Auto Outlook: Saab: Under new management

By AL SWANSON, United Press International
Auto Outlook: Saab: Under new management
The logo for Saab is displayed at the Chicago Auto Show at McCormick Place in Chicago on February 9, 2011. UPI/Brian Kersey | License Photo

Just when it looked like the bankrupt Swedish automaker Saab would be sold off piecemeal, a multinational consortium gobbled up many of its assets.

NEVS, an international firm comprised of investors from China and Japan, last week agreed to buy the main assets of Saab Automobile, Saab Automobile Powertrain and Saab Automobile Tools, including the company's factory in Trollhattan.


Not included in the deal were Saab Automotive Parts and former owner General Motors' intellectual property rights for the latest Saab 9-5.

GM's refusal to allow the transfer of its key technology was a factor in Saab's failure to find a buyer before it declared bankruptcy in December.

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The new consortium apparently wasn't interested in conventional gasoline engine technology and wants to make electric vehicles. There was no word officially on what NEVS paid for Saab's assets or how much it plans to invest in reviving the iconic 64-year-old brand.


Auto & Trends said NEVS paid $210 million to $250 million for Saab, about a third of what GM paid for the 50 percent of automaker it bought in 1989. GM bought the remaining shares for $125 million in 2000 and sold the company to the Netherlands' Spyker in 2010.

"The new company will produce electric drive using advanced EV technology from Japan," said Kai Johan Jiang, chief executive officer of National Electric Vehicle Sweden AB.

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Saab only sold about 15,000 cars before it filed for bankruptcy last year, eight months after money problems halted production.

Just-auto reports the first electric Saab, based on the current Saab 9-3, could hit the road at the end of 2013 or beginning of 2014 using Japanese EV technology. An all-new electric model may be rolled out in China and then offered in other markets.

"China is investing heavily in developing the EV market, which is a key driver for the ongoing technology shift to reduce dependence on fossil fuels, said Jiang, founder of National Energy Holdings Ltd. of Hong Kong, the biggest shareholder in NEVS with a 51 percent stake. Sun Investment LLC, a Japanese investment firm, owns the other 49 percent.


"The Chinese can increasingly afford cars; however, the global oil supply would not suffice if they all buy petroleum-fueled vehicles," he said.

Saab plans to make its new electric vehicles in Trollhattan and is hiring managers and engineers, but was not forthcoming on numbers.

NEVS Chairman Karl-Erling Trogen told reporters at a news conference the "world-class" plant and expertise the company was acquiring was decisive in the plan to build cars in Sweden, The said.

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"We will match Swedish automobile design and manufacturing experience with Japanese EV technology and strong presence in China. Electric vehicles powered by clean electricity are the future, and the electric car of the future will be produced in Trollhattan," he said in a statement.

The Swedish industrial union IF Metall, which represents many Saab employees, was happy about the focus on electric cars.

"We have too few electric cars on the road in Sweden and are far behind many countries. With this new focus, new export opportunities will likely open up," the union said in a statement.

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Battery breakthrough

The newly revived Saab's goal to make electric cars may benefit from good timing.

A123 Systems, a struggling startup battery manufacturer in Waltham, Mass., last week announced it had developed a new lithium-ion phosphate battery it says can operate at temperature extremes that normally sap battery power.


The company's stock jumped 52 percent on the news.

"We believe Nanphosphate EXT is a game-changing breakthrough that overcomes one of the key limitations of lead-acid, standard lithium-ion and other advanced batteries," A123 Systems Chief Executive Officer David Vieau told The Detroit News.

The company already sells batteries for several electric cars including GM's new Spark and recently was given a two-year extension to spend the remaining $120 million of a $249.1 million federal grant awarded in 2009.

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A123 laid off workers last year but plans to hire 400 employees in Michigan where it has manufacturing plants in Livonia and Romulus, and a research facility in Ann Arbor, the News said.

U.S. auto dealers still bullish

Despite economic worries about Europe and fears of a double-dip recession, U.S. auto dealers are riding the rising tide of good sales.

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The National Automobile Dealers Association said in its annual report 92 percent of dealers surveyed in March expect 2012 profits to be as good or better than last year. An average U.S. new-car dealership posted sales around $35 million last year, up 12.3 percent from 2010, and employed 63 workers, the report said.

Although the number of dealerships declined by more than 3,400 during the recession, to about 17,600 currently, new car and truck dealerships had 933,500 workers in 2011, up 4.6 percent.


"The arrival of new brands and new dealerships is a sign that even more vigorous competition is on the way in the U.S. vehicle marketplace," Paul Taylor, NADA's chief economist, told the Los Angeles Times. "As new brands enter the U.S. market, the net dealership count may increase in future years of strong economic growth."

Made in Canada

With the U.S. and Canadian dollars at near parity, consumer advocates in Canada want automakers to explain why some cars cost more north of the U.S. border.

The Canadian Broadcasting Corp. looked at manufactures' suggested retail prices of 24 vehicles built in Ontario by Ford, GM, Chrysler, Honda and Toyota and found 18 were more expensive to buy in Canada than the United States. That may have made sense when the Canadian dollar was worth less than the U.S. dollar but that's no longer the case and hasn't been for years.

"How do you justify a car made in Canada being sold for 20 to 25 percent more in Canada than in the U.S.?" Sen. Pierrette Ringuette said she wanted to ask representatives of the Detroit Big Three automakers she invited to a Senate Finance Committee hearing. The U.S. automakers declined to appear.


Ringuette also wants Canada's Competition Bureau to investigate why U.S. auto dealers can't sell new cars to Canadians without fear of losing their license.

For example, the MSRP of a 2012 Dodge Charger built in Brampton, Ontario, is $29,995, $5,000 more than in the United States. A new Chevrolet Equinox crossover SUV built in Oshawa, Ontario, had a suggested retail price of $26,445 in Canada compared with $23,539 south of the border.

Ringuette said Transport Canada officials calculate Canadian-specific safety features -- like tougher bumpers -- add $200 at most to a new vehicles' cost, not enough to account for a price disparity of thousands of dollars on some models.

"Manufacturer's suggested retail prices in Canada and the U.S. are 'suggested' retail prices. What a customer actually pays for a vehicle is negotiated with the dealer," a Ford Canada spokeswoman told the CBC.

The MSRP of a Canadian-built Toyota Corolla or Toyota Matrix is lower in Canada than in the United States, the CBC survey found, but higher for a made-in-Canada Rav4 or Lexus RX350 SUV.

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