Led by Koenigsegg, Saab's new path is back to its roots

ByABC News
June 16, 2009, 9:36 PM

DETROIT -- For the new owners of Saab Automobile to make money selling small numbers of cars across the globe, they have to return to the Swedish automaker's roots, industry analysts say.

Somehow, a consortium of investors led by custom sports-carmaker Koenigsegg Automotive must restore Saab to the quirky, cutting-edge and reliable brand once favored by professionals who wanted to look smart rather than wealthy.

"It was seen as a discerning choice," said Tim Urquhart, senior automotive industry analyst at consulting firm IHS Global Insight. "It was a professional's vehicle, a doctor's or an architect's. A quality vehicle, but not an obvious statement."

GM announced Tuesday that it has struck a tentative deal that includes a $600 million funding commitment from the European Investment Bank. Additional funding would be provided by GM and the new investors.

GM gave no details on the financing but said the sale should close in the third quarter. The troubled Detroit-based GM initially will get no return on its investment and apparently will have no stake.

Koenigsegg, (KOH-nigs-egg), a tiny company that produces only a dozen supercars a year costing more than $1 million each, was founded in 1994 by Christian von Koenigsegg, a Swedish sports-car fanatic and entrepreneur who remains CEO. It's located at a former air force base in southern Sweden.

Analysts say GM, which bought half of Saab in 1990 for $600 million and the rest for $125 million in 2000, was unable to differentiate the brand from its other products or find a sales niche.

Von Koenigsegg, in an interview with Swedish television, seemed to agree, saying that the new owners would try to restore some of the brand's heritage while finding a place in the market between upscale and mainstream.

"This is neither a luxury or a people's car, but it has its own niche a bit of postmodern comfort, sporty, but with environmental thinking," he said. "We want to capture the Swedish aspect, too. GM had a bit more of an international approach, and Saab drowned a little bit in that context."