Saab in Strong Position to Rebuild Sales, Profit

CEO is confident company can sell as many as 125,000 units annually which would make it 'quite profitable'

The newly reorganized Saab is steadily reducing its breakeven point and has more than enough cash to survive as it begins to rebuild sales, its chief executive officer said on May 12.

After a near-liquidation by former parent General Motors, Saab must rebuild its sales from scratch and is focused on restructuring its operations, said Jan Ake Jonsson, SAAB CEO.

"We had been closed down for seven weeks," Jonsson said. "We couldn't order any material or do any advertising because we were in liquidation,. Now we have about 4,500 cars in inventory. We're completely focused on getting our productsout as quickly as possible."

The company is currently living on reserves, including loans from the European banks and a $200 milliontechnology deal with Beijing Auto. But Jonsson said the storied Swedish brand should be able to break even in the second half of 2011.

While Jonsson hopes to reduce operating costs to the point where Saab can break even with annual sales of 80,000 to 85,000 vehicles, he said its potential sales are significantly higher.

Jonsson is confident Saab could sell as many as 125,000 units annually "at which point we would be quite profitable."

"These are very conservative estimates," he said, noting that Saab had sold 98,000 cars in 2008 when it was still owned by GM.

In the United States, which is Saab's single largest market, Saab has reached several key objectives since its February 23 purchase by Dutch sports car maker Spyker, noted Michael Colleran, president and chief operating officer of Saab Cars North America.

SAAB USA has built a staff, re-filled the pipeline to its 207 dealers and signed an agreement with what was then GMAC but is now Ally Bank, which is providing financing to Saab dealers and customers.

Saab is now in a position where it can offer lease deals to potential customers, Colleran said. In addition, Saab North America is launching its first sales promotion and is preparing a broad advertising campaign that will utilize print, online and social media.

The automaker's U.S. dealers have increased their orders for new vehicles, which is a sign of confidence in the new company and its plans for the future, Colleran said.

Saab also plans to resume selling cars in Canada in August, Colleran said.

It expects to have the 2011 Saab 9-5 on sale in the United States by July and will slowly expand with other vehicles already in its product pipeline as it restarts its business around the world.

"We'll have an all new product line by 2012 and the 9-5 will be the oldest vehicle," Jonnsson said. Saab has also developed a wagon version of the 9-5, which is due out next year, as well as a 9-4X crossover sport utility vehicle, which is being built for Saab by General Motors, Jonsson said. In addition, Saab is also working on an all-new version of the Saab 9-3 for 2012. The styling for the 9-3 hasn't been frozen yet but it will be more sporty and aggressive than the current sedan model.

The new Saab is also interested in developing a new compact or subcompact car, although it's "not in the product plan yet," said Jonsson.

Several other companies have come forward with offers to share technology, which Mueller said is "one of the big cultural changes in this industry since the crisis." Saab could wind up sharing a small car platform with another manufacturer, he suggested, though he declined to offer any specifics.

Saab also has ambitious plans to expand its presence in China, Brazil and Russia and eventually India. "You could see the day when there are more Saab's sold in China than in the U.S.," Jonsson said.

Copyright Agence France-Presse, 2010

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