Saab set to make cars in the US

GM's future plans for Saab could see some assembly move to the US, its main marketplace, along with a more regional-specific model line-up, and increased use of common GM parts.

Speaking to Motors at this month's Geneva Motor Show, GM president and chief executive Rick Wagoner said: "Obviously there are some structural issues at Saab that need to be addressed. They need to expand their line-up. A 130,000 unit auto company based out of Sweden selling 30 per cent or more of their volume in the US currency doesn't work.

"We need to find a way to address the problems that are substantively around some central issues: first, how do you expand their product line-up more rapidly and cost efficiently? The answer is you leverage more effectively the GM family of architecture. Then, how do you address the business risk issue of having almost half of your production being sold in a different currency to your cost base? That needs to be worked on."

As for model line-up, while Saab is viewed as a global company, it sells roughly 30 per cent of its volume in the US, about 20 per cent in Sweden and then roughly 2 per cent in various other markets. Worldwide sales last year were 125,000, of which 37,805 were sold in the US.

"You can't drive your product portfolio only on products that work across all markets," says Wagoner. GM needs to look at "having maybe specific Saab products that are sold only in North America, others that are sold only in Europe."

And he suggests that these new region-specific products would not have to be produced in Sweden: "If you look at the evolution of what's acceptable in the industry, it is no longer required that for example all BMWs be produced in Germany. This liberates us to make good marketing, product and business decisions. I don't personally believe that Saabs need to be built in Sweden to be Saabs.

"I don't think per se that the fact we're building two models in the Saab plant is a huge problem, but I think it's a problem that we're only building 130,000 of them a year, or a little less." He suggests that Saab could have one production line "turning out two or three variants, for example an Opel and a Saab variant. In today's world, by and large, the customer does not have a problem with that."

An obvious first step would be to move some production to the US. "If there's one market in the world that's going to make or break Saab it is clearly the US, because it's the only market big enough to really drive their volume up and for the last period of years its by far the most profitable market in the world.

"If you are playing in an upscale game, why wouldn't you produce there. If you have some 40 per cent of your revenue in US dollars, to have some portion of your costs in US is important."

"GM's philosophy is different from some other manufacturers, we really like to produce where we sell. We do not like a lot of our business to be shipped around the world because we think it brings exchange risks and so booms and bust in your results. You can't do it with every brand but the concept of producing where you sell in the major regions has been one that's worked for GM over the years."

As for the restructuring and cost cutting plans at Saab, while accepts the process has only started, "they've got to pick up the pace. It would have been great if it started sooner, but they were focused on getting the 9-3 up and running and that's good, they need that going."