Posted by: David Welch on April 18, 2006
Maybe I am beating a dead horse here. But here is some interesting info on Saab. A General Motors source tells me that since the auto giant bought into Saab back in 1990, the Swedish carmakers has cost the company $4 billion. That includes the purchase price, which was a little over $1 billion, and the losses it has piled up. Saab has made money just one year in the 15 years since GM bought its first 50% stake in the company.
That’s the biggest reason why so many critics want to send Saab to the guillotine. But not GM. In fact, at the New York Auto Show last week, a GM designer told me that Saab has a bunch of new product coming. GM has a new 9-5 in the works, the 9-3 and all of its different variations will get updates and another suv is coming. The Subaru-built 9-2X is going away. No one really bought it anyway. Add up its new cars and I count maybe four different models. GM execs say that Saab can make money with a limited lineup so long as global sales get somewhere north of 150,000 vehicles from about 130,000 now. That’s because many new models will be engineered and built using frames, engines and other parts from other GM cars.
There’s the problem. GM can only afford to support it if it shares a lot with every other division. The plan can work, but it’s a very tough act to pull off. GM will be trying to lure well-heeled buyers who are sophisticated enough to know that they are getting an expensive car built using the parts of a cheaper one. True, Saab’s new styling is good. And the brand reaches buyers who mostly want nothing to do with other GM brands. But to justify Saab’s existence, GM’s new-car works will have to what it has never done before: make unique Saabs with broad appeal, and make some bucks doing it. In fact, slim profits alone won’t be good enough. Saab will have to start making some real money. I haven’t checked the odds with any Vegas bookies, but it has to be somewhere close to Team Sweden winning the next World Baseball Classic.