GENEVA SHOW: General Motors to build European Cadillac in Swedish Saab plant
General Motors on Tuesday reportedly said it plans to build the new mid-sized Cadillac BLS - designed specially for Europe - at its [Saab] plant in Trollhaettan, giving workers there some sense of safety amid looming job cuts.
GM Europe president Carl Peter Forster made the announcement on the first press day at the annual Geneva motor show, the Associated Press (AP) reported.
Saab reportedly said the new Cadillac BLS sedan and the Saab SportCombi mid-size wagon are to be built at the plant, along with the 9-3 wagon and sedan.
In Trollhaettan, a spokesman for Saab Automobile AB, told AP GM's decision was a mark of confidence for the plant.
"We see this as proof of the confidence the GM management has in us as a designer and producer of cars," Christer Nilsson told the news agency, adding: "GM has chosen to place the production of this new variant of Cadillac here and this feels enormously positive for us."
Nilsson reportedly said that production would start in January 2006 with an estimated 10,000 cars produced annually.
AP said the decision is expected to help put the company's nearly 6,000 workers at ease, given the uncertainty facing GM Europe - Saab's automobile division was sold to GM in 2000.
AP noted that, late last year, GM said it would cut as many as 12,000 jobs in Europe, where it is struggling to end years of losses amid fierce competition and weak demand.
GM reportedly has said that only one of its European plants should be used to produce midsize cars, a task currently divided between the Saab plant in Trollhaettan and the Opel plant in Ruesselsheim, near Frankfurt, in Germany - a decision is expected by the end of March.
The Associated Press noted that the Swedish government has agreed to make nearly €227.2 million ($US300 million) in improvements to road and rail access to the Saab plant in Trollhaettan as part of an effort to persuade GM to keep the plant in its car-making plans.
Besides agreeing to improve infrastructure leading to and around the Saab plant in Trollhaettan, the Swedish government also agreed to make more money available for research and development, the report added.
Separately, the BBC quoted GM's Forster as saying the Cadillac BLS would not be sold in the US, and would be the first Cadillac with a diesel engine.
The report said bringing Cadillac production to Sweden should help introduce desperately-needed scale to the Saab factory, which currently produces fewer than 130,000 cars per year - about half of what major car makers consider sufficient numbers for profitable operations, and Saab is losing money fast - albeit with losses halved in 2004 to $200 million (€151 million) from $500 million the previous year.
The BBC said another way to further reduce Saab's losses could be to shift some of the production of Saabs to the US, a market where drivers have adopted it as an upmarket European car - doing so would remove the exposure to the weak US dollar, which is making Saabs more expensive to US consumers.
But not everyone in the industry agree that it would be the best way forward, the broadcaster noted.
"We know that in five years the US dollar will be stronger than it is today," the chief executive of a leading European car maker told BBC News, adding that the current trend towards US production was "stupid".