January 27, 2010. Copyright 2010, Graphic News. All rights reserved

Resuscitated Saab has new cars ready to go
By Neil Winton

LONDON, January 27, Graphic News:  It would have been ironic if Saab had been allowed to die, because for the first time in years, this iconic but perennial loss-making Swedish company was about to launch revamped models that might well captivate car buyers.

Spyker Cars of the Netherlands must have been tempted by this ready-made parade of new cars poised to enter showrooms, with most of the huge investment already paid for by previous owners General Motors of the United States.

GM will receive $74 million (€52.5 million) in cash and $326 million (€230 million) in shares in the new Saab-Spyker company when the deal is completed in mid-February.

Saab has been a consistent loss maker for about 20 years, making a profit in only one year. It lost $340 million (€240 million) in 2008 and is expected to create a similar amount of red ink in 2009.

But this might be about to change as the new top-of-the-range 9-5 is poised to go on sale across the world. It features turbo-charged engines, harking back to this Saab specialty. The most remarkable engine in the new range is a tiny 1.6 litre which produces 180hp, and propels this very large machine from rest to 62mph in 9.5 seconds, while producing about 31 miles per U.S. gallon (7.6 l/km, 37 Imperial mpg). Next up is the new 9-3, followed by the 9-4X SUV.

Last year Saab moved to concentrate production at its Swedish plants, and the company reckons it can make good money now at 120,000 cars a year. Under the GM regime, breakeven for Saab was around 130,000 cars a year, but sales slipped to 93,000 in 2008, and fell further in 2009. So if good money can be made at a rate of 120,000, presumably break-even is a great deal lower.

Sales in the U.S. last year will have dived to between 8,000 and 9,000 but could be back to about 25,000 in a couple of years. The U.S. was Saab’s biggest market, and could be again. As recently as 2005/2006, sales were close to 50,000 in America.

Some cynics had wondered if the American company’s apparent reluctance to sell Saab was because the new 9-5 relies heavily on engineering from GM’s Opel-Vauxhall Insignia, and sales of this big Saab would have undermined higher priced versions of the Insignia, European car of the year in 2009.

IHS Global Insight also likes the look of Saab’s product pipeline.

“Certainly the latest generation 9-5 has been warmly received and should certainly offer gains when it replaces the current 12-year old model,” said Global Insight analyst Ian Fletcher.

Not everybody is applauding Saab’s reprieve.

Fiat CEO Sergio Marchionne, who says the European car industry needs to slash production to survive, had this to say, ominously, about Saab.

“Marginal players will continue to be marginalised.”
/ENDS