Saab Gets One Step Closer to Death

January 11, 2010

Normally I wouldn’t get too bent out of shape seeing a press release spelling out that an automaker’s days were very short. I must admit, however, that reading yesterday’s notice that Saab’s Board of Directors voted in favor of liquidating the corporation’s assets I was actually kind of sad.

The weird part is that I have never owned a Saab, nor have I ever even come close to considered buying one. For the most part, I’ve never really even liked Saabs. I’ve consulted with plenty of people in the last decade where I’ve specifically told them to avoid buying a car from this manufacturer that claimed so many specialty mechanics around the country also telling Saab drivers that later products were overpriced and too prone to catastrophic failures.

For me, the last great Saab with mass-market appeal was the 9000 from the 1980s. The 9000 was not only a hot car by period standards, but also one of the first stick shift cars I’d ever driven. (At this point in my life, I can’t remember if I drove the 9000 before or after the Nissan Pulsar.)

What hits me in the soft spot is that Saab has such a long history of doing things totally different. In a world of automotive monkey-see-monkey-do, for decades Saabs were quirky. Quirky might not be for everyone, but Saab did provide options for those engineers, college professors and mathematicians who were convinced that two-strokes, front wheel drive, or bathtub design were better for humanity.

GM killed Saab’s value by emasculating the marque’s individuality. With platform and parts sharing with the likes of Subaru, Saab lost the quirky practicality image of the 1960s and 1970s, and Swedish sport-luxury image of the 1980s and early 1990s.

The company had such amazing competition history with the legendary likes of Erik “On The Roof” Carlsson piloting Saab 92, 93, 95, and 96 models to great rally finishes. Ironically, it is because of competitive failure — against Volvo, Lexus, not to mention the hoard of SUVs and crossovers that Saab’s demise is rapidly approaching.

When a company ceases to provide reliable, cost-effective and differentiated products, the options are few. GM simply didn’t see a large enough market to invest large sums reinventing Saab, something with which I totally agree. A company could have bought the line and focused on producing modern interpretations of classic Saab design ethos, but as Koenigsegg found out, that strategy is ripe with labor, dealer, supplier, and warranty pitfalls.

Although GM still claims they are looking for a buyer, the long and short of it is that the world won’t stop the presses to save a company that only sold 8,680 cars in the US during 2009 (and only 124,438 vehicles worldwide in the glory days of in 2007). Just don’t be amazed when some out there continue to speculate and miss what might have been if the company had remained just a little quirkier.

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So Long To Saturn — Its Rings Not Worth A Thing

October 1, 2009

As The Princess Bride’s Miracle Max would say, Saturn is “mostly dead”. Yesterday GM said Saturn will simply be retired, because after the deal between Penske and GM fell apart, it would take a miracle for anything else to happen.

When the Penske/GM deal for Saturn was announced many months ago, I was a tad surprised. Roger Penske has always had something of a Midas touch turning businesses into cash cows. The buyout of Saturn, however, seemed to be more of a pig than a bounty-producing bovine.

The main problem with the deal was that GM would only continue to build three models—the Aura, Vue and Outlook for Penske through 2011. At that point, Penske would need to find some other corporation to build the cars, which he thought he had (insiders claim it was Renault-Nissan). Unfortunately, that all fell through.

Or maybe it is actually fortunate. The value of a brand producing badge-engineered product lines is precisely the issue I brought up back when Saturn was put on the block. In the old days when a corporation bought out another automaker, it got the brand, one or two production facilities, the trademarks, the equipment, and workers. Now it simply isn’t that easy. Since Saturn produces not one single vehicle unique to its brand, Penske didn’t have the opportunity to buy anything that resembled a true going concern.

It’s obvious that Penske was placing the value on Saturn’s distribution network with which he had longer-range plans. Saturn’s current lineup of vehicles was no doubt a stop-gap until other foreign car lines from China, India and other countries could be imported and sold/serviced via Saturn dealers. Since importing cars is a tricky business, relying heavily on emissions and safety regulatory bodies, Penske needed some breathing room if certain brands needed more time to meet American standards.

I said it before and I’ll say it again – GM killed Saturn a long time ago by stripping its primary value proposition: autonomy. When the brand was introduced nearly twenty years ago, all of the company’s products were unique. If 1990’s Saturn were to have been shopped, it would have found a buyer.

Over the last two decades GM let Saturn lose its value. Initially it was by not replacing the original car models, and then they replaced it with badge-engineered crap. While some would argue that the current lineup of Aura, Outlook, Vue, and Sky are pretty good, there’s no escaping that all the vehicles were available with slightly altered sheet metal (actually, usually it was simply plastic) carrying other brand badges. Penske might as well have been buying the Chevy Malibu as the Saturn Aura!

Sure, there are other reasons people buy dying – or dead and buried, for that matter, automakers. It was popular in the 1980s for entrepreneurs to buy existing parts supplies of automakers leaving the US market…or the entire world, such as was case for companies like Maserati, Checker and DeLorean. Since the parts of Saturn are largely shared with other GM products, it makes this tactic a moot point.

And what about simply buying the Saturn name and brand logo for trademark value sake? C’mon – you’d be hard-pressed to find an automaker with a more ambivalent customer base less likely to buy logo apparel. I suppose Saturn is the modern brand image value equivalent of Essex or Frazer.

So Saturn will soon hit the junk bin. At the very least let’s hope that GM has figured out a better way to close-down a brand more efficiently than when it killed Oldsmobile at a cost of a BILLION dollars.

Tell you what – I’ll make GM stockholders a deal. I’ll buy Saturn…at the invoice price of a new Sky, which is the only Saturn product that (with enough development and bug fixing over a couple generations) I ever thought had any chance of being a really great car.

Come to think of it… GM is going to have to throw in an extended warranty.


Someone Has To Be Profiting Now, Right?

September 22, 2009

There’s an old adage in the business world: no matter how bad things get, there’s always someone out there profiting from it. It was true when my immigrant great-grandfather and grandfather (with his sixth-grade education) bucked the tide against the depression during the years running into WWII thanks to their scrap metal business…and it must be true in today’s economy.

When it comes to the auto industry, however, winners are seemingly nowhere to be found. We already know that the manufacturers have been getting slammed harder than a teenager in a punk concert mosh pit. Consequently, all the new car dealers, OEM parts suppliers, Madison Avenue advertising companies, and sponsorship-heavy auto sports and lifestyle events have taken it in the shorts.

But someone has to be winning, right?

The knee-jerk reaction is to say used highline auto sales operations are profiting, but that’s not really accurate. It is true that with production of new Mercedes, BMW, Audi, and Lexus at a snail’s pace, new car inventory is a thing of the past (at least for certain models). With desirable units nowhere to be found, potential clients have to either wait or buy used. Most are simply not buying at all, which means compounding the problem with no used car trade-in. The lower supply combined with higher demand has driven up the values of highline used vehicles.

This doesn’t necessarily mean more profits for the dealer or the auction company. Higher prices can’t necessarily be recouped by dealers, and auctions are killed by lower volume. The only dealers which have seemed to do well are those well-run operations catering to demographics rich in panic sellers as well as gotta-have-it-now buyers.

If people are keeping their cars longer, then the automotive service industry is making off like a bandit, right? Nope. Dealer service centers rely almost entirely on new and used car sales to generate business – and overall corporate profits. As for independent shops, the down economy has turned regular service clients into “fix it when something important breaks” customers. Furthermore, the costs of parts, tools and services used by mechanics have all increased…and only so much of these cost increases can be passed on to the customer base in a down economy. The only upside is that there are more good mechanics looking for work, so hiring qualified talent isn’t as hard as it was in the good old days a few years ago.

Collector car auction volume and results are down. Car shows have reduced attendance and participation. People are buying less gas. Restoration parts suppliers are hanging on by a thread. Online listings on sites like eBay and Craigslist are up, but sales resulting from these listings are down sharply.

The bottom line is that no single group associated with the auto industry seems to be “winning”. The quick and the smart individuals, though, are out there positioning themselves for success. Buy low now to sell high later…or taking the opportunity to develop, test and create synergies for new technologies/products now to fulfill a need when the market returns.

And if you couldn’t guess — automotive journalists aren’t winning now, either. With advertising revenue down, the newspaper industry in shambles and a flooded talent pool, it’s nearly impossible for automotive content providers to expand into new publications. Maybe our President will bail out the automotive journalists? I’m 6’4”, doesn’t that qualify me as “too big to fail”?


Don’t Blame The UAW — Update

May 29, 2009

It appears that when GM engages the UAW in an effort to work together to promote their common interests (such as: “survival”) good things happen. GM and UAW announced today a new agreement:

DETROIT, Mich. – General Motors today confirmed that its UAW-represented employees have ratified the modifications to the GM-UAW 2007 National Labor Agreement. The amended agreement covers approximately 54,000 hourly employees located in 46 U.S. facilities.

“The leadership demonstrated by UAW president Ron Gettelfinger and UAW vice president Cal Rapson, and the hard work from the members of the GM and UAW negotiating teams, resulted in an innovative agreement that will enable GM to be fully competitive and has eliminated the gap with our competitors,” said Diana Tremblay, vice president of GM’s Labor Relations. “We very much appreciate the support of our employees and retirees. Their shared sacrifices will enable GM to become a stronger, more viable company that will continue to deliver world-class cars and trucks.”

Key highlights under the modified agreement include attainment of cost and cash savings comprehended in the GM Viability Plan that will enable the company to eliminate the wage and benefit gap with its competitors. It also includes changes to the agreements regarding the Voluntary Employee Beneficiary Association (VEBA) trust for retiree healthcare. The agreement also highlights GM’s plan to utilize an idled assembly and stamping facility for future production of a compact/small car in the United States to meet future fuel efficiency regulations.

In other words, in exchange for a healthy cut in overall compensation (wages, health insurance coverage/retirement benefits) GM agreed to use UAW workers to build the cars instrumental to its survival, including the Volt.

This is a good move by both sides.


An Anti-Union Guy Says: Don’t Blame the UAW

May 27, 2009

I’ll start by making it crystal clear: I don’t like unions. Most unions, in my humble opinion, penalize the best workers and deliver unjustified compensation to the worst. As a guy who loves to negotiate on my own, I’d only join a union as a last-resort.

That being said, America’s infatuation with demonizing the United Auto Workers is DEAD WRONG. Almost everything you’ve heard or believe about the UAW is not accurate, because the UAW is different from most unions.

Myth number one is the UAW, like all unions, exists only because it makes the leaders rich off of union dues. Guess what? Ron Gettelfinger, the President of the UAW, made $156,000 in 2007 and just under $160,000 in 2008. It might sound like a lot of money, but consider that this most powerful union boss in the world makes less than almost any regional union chief. For instance, the Service Employees International Union (SEIU) Local 32B-32J chapter in New York was paying its president $530,000 each year.

Even better, a person with no experience and no education can get a base of $80,000 if he is lucky enough to get a Longshoreman’s union entry-level job.

In comparison, Rick Wagoner, former President of GM, had a 2008 salary of $2.2 million. Bob Lutz, GM’s former high-profile VP, saw $1.56 million in 2008. Gettelfinger, the demonized head of this so-called greedy union in actuality makes less money than the average GM low-level department director.

Myth number two is that the UAW has no interest in the survivability of the auto companies and has never been interested in anything other than better pay and benefits. This is totally untrue. Indeed, in 1949, UAW President Walter Reuther oversaw the publication of a position paper called “A Small Car Named Desire”, which urged The Big Three to start producing smaller, more fuel efficient cars, because that is exactly what the UAW perceived the American public would want. The Big Three’s top brass told Reuther to stick to negotiating contracts, rather than tell them how to run their businesses.

Throughout the 1960s and 1970s, the UAW was regulated by the Big Three to being concerned only about protecting members’ benefits. By the late 1970s, the UAW started to see the foreign competition as a legitimate threat to the US auto industry, even when Big Three SWAT (strengths, weaknesses, opportunities, and threats) analyses focused solely on one another in each segment.

The UAW urged foreign automakers to build their cars here in the USA. Unfortunately for them, right-to-work states did better jobs of lobbying, so most foreign-owned shops became non-union.

Interestingly, though, the Japanese-owned factories seemed to offer fair compensation for work. So what does that say about the Big Three? To me it says they were…and still are greedy, shortsighted, too inbred, and insulated to see that it was their own damn fault, not the UAW’s, for the domestic auto industry’s collapse.


“Sammy’s Unofficial Template for Listing a Car or Truck for Sale on Craigslist” (or “How to sell a car in a crappy economy”)

December 9, 2008

With the economy in the smelliest of train station crappers, hundreds of thousands of used and classic vehicles have flooded web sites like Craigslist and eBay. While these sites have made listing a car for sale so easy that the dumber brother of the guy who copied off George Bush at Yale could do it, unfortunately, these sites don’t explain the critical information each listing needs to call potential buyers to action.

For the benefit of both sellers and buyers, we at The Four Wheel Drift present “Sammy’s Unofficial Template for Listing a Car or Truck for Sale on Craigslist (or other site)”.

STEP 1: WHAT, SPECIFICALLY, ARE YOU SELLING?
Crazy as it might seem, you actually need to tell people what you’re offering for sale. These are all essential pieces of information:

  • Model year of the car – This is on the title and registration. If the car is a classic car, make sure that the year on the title matches the date code on the car’s data plate. (Most car VINs can be decoded to establish the date of manufacture.)
  • Make of the vehicle – Chevrolet, Ford, Dodge, Hummer, Hupmobile, Porsche, Dort, Crit, Steyr… For searching purposes, if you’re selling a Chevrolet, it’s not a bad idea to also include “Chevy” and “Chevie” in the listing. For most cars it should be absolutely obvious what make it is, however, for that wildly modified hot rod that remained in your garage after you kicked the cheating bastard out, simply look on the registration or title for the manufacturer of record.
  • Model – Just saying it’s a Mercedes, ’67 Chevy or ’30 Cadillac isn’t enough. (There were no less than 113 officially produced model and body styles for a 1930 Cadillac!) You need to list which specific model it is.

    The model name is usually evident (like Toyota Camry, Honda Accord, MG MGB), but it can get tricky for cars built before WWII. For instance, in 1936 Cadillac offered four different series of “Fleetwood” models corresponding with three available wheelbases. Make sure that you always include the series number with the model, such as “Series 85 Fleetwood” to avoid confusion. Any model or series number usually appears on the registration/commission plate on the engine firewall.

  • Trim-level sub-designation – Models often have an additional sub-designation to differentiate equipment levels. Don’t just say it’s a Chevelle if it’s a more desirable Chevelle Malibu. If it’s a Toyota Avalon, is it an XL, Touring or Limited? This is also the time to indicate if the vehicle has an all-wheel or four-wheel-drive option.
  • Body style – Don’t make the reader guess whether it’s a sedan, coupe, wagon, convertible, crew-cab, long bed, step-side… For cars before the 1970s, ensure you get the specific body style name correct, because it can be misleading. Taking the 1936 Cadillac as an example again, there were 21 different body styles of coupes, sedans and convertibles. In the 1950s and 1960s some manufacturers offered coupes and sedans, but also hardtop versions of both with no pillar to hold the side windows. The bottom line is to look for the VIN or commission plate on the firewall or body tag on the driver’s door and use a Google search to find how to establish via your VIN or body code that you are describing the vehicle’s body the same way the factory did (like sedanette, club coupe, club sedan, formal sedan, two-door sedan, phaetons, Victoria, town sedan, roadster…)
  • Engine – For most cars with multiple engine options, just indicating the number of cylinders will suffice. If the car you are selling was offered with multiple displacements and/or states of tune, such as a 1969 Corvette, list the important details (350ci or 427 ci V8 delivering 300, 350, 390, 400, or 435 hp?)
  • Transmission – For cars that offer optional transmissions: automatic, 3spd, 4spd, 5spd, 6spd manual, and list if the gear-change is steering column or floor-mounted for older vehicles.
  • Interior – Leather, cloth, bucket seats or bench.
  • Options – You don’t need to list every last option, but it’s important to list larger and more important equipment packages. Certain vehicles are more valuable with specific options, such as a truck with towing package, luxury car with heated/ventilated seats, BMW with Sport Package, British roadsters with wire wheels and/or Laycock overdrive.

STEP 2: WHAT IS THE CONDITION OF THE VEHICLE?
You should always look at your own vehicle with a seller-calibrated eye. Intentionally misrepresenting the vehicle might be against the law, but unintentionally misrepresenting it is also bad, as it wastes the potential buyer’s time and money.

  • Body: Disclose in the listing if there are any sizable dents, scratches, faded paint, or areas of previous damage that were not repaired to as-new condition…this includes the presence of excess body filler (Bondo). If there is rust, please list the major areas and extent of the rust in detail. This is VERY important. Holes in the floors, trunk or disintegration of frame metal is something people want to know about before they take time out of their schedule to inspect a vehicle! To describe rust, you can use:
    • Surface rust: a light coat of orange on exposed metal pieces that can be scraped-away with a fingernail or light sandpaper.
    • Bubbling: Places where the paint is literally bubbling underneath. Usually you’ll find it low on the car – on fenders, doors and around the wheels. A small poke with a small screwdriver will reveal if the bubble is an indicator of rust through. If your car has bubbling, don’t claim it’s “rust free”.
    • Rust-through: Where the rust has destroyed an area enabling a screwdriver to go through the panel. The only cure is to cut out these rusty areas and weld in new metal.

    This is also a good time to detail if any chrome needs replating or if there are cracks in windows or exterior light lenses.

  • Interior: Describe any wear to the seats (splits, tears or burns), carpets, top, dashboard (cracks). If the car has never been smoked in, indicate it for the benefit of the asthmatic set. If any gauges don’t work, list it. For cars with a kickin’ stereo (that’s what the kids call them, right?) this is the place to describe it.
  • Mechanicals: Does the car run? If not, explain (as best you can) why it doesn’t? Does the engine smoke? When running at operating temperature, is the oil pressure gauge showing in the normal range? Detail any major component that needs addressing, as well as any recently completed major servicing. For collector cars and exotics requiring expensive services, indicate when (time and mileage) the services were last done.
  • Originality: If the car has been significantly modified, not only describe the changes, but also identify what was originally equipped. This is most important for clones/tributes of more exclusive high performance models. Not disclosing that your 1969 Camaro Z28 is actually the love child of a six-cylinder coupe mated with the drivetrain from a wrecked authentic Z28 is fraud. The same goes for more modern cars like Honda VTECs.
  • Mileage: How many miles on the car? If the engine is not original to the car, then how many miles on the engine, as well?

PRICE:
Don’t expect to get calls or reasonable offers without listing a price. Research what the value of your car is and set a realistic price. Don’t forget that asking prices of cars on Craigslist are just asking prices, not selling prices. Go on eBay and see what similar cars are actually bid to. The more you ask, the longer it takes to sell — and if you ask too much, people simply won’t call.

LOCATION:
Don’t forget to explain where the car is located, because if you leave it blank, people will think it’s a scam. If you live in a small town that the city folks have never heard of, explain how far away you are from the nearest big town.

CONTACT INFO:
Include your email address and maybe even a phone number.

PICTURES:
This is one of the most important parts of the listing! Take pictures outside in daylight. The most important shots are front ¾-view, rear ¾ view (showing the other side), interior, and engine. It’s also good to take detail shots of wheel wells, undercarriage, trunk floor, door bottoms and other areas so that you can email these to people when they inevitably ask.

SPELLING:
People, people, people… please check your spelling! The chances of getting your asking price for your car if you misspell the make (Alpha Romero instead of Alfa Romeo), model (Camero instead of Camaro), body style (convertable instead of convertible), or important items (bumber instead of bumper), are Slim Whitman-to-nun chucks.

OTHER TIPS:
It might seem like a crazy suggestion after all of this, but be concise! Use bullet points and stay away from long narratives. If the car was only available with a single transmission, don’t waste space with the number of gears or if it has a manual shift mode.

The bottom line: be honest, direct and accurate.


GM Buying Chrysler Rumor — Redux

October 13, 2008

Just a year and a half since the last time that similar rumors hit the world, again the buzz in the business world is that General Motors is considering buying a controlling stake of Chrysler. This time, though, it might turn out to be true.

Quite a bit has happened since February of 2007, when GM initially walked away. Chrysler was purchased by Cerberus, which quickly found out the extent of the company’s horrible problems. Then gas prices soared…then the credit crunch. If we were Cerberus, we’d want out too!

Everyone seems to be asking: “why would GM want Chrysler?” Here’s a list of pros and cons:

Pro –

  • Chrysler has some of the most advanced plant facilities in the world. Utilizing “flex line” operational technology, some of the facilities are able to build many different cars on the same line. This allows the company to build based on market demand without the need to stop and change production lines – something that is currently killing GM. And Chrysler’s overall value is so low, GM could conceivably buy the company and kill it for its factories for less than the cost of modernizing some of its existing ones.
  • Chrysler’s share of the government’s $25 billion bailout.
  • Getting the “Lebaron” name and preventing it from being used on anymore horrible vehicles that can bring further insult to the name of the great coachbuilder of the pre-WWII era.
  • Ummm….that’s about it.

    Con –

  • Chrysler has the single worst product family for modern market conditions. Most of the company’s star vehicles rely on Hemi V8 and V10 engines that consume gas like beer in a Boston pub on March 17th.
  • Chrysler’s product family offers nothing that isn’t already offered by GM, other than a good minivan (a declining segment.) The 300/Charger competes with Impala, Lucerne and STS, to some degree. Camaro will steal dollars for Challenger. Jeep certainly offers better products than Hummer, but both brands draw from the same pool, and neither look to have good sales over the foreseeable future. Even the Viper is basically in direct competition with Corvette.
  • Just what GM needs – hundreds of additional dealers with under-trained sales and service staff whose primary goal is to get people to circle “completely satisfied” on surveys solely for the purpose of winning corporate recognition (instead of actually having completely satisfied customers!)

    In the end, the only thing we could understand is if GM pulled a Microsoft – buying a company simply to remove it from the marketplace. Chrysler is too costly and too far behind to be anything other than akin to trying to restore a rotten 80’ sailboat. (Read: money pit with no hope of breakeven.)

    We’re going to guess that this just isn’t going to happen, because it makes little to no sense for GM. Though GM has been guilty of plenty of shortsighted decisions in the past, but they’ve made only a handful of downright stupid ones. Only if Chrysler’s share of the bailout funds, plus the value of its modern plants minus the cost of changing the plants to build core GM future products (like the Volt and other plug-in versions of Cadillac, Chevy, Buick, Pontiac, and Saturn offerings) far exceeds the cost of purchasing the company will it go ahead.

    After all…even some still working in GM are old enough to remember how merging Packard and Studebaker (two ailing car companies) turned out!