Niche Automaker Koenigsegg Takes Saab Off GM's Hands
By Michelle Krebs June 16, 2009By Bill Visnic
After months of shopping it and years of unsuccessfully operating it, General Motors Corp. is selling its Saab Automobiles AB division to a tiny maker of exotic cars that will return Saab to its homeland of Sweden.
GM announced Tuesday it has a memorandum of understanding with Koenigsegg Group AB for the company to purchase Saab with the boost of a $600-million funding commitment from the European Investment Bank that is guaranteed by the Swedish government.
In a statement, GM also said it and Koenigsegg will provide "additional support" to fund Saab operations and program investments.
Tiny Koenigsegg certainly will require GM's support into the foreseeable future: Saab is on the verge of launching a long-needed replacement for its 9-5 flagship and an all-new crossover, the 9-4X. Both were developed in GM's product-development system and the 9-4X
is heavily based on the U.S.-developed GM architecture that underpins the new 2010 Chevrolet Equinox, GMC Terrain and Cadillac SRX crossovers.
GM's statement announcing the sale to Koenigsegg underscored the necessary future cooperation between seller and new owner: "As part of the proposed transaction, GM will continue to provide Saab with architecture and powertrain technology during a defined time period. Additionally, Saab plans to produce its next generation 9-5 models in the Saab production facility in Trollhattan, Sweden."
Saab USA's then-marketing director, Roger McCormack, told AutoObserver last year that building the 9-4X in the U.S. would be crucial for Saab, helping shield it from currency-exchange disadvantages that have battered other European automakers selling in the U.S. It can only be assumed for now the arrangement to build the 9-4X in the U.S. will continue under Koenigsegg's ownership, as the crossover segment is largely a U.S. phenomenon, particularly for midsize and larger crossovers such as the GM-made models.
Analysts have puzzled at the choice of Koenigsegg to take over Saab, given that, among other points, the company reportedly built just 18 cars last year. But Sweden Industry Minister Maud Oloffsen told a Swedish news agency that retaining production of Saab models in Sweden was a significant concern in deciding on a buyer for Saab.
While certain Swedish officials said it had not been determined if new owner Koenigsegg will require financial assistance beyond the $600 million now committed, it's a virtual certainty. Saab had said it will need an investment of $1 billion or more to launch its new models and transform its manufacturing operations. The company -- which sold just 3,225 vehicles worldwide in the first quarter -- also expects to lose around $380 million this year.
"This is yet another significant step in the reinvention of GM and its European operations," said GM Europe President Carl-Peter Forster in a statement.
"Saab is a highly respected automotive brand with great potential. Closing this deal represents the best chance for Saab to emerge a stronger company. Koenigsegg Group's unique combination of innovation, entrepreneurial spirit and financial strength, combined with Koenigsegg's proven ability to create world-class Swedish performance cars in a highly efficient manner, made it the right choice for Saab as well as for General Motors," Forster added.
Photos by Manufacturers
1 - Tiny Swedish niche maker, Koenigsegg, sells the CCX supercar in small numbers.
2 - The upcoming Saab 9-4X is based on GM architecture shared with Chevy, GMC and Cadillac midsize crossovers.
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I think it's a good fit. One quirky car company buying another. Both Swedish. This will give Koenigsegg an opportunity to expand rather quickly, and Saab an opportunity to focus on what makes them attractive: their niche market as an "alternative" European car company.
Now Koenigsegg has access to all those SAAB dealerships where it can place its annual production of 18 cars.
Try to imagine if, in 1990, Fuji Heavy Industries bought Ford. In its great marketing wisdom, Fuji decided to drop the F-series trucks in favor of rebadging their Subaru Brat. After years of disappointing and confounding failure in the market, they put Ford up for sale. Then tiny niche maker Steve Saleen buys Ford from Fuji and returns it to its original mission and customer base.
That's what I hope to see come from this Koenigsegg deal; real SAABs again.
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