Saab reports 'improvement' in financial position

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The Independent Online

The managing director of Saab Automobile, Jan-Ake Jonsson, has given a clear indication that his troubled company is secure in the General Motors group with a "dramatic improvement" in its financial position over the past 12 months. This has been underpinned by a 6 per cent increase in global unit sales in the year to date over the same period in 2005.

Unlike some of Ford's subsidiaries, Mr Jonsson confirms Saab is not for sale. A strong position in Europe (+16 per cent) compensated for a drop in the US (-11per cent) as the market there emerged from a discount war. America accounts for 26 per cent of Saab sales.

There has been a one-third reduction in costs since 2002.

Although overcapacity is a problem particularly for GM in Europe, with the UK's Ellesmere Port plant at risk, Mr Jonsson said that GM had taken steps to secure its position, reducing the workforce, ending shifts and closing a plant in Portugal.

The next Saab 9-3, however, looks set for the Opel factory at Rüsselsheim, Germany, while Saab builds Cadillacs for Europe. Rebadged Subarus are marketed as Saabs in America ("not ideal" according to Mr Jonsson).

Regarding the Saab brand and the Swedish plant at Trollhättan, Mr Jonsson added: "I can only say we fit in very nicely into the GM brands portfolio. So we have a solid position in fulfilling that. Swedishness is core to our brand because it presents certain values, in safety, design and alternative fuels.

"We have to be very disciplined to protect that. We need to get our fair share of technology into our vehicles."

GM bought 50 per cent of Saab in 1990 and took full ownership in 2000.

Saab is looking to the production of 150,000 to 200,000 cars to be confident of its viability, somewhat above current levels but way behind rivals such as Audi (more than 800,000) or Volvo (450,000).

That extra volume could be gained via a smaller car, based on the Vauxhall/Opel Astra.

Looking at the recently launched Volvo C30, a premium compact hatch, Mr Jonsson said that kind of car was "in their plans", though they were still "assessing exactly what kind of car" it would be.

Mr Jonsson was speaking at the launch of the company's latest "bio power" Saab 9-5 , running on petrol or green "E85" fuel (a mix of 85 per cent bioethanol from crops and 15 per cent conventional petrol).

Such cars have proved popular in Sweden, where they are the leading 'green" option.

Saab plans to expand biofuel car production, although sales in the US are "several years away". Progress in Britain is hampered by a lack of filling stations and few financial incentives. Bioethanol is around 2p a litre cheaper than petrol, against a £600 premium to buy such a car.