Irreconcilable Differences (Part Two)

Like so many ill-considered marriages, GM’s entanglement with Saab was destined to end badly.  We conclude the story of this unhappy union.

(c) autoevolution

Having taken full ownership of Saab Automobile AB in 2000, GM was free to continue its planned transformation of the company into a premium competitor to Audi, BMW and Mercedes-Benz. The existing 9-3 was looking dated, appearing little different to the New Generation 900 launched in 1994, and its five-door format was out of step with its intended competitors, the A4, 3 Series and C-Class.

A new 9-3 was developed in parallel with the Opel Vectra C, based on the new GM Epsilon platform. Both cars were launched at the Geneva Motor Show in March 2002. The 9-3 adopted a four-door Sport Saloon format. A convertible followed in 2004 but the arguably more important SportWagon estate didn’t arrive until late 2005 as a 2006 model.

The new 9-3 was well received and Saab sales increased to around 176,000 in 2005. That would prove to be the high-water mark for the company and sales fell back to just 133,000 in 2006 and continued to decline thereafter.

Profits were still proving elusive* and GM, assailed by problems with its US domestic brands, was losing patience with its remote Swedish outpost. It realised the limitations of Saab’s existing narrow model range and sought a quick and expedient way to bring additional models to market.

2005 Saab 9-2x and 2005 Saab 9-7x: (c) NMJ

In 2004, it launched the 9-2X, a Subaru Impreza estate with a Saab-style nose and different interior trim. The Saabaru was greeted with incredulity by the market and sold poorly, shifting only around 10,500 units before being discontinued after just two years. GM tried again with the 9-7X, a Chevrolet Trailblazer with Saab trimmings, launched in 2005. This did a bit better, selling around 86,000 units before becoming a casualty of GM’s bankruptcy in 2009.

These modest additional sales came at the expense of destroying Saab’s credibility as a serious premium brand.  GM inflicted further reputational damage on the marque by cancelling both the planned 2005 replacement for the 9-5 and a five-door Combi version of the 9-3, delaying the introduction of all-wheel-drive versions of the 9-3 until 2008 and floating the idea of moving Saab production from Trollhättan to the Opel plant in Rüsselsheim.  By 2006, Bob Lutz, GM’s Vice-Chairman, was lobbying hard internally for the disposal of Saab to anyone who would take it off GM’s hands, but GM’s CEO Rick Wagoner still believed it could be turned around.

The 9-5 received a second and highly controversial facelift in 2006. The restyled front end was ridiculed by some who christened it the Dame Edna because the heavily chromed headlamp surrounds resembled the gaudy spectacles worn by Australian comedian Barry Humphries’ female alter ego. Almost nobody considered the revisions to the 9-5’s appearance an improvement.

In an attempt to boost flagging sales, Saab also facelifted the 9-3 in June 2008. Over 2,000 changes were said to have been made, but most noticeable was a new front end with a clamshell bonnet and larger light units that wrapped around the front wings, giving the car a more distinctive appearance that reprised both the Classic 900 and (pre-facelift) 9-5 models. Just six months later in December 2008, GM announced that Saab’s future was “under review” and floated the possibility of selling or closing down the company.

The effect of this announcement and the Global Financial Crisis on Saab was catastrophic: annual sales more than halved from around 93,000 in 2008 to 39,000 in 2009. In February 2009 the Swedish courts approved the appointment of an administrator to protect Saab from its creditors and allow time to reorganise its finances. Industry reaction to this was scathing of GM. Stephen Pope, Chief Global Strategist at US financial services firm Cantor Fitzgerald summed up the feelings of many when he said that GM oversaw the destruction of the Swedish car company’s soul”.

2008 Saab 9-3: zombdrive.com

GM’s sales negotiations continued and, in June 2009, Koenigsegg Automotive AB, a Swedish manufacturer of high-performance supercars, announced a deal to buy Saab. Koenigsegg was backed by Norwegian investors and Chinese automaker BAIC. This deal unravelled in November when the parties failed to agree a financing plan with the European Investment Bank and Swedish National Debt Office. BAIC did, however, buy the IP rights to the 9-3 and outgoing 9-5 for $197 million, providing Saab with vital working capital.

GM had itself filed for Chapter 11 bankruptcy protection by this time and had been recapitalised by the US and Canadian governments to the tune of $40 billion. A condition of this refinancing was that Saab would be disposed of, and talks continued.

Saab was finally sold to Dutch automaker Spyker N.V. in February 2010. GM would receive cash of $74 million and shares in Spyker worth $320 million, while Spyker would sell its small sports car business to concentrate on its new acquisition. In a bizarre twist, having finally sold Saab, GM began building its new mid-sized crossover, the 9-4X, at the GM plant in Mexico. This shared the new Theta Premium platform with the Cadillac SRX and only 738 examples were produced before production stopped late in 2010.

2011 Saab 9-4X: (c) saabplanet.com

Saab sales fell further to just 32,000 in 2010 as confidence evaporated. Just a year after the GM sale, Saab again ran out of money and Spyker couldn’t continue to provide funding. Takeover talks between Spyker and different Chinese automakers were frustrated by GM’s repeated refusal to licence its IP to any Chinese competitor. This would lead in 2012 to a $3 billion lawsuit from Spyker against GM, which was dismissed by the US courts.

Saab finally filed for bankruptcy in December 2011, with net debts of over $1.5 billion.

2010 Saab 9-5, Photo (c) zonderpump.com

Ironically, by far the best GM-era Saab was launched in the midst of these crises in late 2009. The new 9-5 was a handsome A6, 5 Series and E-Class rival. Early cars were less than fully developed and suffered from a brittle and harsh ride, but the potential of the new model was clear. A SportCombi estate version was shown in early 2011 but never entered series production. A total of just 11,280 9-5 saloons were sold before production ceased in March 2011. They are now a reminder of what might have been and are still sought after by Saab enthusiasts.

The corpse of Saab has been disinterred on a few occasions since, notably in the form of the Chinese NEVS EV project. These events are recorded in a DTW series of contemporary news pieces entitled Death’s Revolving Door and make interesting further reading.

* It is difficult to ascertain Saab’s ‘true’ profitability under GM ownership because of arcane internal accounting practices concerning payments in respect of intellectual property, royalties and licensing. GM is no different to many other multinational companies in this regard.

More on the subject of Saab here.

Author: Daniel O'Callaghan

Shut-line obsessive...Hates rudeness, loves biscuits.

37 thoughts on “Irreconcilable Differences (Part Two)”

    1. I wish they´d carry on making the Kappa. It needs very little work other than maybe re-doing the dashboard. It´s a lovely car in the same mould as the 406 but slightly plusher in some versions. And like all those C-D cars from the mid 1990s, it´s optimally sized.

    2. Kappas are indeed lovely cars, Richard, but quite a bit bigger than a 406, and with a good range of engines. The suspension could be improved to eliminate bump-thump and sharpen the steering.
      The Thesis was a poor replacement, like an oversized slug.

  1. Find the error in GM’s reasoning when they wanted to develop Saab into a premium manufacurer by basing their new product on an Opel.

    1. Good morning Dave. I hadn’t realised just how poorly engineered some GME cars were. I was struck by your explanation of the stresses that caused the bulkhead to split on the earlier NG900/9-3. Did it affect the Vectra A to the same degree? I guess it should have done, but don’t recall it being publicised at the time.

    2. I am not going to be the one who declares Opels the best cars in the world. Like all manufacturers they have their faults and demerits. Even Ferrari and Porsche make cars with demerits (too costly, too thirsty, too cramped). That said Opel don´t deserve to be written off wholesale. Most of what they make is affordable, efficient and reliable despite the ineptness of their parent company.

  2. I´m surprised by this, too. In my country (Spain) ´80s and ´90s Opels were generally seen as reliable and well enginereed cars, or at least a cut above the usual Renault/Citroen/Peugeot/Ford.

    1. I have to confess to having next to no experience of GME cars. I do remember driving a Corsa B rental in Majorca and thinking it had the worst steering I had ever experienced, apart from the Mk5 Escort. My brother-in-law owned an Opel Omega A and I remember it as a handsome and reliable car, but have no idea how it drove:

    2. Opels were designed to have deliberately bad steering in order to prevent drivers from using them too enthusiastically.
      After all, Opels are for customers who don’t care about cars.
      Not exactly what you’d choose to base a premium product on.

  3. Prior to the 90s Opel had a pretty good reputation in Ireland. I think the rot set in around then – the head of Opel in Ireland at the time maintained later in his book that he wished he’d had a side business in cleaning up cobble lock drives, as they were getting so many warranty claims for oil leaks on Vectras. I think he blamed cost-cutting in GM for it.
    (Why did a car import executive write a book, you ask? It was mostly concerned with his involvement with soccer. Arnold O’Byrne was an enthusiast, and Opel Ireland sponsered the Ireland team at the time. The FAI (Football Association of Ireland) is always good for a few stories…

  4. Allegedly Turkey bought the IP from the Chinese company and said they would make an EV derivative.So far no news from that project…

  5. I drove that Opel Omega A a number of times and it’s the only car I’ve ever driven that fish-tailed on me (even if I was going a tad fast, uphill). Other than that it was a fine car to drive.

    1. Hi vwmeister. Just as well you weren’t let loose in the Lotus version of the Omega:

      Twin-turbocharger 2,969cc 24V straight six with 377bhp, 0-60mph in 5.2 seconds and a top speed of 177mph. Imagine the fun you could have had in that!

    2. vwmeister: I drove a number of Omega A’s back in the day, and while I was always in a hurry to be somewhere in those times, I don’t recall them getting wayward on me. Having said that however, they never gave one quite 100% confidence either. I thought they were broadly competent, but I would always have chosen a contemporary Granada/Scorpio from a chassis dynamics perspective. The Ford generally had a nicer cabin ambience as well. The GM engines were lustier than Henry’s old wheezers however.

    3. Oh yes, the Lotus Omega a perfect combination of Lots Of Trouble Usually Serious with all of Opel’s engineering competence.
      A reliability nightmare if ever there was one in its road going version and a testimony of failure in racing. The Omega was raced in Germany’s touring car championship where it suffered a string of failures due to engine defects. In the end, BMW offered help because they felt sorry for their compeitor and after getting the CAD data for the Omega they found that all torsional stress forces from the roll cage (a tubular space frame) were transmitted to the engine block, resulting in snapped crank shafts. BMW suggested design changes that finally made the Omega last a race…

  6. A few comments:

    Saab needed a two model range with at least 300,000 units sold annually, or so the story goes. They were too small to survive on their own. So while it was indeed difficult to determine Saab’s profitability under GM, because of internal accounting practices, it’s fair to say that their business wasn’t viable.

    It’s very easy to point the finger at GM, but GM did invest in Saab for 20 years to make it work. Would they really have done that if they didn’t see any opportunity to get there money back? Yes, GM wasn’t the correct partner for Saab and some of GM’s products were awful, but which other manufacturer at the time had the interest and money and was willing to take the risk to make Saab profitable? Probably not that many.

    Furthermore GM made it clear in their contract to Victor Muller he couldn’t sell it to the Chinese as GM was rightfully protecting there interest in the Chinese market (selling over a million vehicles annually). Therefore I think it’s incorrect to say GM frustrated the sale to the Chinese as they explicitly put that in the contract that Victor Muller signed.

    In the comments the Kappa is mentioned. I drove it and quite liked it, apart from the weight distribution (too much weight on the front axle) and the engine mountains seemed a bit sloppy on the one that I drove. In sales terms it failed. Why would such an old design stand a chance today? Again another car that is lovely, but there’s just no business case for it.

    1. Hi Freerk. I take your point about GM reasonably not wanting its IP to fall into the hands of the Chinese, but I would take issue about the effort it put into developing new Saab models. It should have taken a ‘clean-sheet’ approach to develop a premium architecture (possibly shared with Cadillac) rather than try to base the new models on mainstream platforms. After the Cimarron experience, GM really should have known better.

  7. I think the GM Epsilon platform on which the 2002 9-3 was used for the Vectra C (introducted 2002) rather than the Vectra B (tarted up Vectra A/Cavalier introduced in 1995).

    In any case , what sort of fool would pay BMW prices for a Vectra B or C in a SAAB style frock in the form of the NG900, 9-3 and 9-5? None of the GM SAABs were any good to drive, and often weren’t very good to own. That said, with the total homogenisation of the industry what else could anyone have done with a company whose main USP was doing things differently for the sake of it?

    1. Well spotted, David. That was, of course, my deliberate error to ensure everyone was paying attention. (Apparently, they weren’t!) Text corrected.

  8. I always wondered how the rather weak Omega A body coped with the power of that biturbo Engine? Did they bother to reinforce the structure for that application ?

    1. Hi Roberto. Dave has covered that exact issue in his comment above, which is incredible but, I’m sure, true!

  9. Lessons from Cimarron? Apparently not. Fifteen years later they rebadged the Omega B and imported it to NA as the Cadillac Catera, priced and positioned to compete against the German three. The Catera was a disaster, unpopular and unreliable, whereas at least the Cimarron was profitable (in the short term). But they didn’t learn from the Catera episode either.

    “Let’s try that again but in Europe”, Lutz must have been thinking as he directed the half hearted dressing up of the Epsilon-based 9-3 as the Cadillac BLS (colloquially known as the Bob Lutz Special). The BLS performed the same trick as its Cimarron and Catera forbearers had: “roll over and play dead”, and so Cadillac promptly exited Europe with its tail between its legs, perhaps never to return.

    The BLS was reportedly developed for just $140 million (apparently mostly spent on tail lights, grilles and badges), which is not a lot for a new car model, especially for an international juggarnaut like GM. But for reasons we must guess at (none too honorable) they charged this debit to the account of Saab, thus insuring an additional source for the flow of red ink from Trollhättan, and well before the financial crises.

    I think we cannot consider the demise of Saab without mentioning the nefarious and tragic BLS debacle, wherein GM knifed one of its greatest brands in the heart (plus the incidental cost of collateral damage to its flagship brand). I’ve read it was a sort of punishment for the Swedes’ repeated insistence on safe and sound engineering, in direct defiance of and insubordination to their bean-counter masters in Detroit. I think it was a rather harsh retribution, as not only did GM burden their comparatively tiny subsidiary with a debit they could ill afford, but also concurrently cancelled several important Saab programs while the BLS project sapped Saab’s limited engineering resources during a crucial period.

    —-

    Daniel,

    Could you please relate for us how Mr. Lutz depicts his role in the BLS saga, and in Saab’s demise in his book?

    1. Hi gooddog. Unsurprisingly, Lutz never mentions the BLS in his book.

      Regarding Saab, as I said above, he was lobbying hard for its disposal from around 2004/5 but ultimately the decision was taken out of his hands: it was a condition of GM’s $40Bn US and Canadian Government funded recapitalisation plan that Saab should either be sold or closed down.

      Lutz’s attitude to Saab is best summed up in this quote from the book:

      “In retrospect, I see not one single scrap of evidence that GM ever benefited in the least from the ownership of Saab.”

    2. Would anyone dare to hazard a guess where the world capital of BLS headcount is? I would venture that Beirut, of all places, is a decent bet – I remember seeing a surprising number there when they were new-ish. I put this down to a combination of at least a certain segment of Beirutis for American metal (strange, but true – there is, or at least traditionally was, a thriving import business for cheap, loud, expansive Yankee metal, going back to before the war), and some rather ostentatious tastes.

  10. I read so many negative comments about the NG900 which make me think most of you quite certainly never even drove one. I owned a three door NG900 with the NA 2.3l engine for many years (bought used for a reasonably cheap price) and it was actually a competent car. Put lots of kilometres on it and it never disappointed. Having the steering wheel on the correct side, it also wasn’t plagued with those bulkhead problems some of you are referring to. It was once rear ended, but that barely left any traces. The other car, a Golf, totally burned down, though. Probably out of utter shame. My girlfriend then (now wife) was driving a BMW 1 series and that was, in many aspects, much the lesser car, even though the options alone cost more than my used Saab. Of course the BMW did have the correct wheels driven (the rear ones, of course) but the suspension setup was so hard it often had trouble putting the little available hp to the ground. Sitting in the back was much worse than in the Saab, even as the Saab only had three doors. The boot of the BMW was too small to accommodate the stroller of our new born, where in the Saab there was still lots of space left. I could go on with other cars I actually had the opportunity to drive that didn’t measure up but I think you get the picture.
    Now I do realize this experience isn’t statistically very reliable, but it’s still better than commenting about a car you never owned nor drove…

    1. Hi Patrick. I don’t think anyone (on DTW, at least) suggested the NG900 or 9-3 were terrible cars. Bulkhead issue apart, they were competent and reliable, like the GM models on which they were based. The point is that they simply weren’t up to the task of turning Saab into a credible challenger to the German premium marques, which was GM’s explicitly stated ambition for Saab. Their relatively low sales would support that argument.

      You bought your NG900 reasonably cheaply second-hand and put lots of kilometres on it, and it served you well. Might I respectfully suggest that your perspective would have been rather different if you had been considering one new against an A4, 3 Series or C-Class?

      Our esteemed editor has done exactly the same as you and would, I believe, agree with your assessment. That doesn’t make the NG900/9-3 into a credible premium car.

    2. A friend of mine is a hardcore Saab enthusiast. He owns a NG 900 Turbo, and although it has very good points (really good looking in Imola red with 16″ “Viking” alloys, the engine is a belter, nice interior and a huge boot) the ride is hard and driving it has a strange feel, like if the tyres were filled with concrete instead of air. Unpleasant enough in a cheap car, unforgivable in a “premium” one.
      Until last year I owned an E36 328i and the ride/handling compromise seemed vastly superior to me.

  11. Ah, Saab and Subaru – two engineering-led, idiosyncratic companies that suffered from involvement with GM. Fortunately, Subaru limited GM’s involvement to a minority stake and survived the experience. Saab, of course, did not.

    I do recognise the problem in trying to incorporate such independent thinkers into a larger conglomerate, but in many ways these two brands have a similar ethos and attract similar customers: reasonably affluent, willing to pay for what they want, but either unmoved by ‘premium’ competitors or consciously avoiding them.

    The lesson from VAG is that you need to give your subsidiaries real clout and influence in order to survive. GM should have made Saab its global leader on turbocharging and ergonomics, and allowed it greater influence in determining the specification of shared platforms. Then, perhaps, the story would have turned out better.

    1. That´s not how GM works, as we know. It´s model is to buy competitors and eliminate overlaps as much as possible. What made Saab interesting was not “cost-effective”. Ironically cost-effectiveness cost a lot of money for GM.

  12. “In retrospect, I see not one single scrap of evidence that GM ever benefited in the least from the ownership of Saab.”

    Hidden in that is a rather narrow conception of benefit.

  13. @Daniel, of course I wasn’t commenting your piece, excellent as always, but some of the comments. And while I do get your point, methinks there’s quite a lot of hot air in the so called German premium. While I do not wear black turtleneck sweaters and am no architect, I’d probably have chosen a Saab rather than an A4 or a C-class anyway. The 3-series I don’t know, I did sort of like them. Experiences with A4 and A6 as company cars showed them to be vastly overrated anyway, and Mercedes was then considered to be for old people (an image Mercedes has successfully changed by producing cars I like even less than before). I don’t want to hype a car company which is gone anyway, and market has spoken.

    1. Hi Patrick, I absolutely share your scepticism about the depth of quality in the German so-called premium marques in recent years. I’ve owned two Mercedes-Benz cars, a 1988 190E, which was beautifully engineered, and a 1997 SLK230, which was unreliable rubbish. I also owned two BMWs, both E30 convertibles, which felt ‘special’ in a way that BMW’s current cars, for all their bells and whistles, do not. I’d loved to have owned a ‘classic’ Saab 900 back in the day, but never had the opportunity.

  14. In GM’s case, there was a strong element of corporate pride involved in the acquisition of Saab. All of the US ‘Big Three’ had been snapping up European carmakers like windfallen apples throughout the 1980s. Ford had tried and failed to obtain ARG/LR and Alfa Romeo around 1985/6, being thwarted by the UK and Italian Governments respectively. They had already gotten hold of AC by then and would soon add Aston Martin, (they were clearly working alphabetically…) GM had Lotus, which was hardly a prize. Chrysler had obtained Lamborghini. The General was outpointed by Henry over Jaguar in 1989, when it appeared as though Browns Lane had preferred GM’s offer of technical collaboration and a partial stake in the business. Mercedes and BMW were either too expensive, or not for sale – ditto Porsche. It’s highly likely that Saab was anything but GM’s first choice – more the last man standing.

    Once the Swedish carmaker came under GM’s control, product decisions were made, not for Saab’s benefit, but for that of the mothership. After all, both of the US cargiants enacted a similar victor’s mentality as that of PSA or Fiat Auto did. Rather than focusing upon what it was that made their acquisitions desirable in the first place, they simply applied their own methodologies with the assumption that they knew better. They were after all, in no mood to listen to their newfound chattels. In a similar manner to that of Jaguar under Ford, while it’s quite accurate to suggest that GM invested heavily in Saab, the money was not well spent – not so much because the Swedes mis-spent it, but that they were to a large extent hobbled by the hardware they were forced to deal with.

    I’m reminded of a quote attributed to John Egan, which to paraphrase, went something like: a larger business does not buy you for your benefit, it does so for its own. GM obtained control of Saab to further its own ambitions. That it went badly for them was at least as much a consequence of their management failure as it was of Trollhatten’s.

    A (further) personal view. I have lost count of the number of people who have commented upon my NG900, to the effect of ‘that’s how a Saab ought to look’. The later models were good cars, but they were not special in any way. I’m not suggesting mine is (or was), but it at least looked the part. Having been around for so long, it was (in retrospect) an error to have departed from the basic silhouette – a decision driven from the US I have no doubt. The market didn’t fall out of love with Saab. They fell out of love with the cars Saab ended up making.

    1. Agree with every word, Eoin.
      A friend has a 900, which he loves taking out into the Chilterns from central London – which, under Lockdown, he’s no longer able to do.
      The car is faultless, and serviced by a specialist garage which knows what it’s doing.

    2. One little nugget escaped my attention when I wrote the story of Saab under GM. There was very nearly a second ‘Saabaru’ in the shape of the 9-6X, a Subaru Tribeca with a nose job:

      The project got canned when GM sold its shareholding in Subaru to Toyota in October 2005.

    3. Further to the above, DTW will be crossing back over to Saab later in the week.

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