GM Plans to Add Saab SUV

DETROIT April 7, 2003; Michael Ellis writing for Reuters reports that GM seeking to boost its money-losing Saab division plans to add a mid-size sport utility vehicle to the Swedish automobile manufacturer's lineup, GM officials familiar with the plans said.

The SUV, a version of GM's current trio of truck-like mid-size SUVs, could arrive as early as next year as GM phases out the Bravada sport utility as part of its plan to end the Oldsmobile brand. GM also builds the Chevrolet TrailBlazer and the GMC Envoy on the same chassis as the Bravada.

Saab has lost money in 10 of the last 12 years and has been desperate to add new products to its lineup, which currently consists of two cars, the 9-3 and the larger 9-5.

The quick addition of the seven-passenger SUV would allow the brand to compete in one of the fastest-growing segments of the luxury market. Most other upscale and luxury automakers already sell SUVs.

The SUV, expected to be manufactured at GM's Moraine, Ohio, assembly plant, would be Saab's first product built in North America, and its first vehicle made exclusively for the U.S. market, the largest market in the world for Saab.

Saab has trademarked the name 9-8, which could possibly be the name of the new vehicle, automotive analysts said.

Last year, Saab canceled plans for a mid-size SUV based on the upcoming Cadillac SRX due to concerns that it would be difficult to make a Saab version that didn't strongly resemble the SRX. Saabs are sold alongside Cadillacs in many U.S. dealerships.

One GM official cautioned that the newest Saab SUV is not yet fully approved, and there was the risk it could be canceled at this late stage, just as the previous plans were.

But another GM official said the new SUV is sure to arrive. GM is eager to grow Saab's sales volume and have it turn a profit, officials said.

Saab said in November it would cut 1,300 jobs, or about 20 percent of its staff. Saab lost $120 million through the first six months of last year, and one GM official told Reuters earlier that Saab losses for all of 2002 were expected to total about $500 million, due in part to heavy investments in the new 9-3 range.

QUICK FIX

By basing the Saab SUV on the same underpinnings as the Bravada and its sister SUVs the Chevrolet TrailBlazer and the GMC Envoy, GM could bring the truck to market sooner than if it developed an all-new product, and at a lower cost, industry analysts said.

Saab is also at work on other new vehicles to broaden its lineup, including a smaller car then the 9-3, analysts said. But that car is not expected to arrive in dealerships for another three or four years. Saab also plans to extend the 9-3 range with the addition later this year of a convertible, which will make its North American debut at the New York auto show next week, and a sport utility-like car next year.

Saab expects to grow its U.S. sales by 10 percent or more in each of the next few years from 37,805 in 2002 and pass its all-time sales record of 47,414 vehicles set in 1986 by 2005, Saab spokesman Kevin Smith said.

QUIRKY FEATURES

But by trying to boost Saab's volumes, GM risks alienating loyal buyers who have stuck with the brand during its lean years, some analysts said. They questioned whether GM would tamper with the quirky features which have distinguished Saabs -- such as the ignition, located in the center console between the two front seats in most Saab cars since the early 1970s for safety reasons.

"No matter what you do with that vehicle, how do you make it a Saab?" said Wes Brown, an analyst with the automotive and consulting and consumer research firm Nextrend. "You'd argue that looks like a band-aid approach."

Saabs have always been built in Europe and have always been front-wheel drive, and the automaker has never had a truck in its lineup. Saabs have also traditionally had smaller fuel-saving engines boosted with turbochargers.

"Obviously for Saab, this would be a major departure," said Michael Robinet, vice president of global forecast services with CSM Worldwide, which consults with the automotive industry. Robinet said he expects that Saab would play up its reputation for safety by equipping the SUV with every possible safety feature available.

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