Archive for December, 1989

GENERAL MOTORS AND SAAB-SCANIA SIGN AGREEMENTS: JOINT VENTURES IN PASSENGER CAR

Posted on 15. Dec, 1989 by .

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saab scania press release header 1989 GENERAL MOTORS AND SAAB SCANIA SIGN AGREEMENTS: JOINT VENTURES IN PASSENGER CAR

For Immediate Release

Contacts: Steven Rossi
Karin Nobile

GENERAL MOTORS AND SAAB—SCANIA SIGN AGREEMENT: JOINT VENTURES IN PASSENGER CAR AND ENGINEERING BUSINESSES

NYKOPING, SWEDEN —— General Motors Corporation and Saab- Scania AB have reached agreement calling for wide-spread cooperation in the passenger car business. For this purpose,
Saab—Scania AB has decided to form a new independent Swedish passenger car company called Saab Automobile AB and to sell fifty percent of that new company to General Motors. The Board of Directors of the new company will consist of 10 members, five of whom will be nominated by GM, including the Chairman.

The agreement between GM and Saab-Scania foresees Saab Automobile AB developing, manufacturing and distributing cars under the Saab name, and, in addition, the production of GM automobiles for sale through the GM organization. Saab cars will continue to be sold through an independent Saab dealer network, thereby supporting the distinguished character of Saab automobiles.

The agreement between Saab-Scania and General Motors foresees far—reaching technical cooperation between Saab Automobile AB and GM’s European Technical Development Centers.

The new joint venture company will have full access to GM’s worldwide technology and automotive component resources and supplier network.

In addition, Saab-Scania has decided to create Saab-Scania Automotive Electronics AB, a new company in which Saab-Scania will have a majority interest and GM a major holding. Saab- Scania intends to transfer to Saab-Scania Automotive Electronics its businesses currently engaged in the research, development and manufacture of technically advanced electronic features for
automobile applications. `

The cooperation between GM and Saab-Scania is the result of the Swedish company’s wish to expand its business and model range by gaining access to the resources of a global manufacturer. GM, the world’s largest car maker, believes an association with Saab will enable it to participate more intensively in the upper car segment and to have additional capacity to assemble GM vehicles.

However different in size, General Motors Corporation and the Saab-Scania Group are two companies with similar structures and are both technology oriented with a long-term business
approach. GM and Saab-Scania are both operative in the automotive, aerospace and electronics sectors. The technical experience and engineering skill which both companies possess
create the conditions for extensive cooperation.

Furthermore, GM and Saab-Scania are complementary to each other. In the car sector this signifies that there are positive industrial effects of synergy to be won, both in car operations
as well as in automotive electronics.

Within the aircraft sector, GM and Saab-Scania began a cooperation in June this year when GM Allison Gas Turbine Division became a risk-sharing partner in the Saab 2000 regional
aircraft program. GM will deliver the GMA 2100 engine to the Saab Aircraft Division.

“Soaring costs for R&D and ever-increasing international competition make it difficult for small volume makers to survive on their own, in a longer perspective. I am therefore very satisfied that Saab-Scania has concluded an extensive agreement on cooperation with GM, a corporation with a leading worldwide position within its business areas,” says Georg Karnsund, President and CEO of Saab-Scania. “By investing heavily in our product, production and marketing capacity, Saab-Scania has acquired an image and a strength which makes us an attractive
partner.”

Mr. Karnsund continues: “Only by launching far-reaching cooperation on an international basis is it possible for Saab-Scania to further develop its operations. Our agreement with GM
will make this possible. The agreements on cooperation are therefore positive for Saab-Scania — for our shareholders, our personnel, our dealers, and for our business partners such as our subcontractors. Together we can now meet the future with confidence.”

The main objective for Saab-Scania in launching cooperation is its determination to strengthen the competitiveness of the Saab business and to further develop Saab cars in the upper
market segments for the ’90s and beyond. GM’s main objective is to strengthen its participation in the executive/luxury segments by joining a prestige brand, thus expanding its car product line.

Saab Automobile AB, which is to begin operations on January 1, 1990, will be an independent company based on the ownership of two financially strong corporations. Saab Automobile AB
will consist of existing passenger car, engine and gearbox loperations owned by Saab-Scania AB.

In return for fifty percent of the shares of Saab Automobile AB, Saab-Scania will receive USD 600 m (about SEK 3,800 m.). The parties will each contribute further capital of USD 100 m. (about SEK 640 m.). The new company’s debt of SEK 3,000 m. to Saab-Scania will in the long term be converted to external financing and will carry interest at market rate until converted. In sum ary, the transaction will give Saab-Scania additional liquidity of SEK 6,800 m. During 1990, the agreement will give the Saab-Scania Group a capital gain of about SEK 1,700 m. In the parent company, the corresponding capital gain will be about SEK 4,300 m.,·of which SEK 1,600 m. consists of untaxed reserves.

Saab Automobile AB will be a self—contained Swedish joint venture company with responsibility and complete resources for the development, production and marketing of exclusive top-of-
the—line cars. These cars will be developed and manufactured in Saab facilities in Sweden and Finland and will be marketed by Saab’s sales organization.

Saab Automobile AB will further develop the Saab 900 and Saab 9000 operation. Successively during the ’90s, Saab Automobile AB will launch new top-of—the-line cars in three different segments. Thus, Saab Automobile AB will not only develop new car families in the Saab 900 and 9000 segments but also a new third top-of-the—line car. The expanded Saab car program will retain and strengthen the distinctive image of Saab cars as a technologically advanced and exclusive quality product. The three product lines will, furthermore, consist of a broad variety of different models and engine programs. The three Saab product lines will broaden the market basis and offer the Saab car population of 1.3 million customers, as well as potential customers, new choices. The Saab car franchise will be one of the most attractive franchises existing in the top-of-the-line segment. Saab will continue to have an
exclusive and independent sales network and will expand it further.

Product program: Saab Automobile AB will further strengthen the distinctive image of Saab cars — high demands on individuality, driving enjoyment, performance, safety, space, and quality. The three future product lines will maintain the unique Saab exterior and interior styling and design. The cars will also have the unique Saab characteristics and performance.

The engine program will be extended with high performance six cylinder engines for the most exclusive models.

Product development: Saab Automobile AB and GM will cooperate in specific areas such as body structures, systems, components and parts. This is to achieve economies—0fescale and
utilize volume advantages.

Production: In addition to the Saab product range, the available passenger car production capacity in Sweden and Finland will also be utilized to assemble GM cars.
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