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GM Hands Saab Lifeline After Abandoning BrandBy Ola Kinnander - Jun 3, 2011 12:01 AM GMT+0200General Motors Co. (GM) is giving former unit Saab Automobile a lease on life 18 months after almost killing off the Swedish brand.GM, which had planned to shut down Saab before reaching a last-minute deal to sell it to Spyker Cars NV (SPYKR) in February 2010, is now producing Saab’s new 9-4X crossover. For 10 days last month, GM was the only manufacturer of Saab vehicles after a cash crunch forced Saab to shut its Trollhaettan factory.
“Here is GM giving Saab a lifeline, a bit of time hopefully to find a partner, a source of finance,” said Garel Rhys, president of University of Cardiff’s automotive industry research center. “That’s the irony. It’s an indication of what might have been had GM put more resources into Saab while it owned the brand.”
Under GM’s ownership, Saab racked up operating losses of 16.5 billion kronor ($2.65 billion) in the five years to 2008 as Mercedes and BMW took market share. Since being bought by Dutch sports-car maker Spyker, it has been losing about 25 million euros a month before shutting down production on March 29.
The 9-4X, the first Saab model to combine sport-utility vehicle proportions with car handling, will provide a crucial boost to revenue as the company battles for survival. Saab’s production restart was funded by a short-term loan from shareholder Gemini Investment Fund Ltd. and a partnership with Chinese car dealer Pangda Automobile Trade Co., arranged four days after a deal with Hawtai Motor Group collapsed.
‘Hit the Spot’“This vehicle is enormously important in helping us get our company going again,” Anders Svensson, who heads Saab’s car development, said in an interview. “Since we’re a small carmaker, we can’t really afford to fail with any launch of a new vehicle. We must hit the spot with the 9-4X.”
Saab, whose global sales peaked in 2006 at 133,000 cars, sold just 31,700 vehicles last year, down 21 percent from 2009 and missing an original target of 50,000 to 60,000. Restarting production and restoring ties with suppliers after GM emptied the Trollhaettan factory as part of the planned closure took longer than anticipated.
The GM production partnership is a remnant of the Detroit- based automaker’s two-decade ownership of Saab. The 9-4X, which shares underpinnings with the Cadillac SRX, was the only Saab model being assembled until the Trollhaettan plant restarted on May 27 after a seven-week shutdown caused by suppliers refusing to deliver parts due to unpaid bills.
Lost GroundGM began making the Saab 9-4X on May 16 at its factory in Ramos Arizpe, Mexico, Svensson said. GM declined to comment on its relationship with Saab.
The model, which hits U.S. showrooms later this month, is a welcome relief for Saab dealers like Kurt Schirm. The president of International Motors Saab, a store in Falls Church, Virginia, has lost customers and cut headcount by 50 percent over the past few years “because of all of the ups and downs and turmoil that has surrounded the brand,” he said.
The 9-4X is “entering the right segment and has the right looks,” said Schirm, who now employs about 28 sales and service staff at his dealership. “Saab’s future is good, but it’s not going to happen overnight.”
Under GM Saab lost ground, while Bayerische Motoren Werke AG (BMW) and Audi surged ahead. Saab’s sales are about a third of what they were in 1995, while BMW and Audi have each more than doubled deliveries by expanding lineups.