General Motors Woes Continues As Saab Report Loss

Anthony Fontanelle
August 2, 2007

Detroit automaker General Motors is in the middle of its turnaround plan - something it has in common with Ford and Chrysler. And similar to Ford, General Motors is also losing money on its marques. Ford sold the unproductive Aston Martin, but General Motors decided to keep all its marques. Recently, General Motors’ Saab posted an operating loss that may have put a halt to the turnaround plan of the company.

The Swedish car manufacturer reported that it lost 2.9 billion kronor last year. The result is that General Motors was forced to inject 3.8 billion kronor to the marque’s coffers. This scenario is common to almost all major automakers. With the largest auto market in the world showing reduced sales almost every other month, competition is growing fierce and losses are common.

According to Jan-Åke Jonsson, the Chief Executive Officer of Saab: “We didn't make a profit in 2006 and won't make one in 2007 either, if you look at the business as a whole.” Similar to Ford and General Motors as a whole, Jonsson said that they are expecting to turn a profit by 2010.

The reason pointed out for the operating loss of the automaker is its limited offerings. Similar to Nissan, Saab offers few auto models. Thus, auto buyers are more inclined to shop at other carmaker’s dealership where the choice is much broader. In the United States, Saab is counting on the 9-3 to boost sales.

According to General Motors, the new version of the 9-3 is already being sold at dealerships across the country. The Manufacturer’s Suggested Retail Price (MSRP) for the 9-3 is set at $34,965. For those who are interested in leasing instead of buying, Saab offers a no-down payment plan. The lease rates for a four-year plan starts at just under $500 monthly.

Hyatt Saturn Saab general manager Paul Johnson has this to say about buyers of Saab cars: “Saab is so unique, it's not for the guy who needs to scream from the rooftop: 'look at the prestige car I bought.' This is a car that a guy buys for himself, not for his neighbors.”

While Saab has lost money last year and is expecting another losing year, the Swedish automaker is confident that they will not be auctioned off by General Motors. After all, it is common fact that Jaguar is being auctioned off by Ford because of its poor sales output.

“GM has a very positive view of Saab. We are their only global marque and the premium segment is growing in importance,” said Jonsson in an interview with Swedish daily newspaper Svenska Dagbladet.

As far as their capabilities to produce more auto models and therefore auto parts such as Saab clutches and other powertrain components, Jonsson has this to say: “We have production machinery intended for higher volumes than those of today.”

The lineup of the Swedish automaker for the United States auto market includes the 9-3 Sport Sedan, 9-3 Convertible, 9-3 Sportcombi, 9-5 Sedan, 9-5 Sportcombi, and the 9-7X SUV. With that lineup, Saab surely needs to increase their offerings. Although they have been known for safe and luxurious vehicles, the brand is yet to make waves in the United States auto industry. The automaker though has shown resilience in the past battling with fellow Swedish automaker Volvo in the global market. Basing on that, Saab can be expected to turn a profit by the turn of the decade, something that General Motors needs.

Source:  Amazines.com