Volvo Looks at Life after Ford, Saab will go it Alone

MILAN, Italy — The next chapters are about to be written for Saab and Volvo, two troubled Swedish brands owned by even more troubled U.S. parents.

As widely reported this week in Europe, the solution for Saab is to return to its autonomous near-premium car-builder roots. When we asked Saab spokesman Eric Geers recently at the Detroit auto show, he observed, "You would not believe just how happy everyone in Trollhättan is about this. Ecstatic."

The basic Saab plan is to use the initial financial aid already offered by the Swedish government to make this back-to-the-future move work right. In mid-December, Stockholm approved a $3-billion package to be shared by Saab and Volvo, an immediate $600-million emergency loan fund plus a $2.4-billion line of credit. There will also be a $360-million investment in a new government-sponsored automotive R&D center.

Ford and General Motors helped Volvo and Saab make their cases to the Swedish government, and it is clear that the Americans are intent on divesting. In Ford's case, there has been lots of interest in Volvo from other buyers, according to press reports in Europe and Asia. In GM's case, there has been as much interest in Saab as there was in Hummer — in other words, none whatsoever.

Saab plans to use the Swedish line of credit to help carry out the new plan of reconsolidating everything Saab back in Trollhättan, preferably by the start of 2010. A Saab contact tells Inside Line, "GM has been absolutely cooperative in letting us take this road home. They frankly have much bigger fish to fry and no time at all to really focus on resolving our situation, so there is no resistance from Detroit."

Not only will Saab now be building the next 9-5 family in Trollhättan together with the 9-3 — thus changing the earlier plan to build the 9-5 at Opel's Russelsheim factory — but the 9-4X crossover will be pulled from Mexican production at the Ramos Arizpe factory and instead also will be built in Trollhättan.

"GM and Saab will remain connected technologically for at least a few years in an amicable supply partnership, but Saab will then be fully independent by the next generation of products in 2014 or 2015," our source tells us. Depending on how smoothly everything goes, Saab tells us that the new 9-5 could start deliveries as soon as October of this year, or no later than spring of 2010. As for the 9-4X, timing would be for early 2010.

Meanwhile, over in Gothenberg, an announcement is expected that a Chinese investor will soon be taking a majority interest in Volvo. Reports out of the Swedish and Chinese media indicate that the chief Chinese candidate is Chang'an Auto, already a manufacturing partner for Ford in China. Both Dongfeng and Chery have also been mentioned as likely suitors, but both have indicated that they have other domestic priorities rather than acquiring foreign makes.

Inside Line says: It looks like Saab will return to its Swedish roots. Volvo appears to be plotting a new and different course. Hopefully, both will work outMILAN, Italy — The next chapters are about to be written for Saab and Volvo, two troubled Swedish brands owned by even more troubled U.S. parents.

As widely reported this week in Europe, the solution for Saab is to return to its autonomous near-premium car-builder roots. When we asked Saab spokesman Eric Geers recently at the Detroit auto show, he observed, "You would not believe just how happy everyone in Trollhättan is about this. Ecstatic."

The basic Saab plan is to use the initial financial aid already offered by the Swedish government to make this back-to-the-future move work right. In mid-December, Stockholm approved a $3-billion package to be shared by Saab and Volvo, an immediate $600-million emergency loan fund plus a $2.4-billion line of credit. There will also be a $360-million investment in a new government-sponsored automotive R&D center.

Ford and General Motors helped Volvo and Saab make their cases to the Swedish government, and it is clear that the Americans are intent on divesting. In Ford's case, there has been lots of interest in Volvo from other buyers, according to press reports in Europe and Asia. In GM's case, there has been as much interest in Saab as there was in Hummer — in other words, none whatsoever.

Saab plans to use the Swedish line of credit to help carry out the new plan of reconsolidating everything Saab back in Trollhättan, preferably by the start of 2010. A Saab contact tells Inside Line, "GM has been absolutely cooperative in letting us take this road home. They frankly have much bigger fish to fry and no time at all to really focus on resolving our situation, so there is no resistance from Detroit."

Not only will Saab now be building the next 9-5 family in Trollhättan together with the 9-3 — thus changing the earlier plan to build the 9-5 at Opel's Russelsheim factory — but the 9-4X crossover will be pulled from Mexican production at the Ramos Arizpe factory and instead also will be built in Trollhättan.

"GM and Saab will remain connected technologically for at least a few years in an amicable supply partnership, but Saab will then be fully independent by the next generation of products in 2014 or 2015," our source tells us. Depending on how smoothly everything goes, Saab tells us that the new 9-5 could start deliveries as soon as October of this year, or no later than spring of 2010. As for the 9-4X, timing would be for early 2010.

Meanwhile, over in Gothenberg, an announcement is expected that a Chinese investor will soon be taking a majority interest in Volvo. Reports out of the Swedish and Chinese media indicate that the chief Chinese candidate is Chang'an Auto, already a manufacturing partner for Ford in China. Both Dongfeng and Chery have also been mentioned as likely suitors, but both have indicated that they have other domestic priorities rather than acquiring foreign makes.

Inside Line says: It looks like Saab will return to its Swedish roots. Volvo appears to be plotting a new and different course. Hopefully, both will work out