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: Saab to build Cadillacs in Sweden

Zaphod Beeblebrox
1st March 2005, 07:10 AM
BBC News - 1st March 2005

General Motors, the world's largest car maker, has confirmed that it will build a new medium-sized Cadillac BLS at its loss-making Saab factory in Sweden.

The car, unveiled at the Geneva motor show, is intended to compete in the medium-sized luxury car market.

It will not be sold in the US, said GM Europe president Carl-Peter Forster.

As part of its efforts to make the US marque appeal to European drivers, the car will be the first Cadillac with a diesel engine.

Tough competition

GM's announcement should go some way to allay fears of the Saab factory's closure.

The factory in Trollhaettan has been at the centre of rumours about GM's planned severe cutbacks in its troubled European operations.

But the group's new commitment to the Swedish factory may not be welcomed by the group's Opel workers in Ruesselsheim, Germany.

They may now have to face a larger proportion of GM's cuts. Cadillacs are popular in the US, but will Europeans take to them?

Neither will the announcement be seen as unalloyed good news in Sweden, since it reflects Saab's failure to make significant inroads into the lucrative European luxury car market.

For years, Saab has consistently said it is competing head-on with BMW, Mercedes and Jaguar. The segment's leaders do not agree.

Luxury battle

GM's plans to build the American marque in Sweden is part of its efforts to push it as an alternative luxury brand for European drivers.

In the US, it has long been established as an upmarket brand - even the presidential limousine carries the badge.

Yet it could prove tough for Cadillac to steal market share from the majors in Europe.

Other luxury car makers, most notably the Toyota subsidiary Lexus, have enjoyed tremendous success in the US without managing to make significant inroads in Europe.

There, German marques Mercedes Benz and BMW have retained their stranglehold on the luxury market.

Increased output

Bringing Cadillac production to Sweden should help introduce desperately-needed scale to the Saab factory, which currently produces fewer than 130,000 cars per year.

That is about half of what major car makers consider sufficient numbers for profitable operations, and Saab is losing money fast - albeit with losses halved in 2004 to $200m (104m; 151m euros) from $500m the previous year.

Beyond the 12,000 job cuts announced last year at its European operations, GM is reducing expenditure by building Saabs, Opels - badged as Vauxhalls in the UK - and now Cadillacs on the same framework, and by allowing the different brands to share parts.

Another way to further reduce Saab's losses could be to shift some of the production of Saabs to the US, a market where drivers have adopted it as an upmarket European car.

Doing so would remove the exposure to the weak US dollar, which is making Saabs more expensive to US consumers.

But not everyone in the industry agree that it would be the best way forward.

"We know that in five years the US dollar will be stronger than it is today," the chief executive of a leading European car maker told BBC News.

The current trend towards US production was "stupid", he said.

Improve perceptions

In a separate announcement, GM unveiled a new scheme to allow European consumers the chance to test drive its Opel and Vauxhall models.

It is to deploy a fleet of 35,000 test cars across 40 countries, inviting potential buyers to try out a vehicle for 24-hours.

It follows a similar initiative by GM in the US. GM said it wanted to change "customers' perceptions" about Opel and Vauxhall cars, showing them that the quality had improved in recent years.

1st March 2005, 08:53 AM
If GM were serious about Cadillac, they would know that to stand any chance of making inroads into BMW, Merc sales in Europe and the rest of the world outside the USA, they will have to drastically change the 'image' of what a Cadillac is, and that's not going to be easy, not with the age old image that a Caddy has in Europe.

Probably the best way to tackle this, would be for the world's largest car manufacturer to participate in F1, against the likes of BMW, Mercedes, Honda, Toyota, Ferrari.
If a grand prix team started winning F1 races with a Cadillac engine, then the Europeans and the rest of the world outside of the USA will take notice, and that would be reflected in a percieved change of image and undoubtably increased sales.

But, we all know that isn't going to happen:p

2nd March 2005, 02:18 PM
Today's story in the Financial Times:

Cadillac decision boosts Saab plant
By John Griffiths in Geneva
Published: March 2 2005 02:00 | Last updated: March 2 2005 02:00 future of General Motors' Saab plant at Trollhattan in Sweden appeared slightly more secure yesterday after General Motors announced it as the location for building a new, Europe-oriented Cadillac model, the BLS. //

The model is part of a plan by GM to turn Cadillac into a global brand with 20,000 sales a year in Europe.

More of Trollhattan's 200,000 car a year capacity is to be taken up by an additional Saab model, the SportCombi people carrier also unveiled at the Geneva motor show yesterday. It will join Saab's current 9-3 and 9-5 saloons and estate cars, the 9-5 models of which are to undergo facelifts later this year.

"Trollhattan is an important plant for General Motors," Fritz Henderson, chairman of GM Europe, said yesterday.

However he declined to discuss the plant's long-term future after a decision is made, possibly as early as this Friday, on where to build the successors to both GM's current Opel/Vauxhall Vectra medium-sized cars and the current Saab 9-3. All the cars will share a common engineering structure. Speculation has grown that GM could close Trollhattan if it chose another GM plant, such as the under-utilised Russelsheim facility in Germany, to build the vehicles.

Carl-Peter Foster, GM Europe's president, also insisted that there was a future for the facility, "otherwise we would not have put the Cadillac here".

But while other executives stressed the need to continue building the Saab brand on its Swedish heritage, they avoided the question of whether the vehicles had to be produced in Sweden.

"Saab is a Swedish car and a Swedish brand. It's important to have a foothold in the market where you have that heritage," Saab president Peter Augustsson told Reuters.

Both Saab and and GM's Germany-based brand, Opel, have been heavily loss-making, resulting in GM announcing a European restructuring plan several months ago involving the loss of 12,000 jobs and taking $600m a year out of costs.

Mr Henderson said the project was "on target", with 4,500 job losses announced in the past few days, all through voluntary severance packages. No more job cuts are scheduled for the rest of this year.