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INTERVIEW: Victor Muller sets out plan for revitalised Saab

By Dave Leggett | 10 June 2010

Muller is passionate about the product and says he want to put Saab DNA back into Saabs

Muller is passionate about the product and says he want to 'put Saab DNA back into Saabs'

Saab's new owner has told just-auto that the company's new business plan is based on modest volume projections to ensure a return to profitability, but that new products will transform the brand's image and prospects.

Between 2000 and 2008 Saab never made less than 98,000 cars a year, in spite of dealers having to endure a dearth of new product; the 9-5 was eleven years old by 2008. Last year overall Saab sales slumped to just 39,000 units amid depleted car markets, an ageing line-up and the uncertainty over future ownership after crisis-hit General Motors decided it had to sell the brand.

Spyker CEO and new Saab boss Victor Muller maintains that Saab's new business plan is realistic. He wants new Saab products to improve and better embody traditional Saab values in design and finish, but he also says the plan is cautious on overall volumes.

“We have assumed very moderate sales figures – for very good reasons,” he says.

“In 2010 we want to be at the 100,000 unit level and we want to be at 125,000 units in 2012 – the 2007 level. By the end of 2012 the oldest car in the showroom will be the new 9-5. All the other products will have been completely revamped.

“With the 9-5 and 9-3 we will have a proposition that is a real Saab,” he says. “We are going to take the design of the new 9-3 two notches up.”

The currently launching 9-5 will be followed by the 9-4X crossover next year and the 9-3 in 2012 “my first full shot at developing and making a Saab”.

Muller is an unabashed car enthusiast with a clear passion for the Saab brand and products that began in his childhood, but he believes the business environment favours a brand like Saab that can exploit a new mood for collaboration in a cost-squeezed auto industry.

Proliferating alliances and collaborations between automakers are a sign of shifting attitudes amid unprecedented cost pressures, he believes, and Muller sees that as an environment that enables Saab to be commercially viable through collaborations with others.

He wants to put a planed new entry model, known as 'Project 92', into production in 2013 but to make the project viable the company needs to find a partner to share engines and platforms.

Muller is also looking for deep collaborative partnerships on new technologies in areas like electric vehicle and hybrid expertise.

Talks are progressing with a number of prospective partners – not just vehicle makers, but suppliers, too.

Muller’s aim is for Saab to be back in profit by 2012 and he is very aware that to be profitable it is necessary to have manufacturing presence in emerging markets. The 9-4X will be built in Mexico under plans already in place with General Motors.

Muller says that local assembly is essential in the BRIC markets when volumes become more significant – over 10,000 units a year.

China has already been identified as a priority.

“We are currently investigating ways in which we can take over distribution in the country from Shanghai-GM – that contract will be ending at the end of this year, so we are setting up to distribute in China ourselves. If we can achieve annual sales of around 10,000 cars (built-up imports) this would justify setting up local manufacturing. This is something I am aiming for with the 9-3 by 2013 or 2014,” Muller said.

“Once local manufacturing is established and you have a distribution network, you can drop your prices by about 40% and still make the same margin because you are producing locally and then you can grow to much higher volume – say up to 50,000 cars.

“I could see us doing 30,000 or 40,000 Saabs in China, but where we are today with our product programme it would be crazy to set that up right now – for example with the current 9-3 which will be going out of production. When we go into China [for local assembly] it will be with the new 9-3. So we have a clear target between now and then to create an infrastructure that can carry 10,000  cars. ”

Muller went on to say that Saab will also profit by consolidating all its sales channels after parts operations. “Partsco makes a very healthy profit, but in the past all this went back into GM rather than back into Saab,” he said.

Sceptics may still question whether there is room for Saab, long-term, in an industry beset with overcapacity and cut-throat competition. It does not have the volume and financial resources of BMW, Daimler or VW Group (with Audi). Muller appears to have a vision of where Saab can fit in to the premium brands landscape while not going head-to-head with the Germans (I would wager that the next 9-3 will be available as a hatchback and sportwagon but not saloon). He may be something of a car nut, but his entrepreneurial background suggests he understands how to make (and lose) money. He certainly moved fast to rescue Saab when the Koenigsegg deal unravelled.

The new 9-5 was ready to go and will be helping raise the brand's image as the message goes out that Saab has survived and has a new owner who will take more care of it than the previous one did. A plan is already in place for further new product. The parts business - Muller describes it as a 'cash register' that made a lot of money for GM - will be helping, too. And a collaborative business model to cut future product development costs sounds very sensible. The plan is for an R&D budget that is 10-12% of sales; and Saab wants partners it can trust with new technologies. Muller is very confident that Saab has the know-how and sufficient financial resources to pull it off.

“The business plan for Saab is around a billion dollars, which is fully funded,” he points out.

“GM, the European Investment Bank and the Swedish government would not have sanctioned this transaction if it had not been fully funded.”

See also: UK: Saab close to finding a partner for new small car