Saab, General Motors' historically loss-making Swedish cars subsidiary, expects to at least break even this year for the first time since 1993 and is planning to expand its range into smaller cars to compete with BMWs 1 Series, Audi's A3 and similar small premium sector vehicles.
The new range, likely to be called the Saab 9-1, would take about three years to launch and be based on a new small car platform being developed within GM for global use, according to Jan-Ake Jonsson, Saab's managing director.
While GM has given few details of the platform, it is understood to be of modular type allowing cars ranging between the Opel/Vauxhall Astra and Corsa models in size.
GM's Chevrolet subsidiary in Korea would play a large part in its development. The car could be built in much higher volumes than other Saab models and would further underpin the Swedish brand's future and production facility in Trollhatten, said Mr Jonsson.
With GM still suffering from over-capacity in Europe, the Trollhatten plant has no guaranteed production role for the group beyond 2010.
Last year, the plant built just over 100,000 cars, compared with a maximum capacity on three shifts of 180,000.
From next month production levels will be helped by the launch of Cadillac's BLS model, the first Cadillac to be designed for European markets.
Following an efficiency drive which had cut costs by one-third over the past two years, "if we can build 120,000 units we have a very efficient plant," said Mr Jonsson.
The cuts had been achieved mainly by balancing production costs against demand, and capitalising on an integration of functions with the rest of GM.
Mr Jonsson, a Saab veteran of 30 years, acknowledged that Saab had been "inconsistent" in its brand image and that it had needed to "go back to our roots" as a maker of sporting cars.
A new product offensive includes the 9-3 Sport Wagon, a new 9-5 range and a sports-utility vehicle, the 9-7X, for the North American market.