Saab Reduces 2010 Production Target, Cites Production Difficulties

#Saab, #9-5

Saab may have some ambitious goals for its future, but it seems the Swedish automaker is facing reality when it comes to its immediate sales goals. Citing difficulties faced earlier in 2010, Saab-Spyker has cut its Saab production outlook for 2010 by roughly 33 percent.

Although Dutch sports car manufacturer Spyker did help save the Saab marque from certain death, it has faced an uphill battle to return Saab -- and itself -- to profitability. Recent financial reports indicate Saab-Spyker lost a whopping $56 million in the third quarter of 2010, most of which stems from finalizing the purchase of the Swedish company from General Motors. In February, Spyker bought Saab for roughly $74 million in cash and $326 million in preferred shares -- a decent deal, perhaps, but it does place a bit of a financial burden on a tiny automaker.

Saab sales continue to rise (no surprise, considering GM was winding down the brand this time last year), but the challenges faced by the initial shutdown and liquidation has forced Saab-Spyker to adjust its production forecasts for the 2010 model year. Initially, the brand thought it could move 45,000 cars by the close of the year, but Saab officials now suggest the company will likely only build between 30,000 and 35,000 cars. Remarkably, Saab-Spyker CEO Victor Muller remains unfazed when it comes to looking at the brand's future, suggesting predictions of selling 80,000 Saabs in 2011 and 120,000 cars in 2012 as "conservative" and "realistic."

"The absence of production and the consequent disruption of the supply chain in the first months of this year have presented challenges in restarting the business," reads an official release from the automaker. "Their impact on our sales levels means we expect sales to reach between 30,000 and 35,000 cars in 2010." Given the sales momentum we currently see, management remains confident that this recent momentum will continue to build, and continues to expect to deliver on its wholesale targets [for] 2011 and 2012.

Those goals, however, rely entirely on Saab's new product portfolio resonating in markets around the world. The new 9-5, coupled with the forthcoming launch of the 9-4X crossover, are arguably the lynchpins to the company's survival in many corners of the globe. Reuters indicates Saab is also investigating selling a line of premium models in Russia and China that would return a higher profit margin for the company. The idea of such luxury models is certainly reasonable, especially in these two markets, but Reuters also mentions a possible pickup truck, which appears to be either sheer speculation or unbridled optimism on the company's part.

Will the 9-5 and 9-4X help Saab claw its way towards its 80,000-car goal next year, or will it take the addition of a new 9-3 and the all-new 92 small car -- or even a pickup for Russia -- to really help the company take flight? Send us your best prescription for the company in the comments section below.

Source: Spyker, Reuters, Automotive News (Subscription Required)

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