GM and Saab negotiate split
22 January 2009

Saab has been locked in negotiations with owner General Motors and the Swedish Government as the Scandinavian car maker struggles to re-establish itself as an independent entity.

GM and Saab are said to be co-operating smoothly on the plans. The split is also in GM’s interests as it races to produce a new business plan that will see it concentrate on the Chevrolet, GMC, Cadillac and Buick brands. GM has also to meet a US Government deadline to prove its own long-term viability.

Saab and GM have been working on a plan in which most of Saab car production would move back to Saab’s Trollhattan HQ, according to reports in the Swedish press.

Saab would also untangle its new product development work from GM Europe, re-establishing its own research and development facilities at Trollhattan, as well moving all design work back.

A key part of the plan would involve moving production of this year’s all-new 9-5 from the Opel factory in Russelsheim, Germany, to Saab’s Trollhattan facility.

Although this would be expensive and complex, it is seen as the keystone of Saab regaining its independence after 20 years of GM ownership.

The Swedish government has already readied a bailout package for the Swedish car industry, and insiders say this money could be tapped to move the Saab 9-5 and get it in the showrooms by the end of this year, or early 2010.

It’s likely that $100m (£72m) would be needed to finish the Saab 9-5 engineering work and pay for the launch and global marketing costs of the new car.

Initially, Saab 9-5 body shells would probably be shipped from Germany to Sweden, but eventually the whole car would be made domestically.

Saab also wants to bring production of its 9-3 cabriolet back in house. Austrian company Magna currently builds the car.

Saab is likely to agree a straightforward deal to buy the upcoming Saab 9-4x SUV at an agreed ex-factory cost from the GM factory in Mexico that will build it.

Saab sources have said that the plan for independence is financially viable, pointing out that Trollhattan is currently running at around half its potential capacity of 170,000 units per annum. Sources also confirmed that there are substantial savings in build costs compared with the German factories.

Saab has only had one profitable year in the past two decades, but one senior Saab insider said that the company made money on European sales of the Saab 9-3, so that the addition of 60,000 new Saab 9-5s and production of the 9-4x in the dollar zone (total production of around 185,000 units) would push the company into decent profitabilty.

Perhaps the main problem on the horizon for Saab is how it will replace the ageing Saab 9-3. It had originally planned to base the new 9-3 on the next-generation Opel/Vauxhall Astra platform, as part of a ‘downsizing’ philosophy.

Hilton Holloway

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