Posted by: David Welch on January 11, 2006
There is little doubt that the future of Swedish carmaker Saab AB is in question. In addition to the fact that its sales are a paltry 130,000 or so a year globally, the division loses money for parent General Motors, and has been a drag on the recovery of its European business.
Saab has been such a failure that when Jerome B. York, the top lieutenant for billionaire Kirk Kerkorian, made a speech in Detroit Jan. 10 to tell GM how to fix its problems, he suggested dumping the long-suffering division.
Right now, GM wants to keep it. GM-Europe President Carl-Peter Forster told me at the Detroit auto show this week that Saab attracts affluent buyers that other GM brands can’t reach. It doesn’t have bad baggage like Buick or Pontiac. He added that Saab’s financial results—though not good—are showing signs of improvement.
But is some improvement good enough? GM is adding some new models to Saab. But top management knows that it can’t keep pumping money into it forever. GM Vice Chairman and CFO Frederick A. “Fritz” Henderson said he just finished his plan to fix Saab. It’s now integrated into GM, and can develop models using the corporation’s worldwide engineering capabilities. So he’d like to see if the plan works before ditching it. And unlike Oldsmobile—which GM killed off over the past five years—it doesn’t overlap with other GM divisions. But he wasn’t exactly lavishing it with praise. “I’m never overly optimistic about Saab,” Henderson said. “No brand has a God-given right to exist. We have a commitment to it, but we have to get results.” York may not get his wish immediately, but Saab clearly doesn’t have forever to prove its worth.