Saab and Volvo Pin Revival on New Models

By Paul A. Eisenstein, Monitor | The Christian Science Monitor, August 18, 1993 | Go to article overview

Saab and Volvo Pin Revival on New Models


Paul A. Eisenstein, Monitor, The Christian Science Monitor


NOWHERE in Europe can the automotive sales slump be felt more deeply than in Sweden.

So far this year, Swedish new car sales have plunged by two-thirds. It means the auto industry here is more dependent than ever on the rest of the world for both sales and capital.

The new Saab 900 is a good example. The model debuting this fall will be the first complete update of the company's flagship sedan in 15 years.

"The new 900 is certainly the most important new car in Saab's history," acknowledges John Fleming, the company's vice president of sales and marketing.

From the exterior, at least, the new 900 is distinctly Saab, but under the skin, the heritage is more murky. Only a cash infusion from General Motors Corporation kept the new car's development program - and Saab - going. In January 1990, GM spent $600 million for a 50-percent stake in Saab Automobile AB.

Saab-Scania AB, which owns the remaining half, had little choice. In 1988, the company's worldwide sales shot to 115,043. In the United States, sales peaked at 47,300 in 1986.

"Buying a Saab was like being a rebel," says automotive consultant Chris Cedergren, of the AutoPacific Group. "It was status for those who eschewed status."

But by 1992, the bottom had dropped out. In the critical US market, Saab sales plummeted to 26,000, while worldwide volume dropped to 86,847. That left the automaker with a loss of 2.7 billion krona ($330 million).

But guided by GM's successful European subsidiary, Saab is slashing costs and sharply improving productivity. By closing one of two assembly plants, as well as five component factories, the company has trimmed its headcount 50 percent since 1989, and the numbers will slip below 8,000 by the end of this year.

Significantly, Saab expects to need just 30 to 35 hours of direct labor to build each new 900, down from 110 man-hours on the old model. As a result, the company's break-even is now 80,000 vehicles a year, down from 120,000 in 1989. …

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