GM Works on Plan to Revive Saab

DETROIT John Porretto, AP Auto Writer reported that a major restructuring in the works at General Motors Corp.'s struggling Saab division likely will mean job reductions at the Swedish automaker and other cost-cutting measures in the United States, GM officials said Tuesday.

A GM spokesman in Zurich said top management from GM Europe and Saab Automobile AB, GM's Swedish subsidiary, have begun work on a plan to trim expenses and boost revenue at Saab. He said it was too early to say when the restructuring would start or how many jobs might be eliminated.

Saab employs some 10,000 workers, including 8,500 in Sweden and 150 in the U.S.

"Certainly, everybody is eager to start working as soon as possible to address the financial situation," said the spokesman, who cited the local custom and asked not to be identified by name.

Saab, part of the GM Europe division that lost $180 million in the third quarter, has been hampered by sluggish demand, a costly launch of its new 9-3 sedan and appreciation of the Swedish krona against the dollar.

GM's European unit lost $767 million last year, and the world's largest automaker had said it hoped to reduce that loss to $350 million this year. It has since backed off the $350 million figure but has provided no other estimate.

GM also has said it hopes its European division will break even in 2003, but some are skeptical.

"There is little hope for Europe auto to break even in the near term, in our view," UBS Warburg said in a recent research report, predicting a loss for GM of between $150 million and $200 million in Europe next year.

"A Saab ramp-up is impacting results, but more plainly, we believe many of the vehicle offerings are simply not competitive," the report said. "We see no obvious way out of this earnings drag."

Saab expects to sell about 125,000 vehicles worldwide this year, down slightly from previous forecasts. Saab's U.S. sales for 2002 through October were flat at 32,290. Saab has 218 dealers in the United States.

The company has shelved plans for the U.S. to partner with local dealers in major cities and establish so-called "city centers" to show off Saab products. The idea is to create a presence in high-traffic areas where real estate costs are cost-prohibitive for a local dealer alone.

"We began down the path of putting together one in San Francisco, we were contemplating Chicago and then thinking of others beyond that," said Saab spokesman Kevin Smith in Atlanta. "All of those plans have been put on hold for the time being."