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Today, I thought it might be nice to get a look at who’s behind the name Koenigsegg, and what a niche car
manufacturer might be able to bring to a company, such as SAAB automobile.
The wealthy entrepreneur Christian von Koenigsegg began his dream of a super car in 1994, when he first
produced a prototype car, and by 2002, his first car for delivery was produced, marking a great milestone
of 8 years of hard work. In 2005, Norwegian entrepreneur Bård Eker bought a large share of the company
and is today the biggest owner. However, the Koenigsegg Group is not only Eker and Von Koenigsegg.
American investor Mark Alan Bishop and other smaller investors are also behind the company and its
buyout.
But what can a small super car manufacturer and a small group of investors, with limited experience within
mass production, do better than giant GM?
What first comes to mind are new ideas. In a large corporation such as GM, it might be easy to get stuck in
old habits and procedures, which might have worked earlier but have shown weakness over the past few
years. With Koenigsegg as a new owner, SAAB automobile gets an opportunity to look past the old habits,
and they can hopefully bring in new ideas that will create profits in a 21st century car industry. There is no
secret that the car industry has made relatively little improvements over the last 50 years. This is partially
due to a strong lobby movement and other political factors. In an interview with the Swedish newspaper DN,
Von Koenigsegg comes back to the word entrepreneurship over and over, and it is perhaps
entrepreneurship that will give SAAB a necessary rebirth. Von Koenigsegg is an outsider who is not stuck
in the lobbying and all the other factors that have made the car industry, on a relative basis, an outdated
and not very innovating industry.
There is no secret that SAAB has been losing a large amount of money in last the few years under GM
control, and my explanation for this, judging from their product line, is that they are too average. They have
been trying to offer a middle to high end product but giving the customer nothing more than an average
car. For this reason, Koenigsegg might be the owner they need. Koenigsegg's cars are luxurious and
expensive, far from the average and will hopefully help SAAB to find their niche. In a press release
broadcasted on the SAAB website, their CEO comments that SAAB and GM will still have a close
connection with technology and supply. Also speaking to other officials in the SAAB public relations staff,
they mention that GM and SAAB will continue to work together via their service contracts, and GM will use
SAAB’s Cross wheel drive system that is used in many GM models.
However, when I wrote last week about the rumor, I wrote that my biggest concern is the distribution
network, and if SAAB will continue to use the GM network. After talking to the SAAB public relations staff, it
is clear that SAAB will be totally carved out from the GM network, and they will try to open up their own
sales channels around the world. However, how these channels will be organized is still too early to say.
Still, this is the first and probably the only thing that I find worrying about their new plans. In an early stage
like this, I would think that reorganization, remodeling the business plan, and creating a niche for SAAB
would be where the capital would be placed. Opening up new sale channels around the world would be a
large investment, and in my opinion something that could be spent in other places. I can’t imagine that GM
is the driving force behind this decision since they are not in a position to negotiate, as they have
desperately looked around the world for potential buyers of SAAB. Conceivably, SAAB feels that they do
not wish to be connected to the GM brand and want to create their own brand recognition.
Overall, this new form of ownership that SAAB will get through Koenigsegg is attractive. That a car
manufacturer that only produces 18 cars a year would even be considered to buy a company of SAAB’s
magnitude, signaling that the car industry is shaky. The car industry has been a vital part of many western
countries stability in the last decades and has created many jobs and opportunities that come with a
functional car industry. However, in the last decade or so, globalization has taken away some of the
advantages old car manufactures had, and new model for car production is necessary in order for old car
companies to stay competitive. Perhaps, someone who thinks outside the box (Van Koenigsegg) will be
able to find a model that will work in the 21st century and will give rebirth to SAAB and the whole industry.
With a new and innovative owner, not only SAAB, but also the whole car industry might discover a business
model that is better suited for a globalised and more competitive world. It might just be that Koenigsegg is
not stuck in a mass production mentality, and they might be able to find a model for the 21st century car
industry that will be both profitable and innovating.
| SAAB Rolls Away from GM: A Rebirth for the Car Industry? by Petter Andersson, June 28, 2009 |
In my last article, I mentioned a rumor that SAAB automobile would be bought by
the super car manufacturer Koenigsegg. Tuesday night, June 16, it was made
official that Koenigsegg would buy SAAB automobile. The company, with the help
of a few investors, brought together enough capital to buy the brand and attempt
to remodel the SAAB automobile and make it profitable again.
Still, for the majority of people outside of Sweden, Koenigsegg is an unknown name
since it is a, high end, niche car manufacturer.
the super car manufacturer Koenigsegg. Tuesday night, June 16, it was made
official that Koenigsegg would buy SAAB automobile. The company, with the help
of a few investors, brought together enough capital to buy the brand and attempt
to remodel the SAAB automobile and make it profitable again.
Still, for the majority of people outside of Sweden, Koenigsegg is an unknown name
since it is a, high end, niche car manufacturer.
| Petter Andersson is a fundamental strategist, with experience in banking and public finance. Contact Petter at petter.andersson@ theoxengroup.com |
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