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Can Tiny Koenigsegg Save Saab?

Supercar Maker Has Green, High Tech Expertise.
“the reinvention of Saab is not beyond all possibility”.

One of the most puzzling aspects of the disposal of General Motors’ European assets was the apparent scramble to buy Saab of Sweden, a chronic loss-maker which only rarely looked like selling enough cars to break even.

GM’s offer of cash might have helped. The bankrupt U.S. company is understood to be prepared to provide $500 million in assets and cash, engineering facilities for a new Saab, and $150 million in Saab’s bank account.

According to Reuters, GM is close to selling Saab to Swedish supercar maker Koenigsegg, a development that seems bizarre given that this company has about 50 employees turning out a few $1 million supercars a year.

Method or madness?
There might be method in this apparent madness, says IHS Global Insight analyst Paul Newton.

“The halo effect of the Koenigsegg brand – its experience in advanced fuel-saving technologies and the esoteric Swedish brand values it would bring back to Saab – could see the company survive as a small/medium sized volume premium brand,” Newton said.

Newton said Saab is considerably short of volume – last year selling 93,000 cars.

Breakeven is said by GM Europe to be about 130,000.

Newton said Saab is overdue a model line-up overhaul, with the 9-5 three to five years late in its model cycle. The new 9-5 is based on the Opel Insignia, itself selling in a dwindling segment. The smaller 9-3 also relies on GM engineering and engines.

Glimmer of hope
But there is a glimmer of hope for Saab.

Newton reckons that Koenigsegg has a reputation for “green” technology, having developed a flexfuel engine, plug-in electric car systems, and next generation combustion engine technology. It also has its own proprietary engine technology, an improved catalytic convertor, and a new supercharger for petrol engines.

“The short-term hurdles are still huge and maintaining its fragile image and recovering some volume to limit cash burn through a successful launch of the new 9-5 will be first on the agenda, neither of which is straightforward in the current climate. However, given a fair wind, the fact that much of Saab’s debt has been cut, and the addition of significant external investment in a company with the technical nous to use it, the reinvention of Saab is not beyond all possibility,” Newton said.

Neil Winton – June 15, 2009

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