agreement, if indeed it was assigned at all.”

The case centers on $1.3 billion in GM Canada debt to a group of hedge funds that was waived in 2009 after GM Canada agreed to make a lump sum cash payment of $367 million (USD) to those hedge funds. To make that cash payment, GM Canada in turn borrowed $450 million from old GM. New GM says that it can prove that loan was made before it filed for bankruptcy before Judge Gerber. The trust representing the creditors says that the deal was backdated to hide it from the judge. Those creditors are unhappy because while 35 cents on the dollar doesn’t sound like a great deal, that’s better than what they got.

Ronnie Schreiber edits Cars In Depth, a realistic perspective on cars & car culture and the original 3D car site. If you found this post worthwhile, you can dig deeper at Cars In Depth. If the 3D thing freaks you out, don’t worry, all the photo and video players in use at the site have mono options. Thanks for reading – RJS



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GM Deathwatch Part 1! This Time, It’s Forbes Doing The Countdown Fri, 17 Aug 2012 14:49:56 +0000

“President Obama is proud of his bailout of General Motors. That’s good, because, if he wins a second term, he is probably going to have to bail GM out again.” Sounds like our august founder, Robert Farago, sounding off about American Leyland the New GM. Nope, it’s Forbes this time, and they come to bury the General, not to praise him.

Louis Woodhill’s article pulls no punches. Using TTAC’s Winterkorn Meets The i30 article as evidence, combined with Car and Driver‘s decision to rank the 2012 Passat first in a family-sedan test (and the Malibu last), Woodhill states

Uh-oh. While Dan Akerson is busy rearranging the deck chairs on GM’s Titanic, Martin Winterkorn is leading VW to world domination via technical excellence.

Your humble author would suggest that it is Toyota, not Volkswagen, that has its foot on the General’s throat, but that’s a minor point.

The Forbes article rustled enough jimmies on Wednesday that the publication decided to run a counterpoint today, entitled “For GM, Bankruptcy Talk Is Its Own Fault”. The author, Micheline Maynard, argues that GM has a good cash position — sounds familiar — and plenty of ability to borrow more — which they’ve done in the past. When the best argument your defenders can make against bankruptcy is that you can borrow more money, you’re in bad shape. My AMEX is supposedly ready to charge a Lamborghini Aventador but that doesn’t mean I can pay for… hmm. Okay, I’m going to wrap this up. In unrelated news, TTAC may have a review tomorrow of the Lamborghini Aventador.

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Dead Brand Pool 2014: The Brutal Retreat Sun, 05 Aug 2012 00:07:17 +0000

The most successful brands in our industry don’t have much meaning to them.

Toyota, Chevrolet, Ford, Hyundai, Kia, all of these are names that wouldn’t evoke much of any imagery had their manufacturers never existed.

Mercury and Saturn are popular planets that make you think of space and the futuristic pursuit of those faraway places. Acura should be quite accurate and precise. Rams are tough. Infiniti pays homage to the outer limits of capability and performance.

Yet all of these names experienced failure, or ultimately failed, due to the key essential ingredient within any brand’s reputation.


Scion now finds itself on the edge of irrelevance due to a series of bad products. Although I believe that Scion is essential to Toyota’s long-term performance in North America, other experts have plenty of good reasons to disagree with me.

The most obvious loser these days is smart, which has turned out to be a failure par excellence. You didn’t need a brilliant iQ or bat 500 with our prior features on dead brands to figure out why. Bad product will always be to cars what bad loans will be to the banks.

A risk free opportunity to shed debt, liquidate assets, and drink deeply in the vassals of government loans and grants.

Doubt me?

You should, if the automaker you are considering is headquartered in Europe.

Opel, Fiat and Peugeot appear to be suffering a decline that is, in part, due to their dependence on home markets that are stunted by an endless sea of bad governance and legacy costs.

A lot of folks believe that European consolidation has been due ever since British Leyland got sliced, diced and sold to whatever foolish suitors were willing to buy their market sizzle. Those rotten stakes didn’t add up to very much back then. Today the sizzle of a brand name means even less since the profit in mature markets may be non-existent.

Now these victors of yesteryear find themselves competing against global automakers that are not dependent on mature and declining markets with little to no profit. Europe’s long cold recession may only give VW the smallest of sniffles. While Opel, Fiat and Peugeot are now suffering with varying levels of flu like symptoms, and unprofitable products developed for a home audience that is simply not there.

The historians among us may look back on the past failures of these three in North America and wonder, “Does a lack of success in major overseas markets eventually yield itself to domestic weakness?” If this is the case, does the ‘new’ GM and Chrysler stand even a shadow of a chance over the long run?

As for Japan Inc., Mitsubishi seems to be tanking it here in North America… even as a Hertz special. Suzuki is hanging on in a near zombie state of North American product rot. Not too far away in India, Jaguar and Land Rover are still not quite ready for a prime time hit. Should they pack up their star spangled tent and focus their limited resources on the emerging economic engines of East Asia and the Pacific Rim?

Then we have the high end of the market. Too many names and certain pseudo-elite manufacturers are playing too many games with an information enriched public.

The shakeout is already taking place. Maybach never could muster up the prestige of Mercedes. But how about Maserati? Will their social equity investments continue to yield a small dividend of increased sales? Or will the better funded competitors in Germany and Japan turn the beleaguered trident into an archaic pitchfork?

Change in the global auto industry is always slow. You always see the dimming headlights well before the automaker sees the cliff. But time and money are finite, as is the future for some modern day manufacturers and their brands.

It looks like nearly everyone will emerge from 2012 with a continuing lease on life. SAAB may even be revived. But how about everyone else by say… 2014?

Who do you believe is already on the slippery slope to a depreciation hell solely reserved for orphan brands?


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General Motors, Channel Stuffing And The Return Of 2008 Mon, 09 Jul 2012 16:52:09 +0000

A lawsuit filed by a Florida investor against General Motors over the age-old practice of “channel stuffing”, or sending inventory to dealers and recording it as a “sale”, so that revenue numbers can be pumped up while the vehicles languish on dealer lots. The practice of channel stuffing is universal in the auto industry, but in this case, the consequences are much broader.

The specifics of the lawsuit, which hinge on specific phrases in the IPO prospectus, can be found here. The class action suit is unlikely to do any serious damage to GM, and will likely be the site of a long, protracted legal battle. The implications of channel stuffing are what really matter, and may provide a glimpse into both General Motors, and its government stewardship.

While General Motors is touting their 32 percent year-over-year increase in sales, a closer look at the numbers reveals a couple of things.  According to Bloomberg, inventory for full-size trucks was at a 135 day supply, as GM ostensibly cranked out profitable pickups and sent them off to dealers across the land, allowing them to book sales of their most lucrative vehicles just in time for the half-way mark – and coincidentally (or not), government purchases of GM vehicles rose 79 percent in June. Retail sales were up a mere 8 percent, while fleet sales rose by 36 percent.

There is a political argument to be made for all of this, with GM’s financial health being integral to President Obama’s re-election, and a validation of the auto bailout and his economic policies. The Treasury still owns a 32 percent stake in GM, and selling their shares now would mean a major loss of taxpayer money. If GM’s fortunes were to reverse, than a quick exit, perhaps at a profit, might be possible.

The inflated inventories and “channel stuffing” aren’t just a manipulative way to make GM’s numbers look better than they are – they also expose GM to a potentially dangerous financial situation similar to 2008. General Motors, like any other car company, must sell the cars it builds. Its inventories are much higher than other manufacturers. Prior to the bailout, GM was caught out with large inventories of full-size trucks and SUVs at a time when a poor economy and rising gas prices made them unattractive to consumers. This same scenario occurring again isn’t inconceivable.

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Last Holdouts Admit: “Saab Is Dead” Sun, 22 Jan 2012 17:36:15 +0000 According to media reports and TTAC, all kinds of high-powered parties are interested in sucking the last bone marrow out of the corpse of bankrupt Saab. China’s Youngman supposedly is ready to plunk down  a billion Euro (or $1.3 billion) for the carcass. In Turkey, Brightwell Holdings “will make a bid very shortly, there’s no question,” as Brightwell board member Zamier Ahmen told Bloomberg. The trouble is: Nobody is bidding.

“There have been no formal bids,” receiver Anne-Marie Pouteaux told Reuters. Her colleague Hans Bergvist added that they “ have had discussions with a number of interested parties. Some of them are interested in the factory as a whole and some of them are interested in parts of it.”  But no, no bid.

It would be folly to place a bid, because even the receivers don’t know yet what that bid will buy. In a press conference on Saturday, receiver Hans Bergvist said:

“Everything that was possible to pawn in Saab has been pawned. The work to identify Saab’s assets is not yet complete, but we have come a long way.”

Anybody who had lent Saab money recently, did so with assets pledged. In July, just as a for instance, Saab sold 50.1 percent of its real estate holdings to a consortium led by Hemfosa Fastigheter AB, for about $40m. They leased it right back, with the proviso that the rest is security for the rent. Should Saab default on the rent, the contract allegedly said, then the consortium will say tack så mycket and  owns the whole thing.

Even in a bunker in Sweden, from which the last faithful had been sending blog posts in support of the zombie brand, defeatism makes the rounds.

“The headline everywhere is “Saab is dead”, which actually, right now, is true.

This amazing revelation comes from Saabsunited, which continues:

“The fact that Saab has not even had money to buy toilet-paper since march is a fact that not a lot of people knew about. We’ve heard horror story after horror story from Saab employees and suppliers describing how a company has to act when it is completely out of money and saving up on absolutely everything! But despite having to clean the offices, toilets, kitchens and even buy supplies themselves for their own money the employees stayed at their post! They did not leave which is the biggest evidence of how great Saab actually was.

They said it: Was.

And the reaction from the peanut gallery?




“Griffin up!”


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Bring A Trailer: Saab’s Heritage Under The Hammer Tue, 17 Jan 2012 16:49:10 +0000

Want  a piece of “quirky” history?  While the good folks at the Church of the One True Saab still have dreams of white knights, Saab’s heritage is being auctioned off. This caught the attention of (“The best vintage and classic cars for sale online.”) In a lengthy piece, the organ for trailer trash collector’s online hub salivates over “the entire collection of 100+ cars belonging to the Saab Heritage Museum in Trollhaettan, Sweden” to the liquidator.

The cars  include everything from the 1946 Ur-Saab to recent show prototypes. Complete listing here, in Swedish. A rare collector’s item in itself!123 pages, 2 pictures per car. Saab history, written by the executioner. Download your piece of Saab history for  FREE!

As for the auction, you don’t even need to bring a trailer to drag away your loot. Also on auction are the workhorses of the museum which include an enclosed trailer, and a Saab 9000 back-halved flat-bed hauler.

The cars are auctioned off by the Swedish law firm Delphi. Written bids on the collection, as a whole, or, come on, cheapskate, individually, are requested via mail or fax by this Friday, January 20th. Instructions here.

Place your bids, or do we have to send Steve Lang over there? Come on, didn’t you always wanted to own the concept cars, just as they show them at the car show? Now you can. Their loss, your gain.

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What To Do With Bankrupt Saab? Sell It To The Indians Fri, 30 Dec 2011 14:34:39 +0000

Yesterday, the alleged enthusiast blog did play its usual “if we would tell you, they would shoot us” about a possible suitor from India:

“We are not allowed to reveal the identity of the company yet, but we are allowed to reveal some facts about it. They are of course based in India but acts on a world-wide basis with much more than 100’000 employees worldwide. They are a multi-billion dollar company, that work on multiple fields such as energy, logistics, real estate and of course within the aerospace and automotive industry.”

Bloomberg does not bother playing twenty questions and reports:

 “Mahindra & Mahindra Ltd., India’s biggest sport-utility vehicle manufacturer, is interested in buying at least parts of bankrupt Swedish carmaker Saab Automobile, two people familiar with the situation said.”

 Not more is known about the matter. According to Swedish media, Mahindra hasn’t even had an audience with the administrators yet.



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Saabstermath, Bonus Edition: Let’s Play Lowball! Fri, 23 Dec 2011 14:36:56 +0000

Thinking of cashing in on Saab’s misfortunes? Contemplating your own bankruptcy deal, where you can buy a brand new (well, nicely aged on the dealer lot) Saab for pennies on the dollar? Think again. Senior Consumer Advice Editor Philip Reed says you will be in for a nasty surprise:

“Consumers shouldn’t expect a fire sale on unsold Saabs just yet. While incentives are no longer being offered for now, our research indicates pricing remains unchanged at Saab dealerships. Dealers are taking a wait-and-see approach since this situation is changing rapidly. But analysts estimate that the True Market Value price of new vehicles will be discounted by an average of 28 percent from MSRP — and as high as 33 percent in some cases.”

That may happen, down the road. Currently, prices at some dealers are going up. Yes, you heard right. Up. Edmunds found a Saab dealership in Los Angeles where new Saabs are sold in “as-is” condition as if they were used cars, but they are priced at full MSRP. The reasoning is that some models had $12,000 in incentives the previous day, but these price breaks were no longer available because of the bankruptcy.

One reader told us that he went to a Saab dealer, made a lowball offer, only to hear the story that because Saab is in bankruptcy, the company will buy back all cars on dealer’s lots. Sure. And low flying pigs were sighted of Trollhättan.

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Saabstermath: Of Vultures And Phoenixes Fri, 23 Dec 2011 14:01:48 +0000


If you are worried that you may have to live without daily episodes of the Saab Soap, now that the company is bankrupt, worry no more. Or in the words of Saabsunited: “never ever give up!” The show will go on.

Today, Automotive news China [sub] reports:

“Zhejiang Youngman Lotus Automobile Co. says it has purchased Saab Automobile’s Phoenix architecture despite its failure to acquire the automaker itself. Youngman already has set up a company in Sweden to develop new models based on the architecture, said Rachel Pang, Youngman’s spokeswoman and daughter of Youngman President Pang Qingnian.”

The trouble is, nobody in Sweden or elsewhere has heard about it. As far as Sveriges Radio knows, the discussions between Youngman and the bankruptcy administrators  are ongoing. No sale of nothing has been announced. Victor Muller’s and Vladimir Anntonov’s propaganda organ The independent enthusiast site Saabsunited implores the faithful:

“Don’t believe any report that shows up. The media is desperately looking for things to write about and comes up with, to say the least, strange news. Like with the rumours about Phoenix being sold to Youngman seperately we will try to figure out the truth behind it and keep you updated ad good as possible.”

To me, the story comes as expected. A few days ago, I predicted:

“I wouldn’t be surprised if a license for the PhoeniX platform won’t suddenly show up at Youngman, pledged as security for some of the money that had been paid. Then, GM will say that Phoenix IP is mostly theirs, and there will be a protracted and messy lawsuit.”

Whoever thinks the Chinese paid a few million out of the goodness of their hearts is gravely mistaken. The way we (and other Swedish media) understand the deal is that there was a loan, with the Phoenix platform pledged as collateral. Youngman most likely takes the position that the loan was defaulted upon, and the collateral is theirs. This can be a long, expensive, and messy lawsuit until this is sorted out, and in a bankruptcy, who has the nerves and money for that?

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