Saab Forecasts Small Worldwide Gain in 2004

NEW YORK – Diesels are a big priority for Saab Automobile, says Peter Augustsson, president of the General Motors Corp. subsidiary, noting the brand is losing sales in Europe because of its limited range of diesels.

Saab’s European diesel sales amount to 20%-25% in Europe, far below the 75% of total segment sales in Europe that are diesels.

Augustsson says Saab will get new diesels for its models from Isuzu Motors Ltd. and Fiat Auto SpA. The Japanese auto maker will supply a V-6 for the 9-5 and Fiat will provide a 1L 4-cyl. for the 9-3.

"We will go up in diesel sales," he says. But he admits that this may affect margins because diesel technology is more expensive than gasoline engines.

"We have difficulty in passing the extra cost on to consumers," he says. But he notes being able to tap into the big volumes of the other GM affiliates is a cost benefit to Saab.

The Swedish car maker also is relatively unharmed by the strong Swedish kronor. "We are close to neutral in currency," Augustsson says.

He says that Saab is hurt by the strong pound in the U.K.

Overall, Augustsson estimates strong currency has cost Saab about $300 million in the U.S. over the last three years, and the auto maker is planning its future business model on where the dollar and euro are now. In an ideal world, Augustsson says Saab should have a better balance in sourcing – buying more parts from the U.S.

The forthcoming 9-7X and the 9-2X provide some relief from currency pressures. The 9-7X is based on the architecture used by GM's midsize SUVs and the 9-2X is manufactured by Fuji Heavy Industries Ltd. (Subaru) in Japan.

More such architecture sharing is in Saab's future, he acknowledges. "Since 1994, all Saabs have a common architecture (with other GM models) and that will continue in the future," the Saab chief says.

"Despite that, we'll be more Saab than less Saab in the future," he says. But he also claims that Saab contributes engineering to other GM entities. "We are extremely good in quality details and we are passing this on."

GM also is taking knowledge from Saab safety development.

Augustsson says Saab will hit the 200,000-unit range with present products and those now in development.

Saab will not try to be competitive with Volvo, model for model. The auto maker has no intention of offering three model segments in sedans as Volvo does. "We will have a strong product portfolio by 2006," he says.

Despite the lackluster results of its first quarter, Augustsson predicts Saab will reach worldwide sales of about 140,000 units this year.