Future Still Uncertain, But Looking Up for Saab

The future is uncertain for Saab Automobile AB. The upcoming year will bring not only several new niche models but also a change in the ownership structure of the company.

General Motors Corp. and Investor AB now share 50/50 ownership of the company. But GM soon must decide if it will buy all or a portion of Investor's shares. If GM decides it does not want the company, Investor has the option to force GM to buy up to half its share.

GM would be smart to purchase the remaining shares in Saab. The Swedish automaker would help GM compete against Ford Motor Co.'s Premier Automotive Group, which now includes Saab rivals Volvo and Lincoln. But Saab is already a step-member in the GM family and soon will be more deeply absorbed into GM's platform plans.

Saab has worked earnestly toward recovery and sales growth. Sales in the U.S. through August show a surging 39.5% increase, with the 9-3 racking up 15,736 units. The automaker has reworked its dealer network and increased its return on investment from 8% to 20%. Saab also received a No. 1 ranking from Consumer Reports' automotive edition for its dealership experience.

Additionally, the Swedish automaker launched the 9-5 wagon and 9-3 Viggen earlier this year; by all accounts, the good-looking 9-5 wagon appears to have touched a solid chord with upscale customers resisting the SUV urge. Soon to come is the 9-5 Aero. The Aero packs a high-output turbocharged 2.3L, 230 hp. 4-cyl. engine. Saab also has enhanced the vehicle's chassis and given it 17-in. alloy wheels and exterior changes to make it look sportier. It is set to go on sale this month. Saab also is planning to launch its 9-3 Viggen 5-door and convertible for 2000. Like the 2-door 9-3 Viggen and the 9-5 Aero, these cars target low-volume niches, but will satisfy customers seeking a higher-power, front-drive premium car.

By optimistic projections, the company should be a viable European competitor within the next several years. Saab has a solid brand reputation and GM backing to joust with the established luxury/sport marques. - Andrea Wielgat.