Big Changes for Newly Liberated Saab

In February Saab was sold by General Motors Company to Spyker Cars NV, and is in the process of reinventing itself as an independent automaker. They are making huge changes to the company and planning even more.

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

“Anything we want” includes cutting manufacturing and engineering costs wherever possible. The company is looking to share engineering costs with other European automakers and shopping its own expertise to other carmakers worldwide. An announcement regarding tie ups with other European companies is expected this summer.

To reduce Saab’s breakeven point to 80,000 vehicles by the close of 2012, all these changes must be implemented quickly. This way the company has a chance of making a profit while reworking its new product line.

The 13-year-old 9-5 model will be replaced with a new model in July. Also, the 9-4X crossover (a first for the company) will be available next April. The newly redesigned 9-3 will launch in 2012, and Saab would also like to make a car smaller than the 9-3 in the next three to four years.

The sales goal for this year is 50-55,000 vehicles. Next year, the goal is 100,000.

Saab’s engineering budget is being cut 40% to $151 million for 2011, says Mats Fagerhag, director of vehicle engineering for the company. The 40% reduction includes slashed development, material and supplier costs and a cut in contract jobs.

Fagerhag said during an interview at Saab headquarters, “We are gradually moving from a GM strategy of shared components and investments.” They’d also like to improve the quality over that of the GM-prescribed components.

Fagerhag says the first vehicle that will be changed under the new savings measures will be the 9-3. “You are going to have a Saab car that consists of components and systems that we have developed jointly (with other carmakers),” says Fagerhag.

The company is also planning to make the most of its underused engineering talent. They are expected to team up with additional companies in the near future. Saab sold the tooling for the 9-3 and previous models of 9-5 to Beijing Automotive Industry Holding Corporation. Production in China will start in a year and a half. Proposals for related engineering work have also been submitted. Spyker CEO Muller says the automaker “will work much more for third parties.”

The assembly plant in Trollhattan is being targeted for major changes as well. The oversized capacity of the facility doesn’t fit well with Saab’s vision. Muller says, “We have a huge infrastructure and engineering capabilities for 190,000 cars and overhead costs that are related.”

Assembly facilities for the 9-3 are also being considered. CEO of Saab, Jan Ake Jonsson, said, “Automation is a very heavy upfront investment. A high-volume plant in most cases gets the payback because of efficiency, quality. But we are only going to be a 110,000 car plant.”

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