The GM Bankruptcy has been making me sick for the last couple of weeks. After visiting with my parents and seeing how my father lost pretty much everything he has saved all his life, I have developed a dislike for GM. However, there is something about the GM bankruptcy that intrigues me. I want to keep informed of everything that happens.
So far, the GM bankruptcy has put popular car brand Saturn in the hands of Penske. Hummer was sold to a Chinese car manufacturer, which still baffles me. GM European car brand Opel was sold to a Canadian parts manufacturer. Now, Saab is the latest of the GM brands to be affected by the GM bankruptcy, and it looks like they will unload this company as well.
The sale of Saab is between GM and Koenigsegg. I have never heard of Koenigsegg before, but they are the manufacturer of some of the worlds most fastest and expensive sports cars. After reading Reuters’ report on the sale of Saab, I realized that the reason that I have never heard of Koenigsegg before is because they only made 18 cars last year. The price tag on each individual car was over $1 million.
Skeptics are unsure as to whether or not Koenigsegg will be able to successfully run Saab. After all, the company made 18 cars in one year as opposed to over 90,000 produced by Saab. Perhaps this is the owners way to gain ground in the luxury car market and be able to sell his products to more than just the uber-rich.
Saab will remain a high quality and “luxury” brand car. They have always been headquartered in Europe – even though they have been owned by GM for over 20 years.
Will Saab survive under the leadership of Koenigsegg? I have recently read several business books over the past couple of months. One popular business book written by Jim Collins titled Good to Great introduces what is known as the “Hedgehog Concept” where a company is to find the place where their passion, what they do best, and economic engine all intersect. Once a company can find that and stay disciplined, they can eventually become great.
Good to Great warns about taking on acquisitions that don’t fit inside the model of what you do best. What Koenigsegg does best is produce high-quality near-perfect sports cars. He has never dealt with mass production and running a business such as Saab.
Peters and Waterman wrote one of the most widely read business books of all times, In Search of Excellence. The authors of this book also warn of the dangers of acquisitions that aren’t within a company’s core competencies. Two of the best business books of all times warn against acquisitions that just don’t make sense. Koenigsegg’s purchase of Saab does not make sense to me at all.
Potential problems that I see is Koenigsegg trying to make Saab vehicles too “perfect”. He’s known as a vehicle perfectionist. When you mass produce items, you cannot always make everything perfect. Another potential problem that I see is Koenigsegg’s name becoming more and more associated with a mass-produced luxury car instead of a high-quality hand-made million dollar sports car. Will people still want to pay over $1 million for a sports car produced by the same company that produces vehicles under $100,000? Only time will tell.
Despite the future success of Saab, all we are concerned with at this time is the survival of automotive giant General Motors. If Saab ultimately fails, quite frankly that won’t be our problem here in the US. The deal will provide GM with much needed cash that could help them weather this storm. Although the future of GM remains guarded, I think with each sale the company will be able to reach their goals easier.
In Search of Excellence:Lessons from America’s Best Run Companies, Thomas Peters & Robert Waterman, 1984 Warner Books
Good to Great: Why Some Companies Make the Leap and Others Don’t, Jim Collins, 2001 HarperBusiness