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."
GM CEO Fritz Henderson, in a Web chat with reporters on Tuesday, said Saab was never profitable, despite great vehicles and loyal customers. He wrote that GM will continue to make vehicles for the new company as well as provide engines and other technology.
IHS analyst Urquhart said GM didn't seem to know what to do with Saab, and failed to set its models apart from mainstream brands.
"Without being too rude about it, GM sucked all the brand value out of it," Urquhart said.
Urquhart said the company must return to its roots of innovation. Saab was among the first with front-wheel drive and turbocharging.
Yet it will be difficult, he said, to make money with Saab's historically small sales volume of around 130,000 vehicles a year. That volume, Urquhart said, has held steady since GM's acquisition, dropping to 92,000 last year in the global slump.
Von Koenigsegg dismissed criticism about his company having no experience in large-scale production, saying it isn't needed because Saab has that knowledge. He said Koenigsegg can contribute green solutions and engine technology.
Saab employs about 4,000 worldwide, while Koenigsegg has a full-time staff of 45.
Shareholders in the new company were listed as Koenigsegg Automotive (23.4%), von Koeningsegg's firm Alpraaz (42.6%), Norwegian holding company Eker Group (11.8%) and San Diego-based investor Mark Bishop (22.2%).
Other members of the consortium include Augie Fabela II, Florida-based co-founder and former chairman of Russian telecom operator VimpelCom, and Melissa Schwartz, a Washington, D.C.-based attorney.