GM will keep the Saab brand, but not necessarily as an independent Sweden-based car-making operation.

The automaker will not stop building and selling Saabs, according to its vice chairman Robert Lutz.

"We like the brand and we want to retain it," Lutz said during an interview at the Amsterdam motor show earlier this month. "We will do what is needed to keep the Swedish character of Saab."

But GM is determined to stop heavy losses at Saab - $US500 million (€385 million approx.) in 2002, $250 million in 2003 and $200 million last year - caused by poor global sales and the cost of manufacturing all Saab models in Trollhattan, Sweden.

"You cannot make a business case under 200,000 to 250,000 annual volume - that is almost impossible," Lutz said. "And we cannot subsidise a factory for that."

Last year, Saab built 128,000 units in Trollhattan.

GM is wrestling with other operating losses at its European operations and has told workers in Trollhattan and Opel's plant in Russelsheim, Germany, that only one plant will win the contract to build cars based on the next-generation Epsilon architecture - the Opel Vectra, Saab 9-3 and, perhaps, the newly announced Cadillac BLS.

GM has three options for Saab's future: close it, sell it or alter the business plan to make Saab large enough to be profitable.

GM sources say that last year GM Europe management had debated the most basic question: whether to keep Saab alive. "But we are now beyond that stage," a well-informed GM Europe source said.

Said another GM source: "GM needs a global premium brand, and that should be Saab."

In one potential scenario being discussed by GM managers:

* All Saab models would share architectures with other GM brands, including engines and transmissions.

*The next-generation Saab 9-3 would be built at Russelsheim, not Trollhattan.

*GM will continue production indefinitely at Trollhattan, but the plant would likely produce non-Saab models also.

*Saab will reskin the 9-5 to keep it going while GM decides whether to replace Saab's largest model.

*Saab will continue a design task force directed from Sweden, which is dispatched globally to add "Swedish-ness" to Saab models derived from other GM divisions and affiliates.

This is the same task force that developed the Subaru Impreza-based Saab 9-2 sold in the US and is working on the US-only Saab 9-7 SUV derived from the Chevrolet TrailBlazer.

Since GM purchased half of Saab in 1989 (taking full ownership in 2000), it has been unable to get Saab's global sales close to the 200,000 target. The closest approach was 133,013 sales in 2000.

Automotive News Europe