Saab in Expansionist Mood

After years struggling under the slow, dead hand of GM management, Saab is in an expansionist mood once again. Not just to build the cars planned under GM management (9-5 sedan and Sportcombi, and 9-4X crossover), but to do its own replacement for the 9-3. It also wants eventually to do a 9-1 or 9-2 compact car.

But first things first. The company has two vital all-new cars to launch in the next two years. The 9-5 was seen at the 2009 Frankfurt show and will go on sale in 2010, with a Sportcombi wagon to follow in and 2011. The second is the 9-4X crossover, which was previewed accurately by the concept at the Detroit auto show in 2008. The production version shares platform and dimensions with the Cadillac SRX and will be built alongside it in Mexico.

U.S. dealers are crying out for this stuff. With the separation from GM, Saab will sell only about 8500 cars in the U.S. in 2009. Its best year was 2006, with 47,000 U.S. sales. The existing 9-5 is out of production and the new one doesn't ship until spring. Dealers in the States are surviving on used cars and service business.

The 9-5 and 9-4X should bring Saab's U.S. dealers back to life -- if they haven't died first.

2010 Saab 9 5 Rear Three Quarters View Passenger
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What's striking -- and more than a little brave -- about the new Saab is that its management wants to go beyond the GM plans and replace the 9-3 with a car that is "more unlikely than likely" (according to Global Brand & Sales Operations Director Knut Simonsson) to be derived from a GM platform. And that beyond that, he indicates, Saab wants to build a compact, a 9-1, that will take a lot of inspiration from the 9-X BioHybrid concept first seen at the Geneva auto show in 2008.

Saab usually sells 100,000-150,000 cars a year globally. How can such a small firm have such big ambitions? No car company this small in the modern era has ever survived independently with the exception of Porsche, which sells far more expensive cars. Of course, Porsche is now part of the VW Group.

By contrast, Saab is now part of the Koenigsegg Group. The tiny Swedish supercar maker's automotive business consists of fewer than 50 employees making about a dozen cars a year. Not exactly VW, or even the New GM.
2010 Saab 9 5 Front Three Quarters View 2010 Saab 9 5 Side View 2010 Saab 9 5 Rear View
2010 Saab 9 5 Engine 2010 Saab 9 5 Interior View 2010 Saab 9 5 Shifter
2010 Saab 9 5 Gauges 2010 Saab 9 5 Start Stop Button 2010 Saab 9 5 Center Console

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But the Koenigsegg Group is more than just a maker of boutique sports cars. It's backed by the strong Norwegian investment house Ecker. The Koenigsegg Group's chairman is the respected Augie K. Fabella, who founded Vimpelcom, Russia's second-largest telecom company, which was the first Russian corporation to list its shares on the NYSE.

Saab management maintains that this depth of business experience and capital will bring new speed and solidity to Saab's operations, while the automotive expertise will be provided by Saab's existing management, which has not changed since the sale by GM.

It's also important to note that Saab is in a stronger position than before because it has gone through the Swedish equivalent of Chapter 11. This has allowed it to cut debt by around three-quarters and shed a significant number of staff with no redundancy cost. GM was so keen to be rid of Saab that it has given Saab the new models without charging for their development cost, and agreed to favorable future supply terms for engines and components.

Even so, it will go against the auto industry's "bigger is better" mantra for Saab to survive. It will need to cooperate with suppliers over things such as mild hybrid systems, which it plans to do. It will also try to barter its expertise in design and ergonomics. It's a new industry model, and success is far from assured.

Saab 9 4X Rear Three Quarters View
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But Saab's key potential asset is a Chinese connection. One of the failed bidders for Saab was the Beijing Auto Industry Corp. and, since the separation from GM, BAIC has taken a 10-percent stake in the Koenigsegg. BAIC claims to be China's fifth-largest automaker, producing roughly one-million units a year, and although it builds no cars in its own name, it makes among other things Chinese-market C-Class and E-Class models for Mercedes.

Were BAIC to start building Saabs, which the Swedes say is possible, then there is potential for an as yet untapped source of sales in the world's hottest automotive market -- one that is already the largest for 9-5-size cars.

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