Saab's Success As A Stand Alone Company In Doubt

General Motors is pushing to take its Saab brand in a new direction, one where it would operate as a separate car company outside of the GM fold. Much as they did with Saturn when that brand was launched in the 1980s, GM plans to do the same with Saab – run it independently. But, I don't believe that this idea will fly (or drive) for reasons I will share with you just ahead.

GM is in a world of hurt, much of it due to its own doing. Lousy union work rules drained the profits from the automaker and the company became spread too thin as it acquired other automaker and built new brands. Clearly, a leaner and thus meaner GM would be a much better operation one that would produce high quality cars at a competitive price.

Saab has been a disappointment for GM ever since the automaker acquired a 50% stake from the Swedish company in 1990, pushing its ownership up to 100% by 2000. In the 19 years that GM has owned Saab, the division has only been able to produce a profit once. Meanwhile, sales continue to drop as Swedish car lovers flee to Volvo and other European brands.

In the recently submitted recovery package submitted by GM to Congress, GM outlined its plans to take Saab independent and/or sell the company outright. As a wholly owned, but independently run company, Saab might qualify for assistance from the Swedish government and, perhaps, be more attractive to a potential suitor. However, with the entire world auto industry in a tailspin, neither one of those scenarios is likely to happen.

Given its current state of affairs, Saab's position with GM will change by early 2010 even as two new models come to market. The 9-3X, an attractive crossover model will appear this Spring while the larger 9-5 series will be overhauled and make its debut this Fall. Awash in new models, GM hopes that Saab will suddenly become attractive to someone, somewhere.

GM's plans for Saab are tentative, based on ongoing assistance from the US government as well as on hopeful assistance from the Swedes or the European Union. Although hope springs eternal for some, the odds are against Saab surviving in any fashion as tightening competition is putting a noose around the neck of Saab, one that is choking the life out of the iconic brand.