Saab Chairman Victor Muller gave an entertaining speech at the Automotive News Europe Congress in Bilbao last week, but the sales number he gave for the Swedish's automaker to break even is misleading.
Muller said that by 2012 Saab's break-even point will be about 85,000 units, which he said is much lower than when it was owned by General Motors.
His number only tells half the story. The reason Saab's break-even point may be that low is because it is using so many expensive technologies under license from GM.
Saab also is looking for a “technology partner” to provide it with the platform and powertrain expertise it will need to add a new 92 entry-premium model to its lineup. Without a partner that is willing to provide expensive technologies at an affordable price, the 92 will not be built. The harsh reality is that companies making 100,000 units a year don't have enough cash to solely finance a new volume model.
In Spain, Muller told the Congress that he “totally disagrees” with Fiat CEO Sergio Marchionne's belief that only automakers making at least 6 million units a year will thrive in the future. Muller, whose tiny Spyker Cars NV bought Saab from GM for $74 million in cash and $326 million in redeemable preference shares in February, likes to say that small is beautiful.
Small is dangerous.
Just look back a decade ago when BMW was given a symbolic 10 pounds by Phoenix Venture Holdings as payment for what became MG Rover.
BMW was desperate to avoid closing the British company.
GM avoided outrage in Sweden by selling Saab to Spyker.
Despite promising to reduce its break-even point and despite having licensed technology from BMW and Honda, MG Rover collapsed within five years.
No one wants history to repeat itself with Saab.
But that doesn't mean it might not happen.