SAABstory on notice

As he has noted previously, the werewolf is stuck in a rather loveless and stress inducing relationship with an uncooperative 2003 silver SAAB 9-3 he has driven for the last seven years. This automotive beast from Scandinavia is known as the SAABstory. He has likened her to a spiteful and vengeful ex-wife that is out to undermine your bank account at every corner, while simultaneously stressing you out, and rattling your cage for perverse shit-and-giggles. She has no remorse, no emotion, no accountability to anything other than the proliferation of headaches and misery on the werewolf. Lately, the SAABstory, clocking in 93K miles, has begun to show signs of leprosy. The air-conditioning and heating motors crapped out last February in the dead of winter leaving the werewolf to rely on the heated seat feature. There is a flaw in the seal of the passenger door causing a small flood on the floor with each rain. The passenger side floor is beginning to resemble the 9th ward of a post Katrina NOLA.  The CD player is beginning to act ticky and skips when it pleases. On principle, the werewolf refuses to bend over and sink scarce cash into this venomous and vindictive bitch, and he intends to drive her into the bloody ground, yet, she has been trying his patience lately. He would hate-crime her her if could, but sadly, the need to have a modus transportation trumps the righteous blood-lust for the time being. Read it here first, the werewolf is like an elephant. He keeps score and never forgets. When granted the ability for just vengeance an on account of the years this loveless and abusive relationship has subjected him to, he will take his many of pounds of flesh!

An Encore for the Saab Story?

While it is way too early to declare this a happy ending, it looks like GM's red-headed stepchild, SAAB, is getting a new lease on life and being sent home to Scandinavia. Well, sort of. The WSJ offers coverage here.

Spyker, the new owner of SAAB, has announced its intention to turn SAAB into a lower-volume, more premium oriented car maker. The werewolf thinks this a bold, but troubled move. GM, the corporate king of conformity, has spent the last two decades eroding SAAB's quirky and unique image. Beyond purging its designs of all GM DNA, Spyker will have to invest heavily in reversing the damage GM has done to SAAB's brand image. The werewolf would be a very concerned investor.

However, the real drama in this tale is told in the numbers. Between 1989 and 1999, GM paid $725M to acquire SAAB in addition to assuming all of SAAB's debt and liabilities. In 2010, SAAB was sold by GM to Spyker for $74M.

Saab-story Saga Continues...

The reporters at the Daily Telegraph, have an interesting story about the latest potential development of GM's neglected Swedish brand, Saab. Despite proclamations of Saab's pending doom, and the inability to find a proper suitor to acquire the brand, it looks like there is a slight chance of salvation via F1 racing guru and bizarre billionaire eccentric, Bernie Ecclestone, and a Luxembourg based private equity concern. As a taxpayer with a forced equity interest in GM, the werewolf hopes our government is able to salvage some sort of value from this neglected GM division, as GM is already getting hosed with write-offs by shuttering Saturn and Pontiac, not to mention the disgrace status of its brand equity. (That's a whole other can-of-worms, the long term viability of the GM's brand and business)

This leads the werewolf to wonder, given the doom and gloom shrouding the Saab brand, along with GM and Washington's complete incompetence managing the enterprise, how does a prospective buyer attach an optimal value to Saab? The clock is ticking before Saab goes bye-bye. As the werewolf types, it's being unwound and dismembered by financial advisors and management consultants. Therefore, the werewolf would think that the value erodes with each passing day. As a perspective buyer, would I get a better deal buying Saab's assets post-liquidation, for pennies on the dollar, including the naming rights, and starting the whole endeavor over from scratch, as opposed to acquiring all of the liabilities and baggage currently associated with the brand? There are dozen of financial and strategic concerns at play, both for GM and any potential suitor, yet, the perception that nails are be driven into the coffin, I would think strengthen any potential buyer to drive down the price, extremely weakening GM's hand, and giving suitors all of the leverage. The only play for GM is to try and get suitors into a bidding war with each, however, that seems highly unlikely at this point.

The fate of Saab was likely sealed years ago when GM shamelessly assimilated it into the heinously conformist and bland Detroit collective. However, there may be some interesting lessons on corporate valuation and both seller and purchaser behavior during Saab's death throws. The werewolf will be watching.

Addition: The werewolf would like to clarify some details around valuing an enterprise as it relates to this post. Traditional metrics include, comparables (the whole auto industry is getting squeezed at the moment, and Saab was a niche player, so that's not really helpful), projected earnings or discounted cash flow (normally several models could estimate these, but when you announce your exiting existence, this goes to zero), assets (Saab has these still, but the inventory isn't moving, and who wants a bunch of pampered unionized Nordic workers?), Market value (GM is such a charlie foxtrot, that this method is murky and imprecise), plus there are the softer value points like technology, pipeline, etc. These can probably be factored and are likely the basis for the pending pricing, but again, as a potential suitor, the werewolf would think all the cards are in your hands. This goes to a secondary take-away from the werewolf's business school Corporate Valuation class (also known as Corpse Val), the bankers and advisory folks love to push corporate valuation as a science, but when you drill down to realities, such as the one Saab and GM are facing, corporation valuation begins to look less like a science and more like an art.

A Saab-story's final chapter.

GM recently announced that Saab, like its stablemates, Pontiac, and Saturn, is to be wound down into oblivion. It makes sense. Saab, despite a certain cache and decent potential, reminds me of B-movie actor Michael Biehn. They both always dwelled on the cusp of potential, developed a decent reputation, and loyal following, but never achieved the star status that always seemed within their mutual reach. Biehn played prominent roles in well known films like "The Lords of Discipline," "The Terminator," "Aliens," "K-2," "The Abyss," "Tombstone," and "The Rock." Yet nowadays, he can be found working for a case of hard liquor doing voice-overs for computer games and flunkie films for the Sci-Fi channel.

Traditionally, Saabs have been quirky. (This statement excludes the heinous rebadging GM engaged in) Their engines are small, but turbocharged, the ignition is located on the center console near the transmission between the front seats, and they have bizarre Nordic design features and ergonomics. Cute quirky differentiators that meant something once upon a time, but were lost long ago in the bureaucratic labyrinth that encapsulates GM. Over the last few years, Saab had morphed into a useless Scandinavian appendage on the GM collective. Like the Borg, GM has been known to assimilate its acquisitions and totally strip them of any distinctive value added features in order to more quickly ruin them. Over the last few years, Saab's were nothing more than rebadged Chevy's and Subaru's. Even Saab's brand managers lost the quirky Saab brand image by vacillating between two abortive advertising campaigns that overemphasized a "state of independence" or being "born from jets." Neither was great, but the fact that they couldn't stick to one certainly added to the mayhem of Saab's identity in the GM stable.

My experience with Saab's go back to my day's as a boarding school student in New Hampshire. My girlfriend during senior year was one of the few day students where I was enrolled. She had a winterized blue 1990 Saab 900 coupe with a 5-speed manual transmission. One of the many things I learned from her was how to drive a stick shift. It's a very fond and positive association for me, and while she is long gone, her gift keeps on giving.

In 2003, I bought a new silver Saab 9-3 linear sedan that I affectionately named the "Saab-story." Despite looking halfway decent and aging well visually, the car is a mechanical nightmare that has pillaged my checking account on several occasions. Since the warranty ended several years ago, it feels like I have been stuck paying alimony to an bitter and undeserving ex-wife. All these ludicrous expenses, constant nagging and bitching, with no benefits, pleasure, or piece-of-mind. Despite the fact that the werewolf is obsessive compulsive about maintenance and keeping an orderly car, little things that are absurdly expensive frequently fail on the Saab like clockwork. It reliably starts about 80% of the time. Not to mention that every Saab dealer I have been to in Georgia, Tennessee, and New York finds a way to shake you down worse than a Jersey mafioso. I have been detached from the Saab-story for years, but as an underemployed, recently minted MBA, I am in no position to jettison the gray lady. I look forward to the day where I can wind down my own Saab-story. That being said, it's sad that the such a quirky and iconic brand has fallen victim to GM's quest for mediocrity and sub-standard automobiles.

Someone remind me why we bailed GM out?