Free of GM, Saab declares its independence

Saab Automobile AB is reinventing itself as an independent automaker.

Since its sale by General Motors Co. to Spyker Cars NV in February, Saab has been re-evaluating every aspect of its business. Big changes are under way or expected.

"We are now in charge of our own destiny, which means we can do anything we want," said Spyker CEO Victor Muller.

Saab is slashing manufacturing and engineering costs. It is looking for tie-ups with other European automakers to share engineering costs, with an announcement expected in the next two or three months. It also is shopping its engineering expertise to automakers worldwide.

It is all part of an effort to reduce Saab's breakeven point to about 80,000 vehicles by the end of 2012 so the automaker can become profitable even as it ramps up its new model line.

Saab is replacing its 13-year-old 9-5 sedan with a redesigned model in July. The 9-4X, Saab's first crossover, arrives in April. The redesigned 9-3 will debut in 2012, and the automaker would like to offer a car smaller than the 9-3 in 2013 or 2014.

Saab has targeted global sales of 50,000 to 55,000 vehicles this year and about 100,000 next year.

In two to three months, the automaker also is expected to unveil its electrification plan.

As part of its cost-slashing efforts, Saab chopped its engineering budget 40 percent, to $151 million for 2011, said Mats Fagerhag, Saab's executive director of vehicle engineering. The cuts reflect reductions in development, material and supplier costs and fewer contract workers.

"We are gradually moving from a GM strategy of shared components and investments," Fagerhag said in an interview at Saab headquarters here. In some cases, Saab wants to improve quality over the GM-prescribed components.

"You are going to have a Saab car that consists of components and systems that we have developed jointly" with other carmakers, Fagerhag said. He said the first vehicle to benefit from the engineering cost savings will be the redesigned 9-3.

Saab is re-evaluating its underused engineering capability. It has worked with a handful of Swedish companies over the years, but that is expected to change.

This year, Saab sold the tooling for the 9-3 and the past generation 9-5 to Beijing Automotive Industry Holding Corp. Production in China begins in 18 months. Saab also submitted proposals for engineering work related to those vehicles.

Muller said Saab "will work much more for third parties."

Saab also is targeting manufacturing costs at its lone assembly plant here in Trollhattan. It has state-of-the-art assembly equipment, installed by GM. But Saab's maximum production is expected to be far less than the plant's capacity.

"We have a huge infrastructure and engineering capabilities for 190,000 cars and overhead costs that are related," Muller said.

Also under review is the amount of assembly automation that will be needed for the redesigned 9-3.

"Automation is a very heavy upfront investment. A high-volume plant in most cases gets the payback because of efficiency, quality," said Saab CEO Jan Ake Jonsson. "But we are only going to be a 110,000-car plant."

By Rick Kranz- Automotive News