Bloomberg News

Saab Dealers Driving to Maserati With Unfolding Bankruptcy: Cars

February 14, 2012

Feb. 13 (Bloomberg) -- The bankruptcy of Saab Automobile has left the carmaker’s 900 dealers around the world scrambling to reinvent themselves, sometimes in creative ways.

Tom Backes, general manager at Guilford Saab in Connecticut, is considering trading in his sensible Saab wagons and sedans for the racier world of Maserati, the luxury brand owned by Fiat SpA, which is expanding its U.S. dealer network. He has also approached Mitsubishi.

“I’ve reached out to quite a few brands,” Backes said. “Some have said, ‘We’re not expanding,’ and others have said, ‘We’ll take a look at it.’ It’s a slow process.”

In the past two years, about 200 Saab dealers around the world have thrown in the towel and the rest are seeking new partners to survive. The flight of the dealers to competitors means that any company with an interest in buying the Trollhaettan, Sweden-based automaker may struggle to resurrect the brand.

“Often these dealerships have a loyal clientele who might switch brands,” said Garel Rhys, president of the University of Cardiff’s automotive industry research center. “They’re often in very good locations and well-established. So I’m quite optimistic about the prospects of Saab dealerships”

Rhys cites the history of British carmaker MG Rover. When that automaker went into liquidation in 2005, most of its dealers were able to add brands and survive.

Saab’s uncertain future has allowed the likes of Volkswagen AG’s Seat and Mitsubishi Motors Corp. the opportunity to swoop in and nab experienced dealers with a loyal clientele.

‘Absolutely Interesting’

“We’re absolutely interested in talking to Saab dealers,” said Ake Lundberg, head of Seat in Sweden. Seat, VW’s Spanish unit, aims to expand to 50 sales outlets in Sweden from today’s 28, Lundberg said.

In the U.S., “every one” of the country’s 188 Saab dealers have thought about taking on another brand, said Kurt Schirm, head of the Saab National Dealer Council.

That includes himself. Schirm, president of International Motors Saab, an exclusive Saab store in Falls Church, Virginia, has considered other brands for the past couple of years, he said. It’s been tough, not the least since Virginia, like many U.S. states, has a law preventing more than one dealer of the same brand within a certain distance of each other.

Schirm, whose store also repairs and sells used Saabs, had cut headcount by half to 28 in the last few years and the past weeks have trimmed further to about a dozen staffers, he said.

Warranty Challenge

Saab dealers have been struggling financially since at least December of 2009, when crisis-hit General Motors Co. announced it might kill the Swedish brand as it did with Saturn, Hummer and Pontiac. GM eventually sold it to Dutch sports-car maker Spyker Cars NV, today called Swedish Automobile NV. With sales once reaching 133,000 in 2006, Saab sold just 31,700 vehicles in 2010.

No sales figures have been released for 2011. Eric Geers, Saab’s former spokesman who lost his job with the bankruptcy, puts the number at 10,000 to 15,000.

“It’s a miracle they exist at all,” Geers said of the dealers.

Dealers with new Saabs left in stock are trying to get rid of them with discounts that often reach 30 percent or more. It’s not always easy, not the least since new Saabs in the U.S. lack a factory warranty. While customers can buy a separate warranty, that costs about $2,000 and generates an uncomfortable feeling, said Roland Gartner, who owns two Saab stores in Illinois.

“You’d think that customers would come flooding in and buying them because of the great prices, but they’re still not convinced it’s a good value at this point,” Gartner said.

Potential Buyers

Of course, there’s still a chance that Saab will survive as a brand. A half-dozen parties are considering buying the business and restarting assembly, according to the court- appointed Swedish attorneys handling the bankruptcy. China’s Zhejiang Youngman Lotus Automobile and Brightwell Holdings BV, a Turkish private-equity firm, have both publicly expressed interest.

That glimmer of hope is keeping dealers like Gary Small, 71, going. The founder and president of a Saab dealer bearing his name in Portland, Oregon said he’s not ready to be forced into retirement.

“I’m like an old Saab, I want to keep running forever,” Small said.

--Editors: Chad Thomas, Rick Schine

To contact the reporter on this story: Ola Kinnander in Stockholm at okinnander@bloomberg.net

To contact the editor responsible for this story: Chad Thomas at cthomas16@bloomberg.net


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