You can keep Saab, Kerkorian tells GM

James Mackintosh, Geneva
02mar06

REBEL shareholder Kirk Kerkorian has dropped his demand that General
Motors close or sell Saab, its troubled Swedish car-making division.

GM vice-chairman Bob Lutz said he had briefed Jerry York, Mr
Kerkorian’s representative on the GM board of directors, and Mr York
had agreed that Saab – and Hummer, the profitable sports utility
vehicle brand – be retained. A spokeswoman for Mr York declined to
confirm his position.

Mr Kerkorian became GM’s third-biggest shareholder last year and has
offered to buy more shares if his plan, drawn up by Mr York, is
followed through.

Mr Lutz, speaking at the Geneva motor show on Tuesday, said: “He (Mr
York) thought Saab was still what it was a few years ago when it was
this nice company sitting in Trollhattan (its Swedish base) with
basically all the structural cost of an entire automotive company but
selling only 120,000 units a year.

“That model was frankly hopeless. I took Jerry through it the other
day at great length and he now understands there is no more Saab you
can sell.”

He said that Saab was now integrated into GM’s global product
development and manufacturing system, which involved a new small
Cadillac being built in Trollhattan. The next generation 9-3, Saab’s
biggest seller, will be built at one of GM’s German factories.

“Trying to sell Saab and Hummer out of GM is like saying there are too
many eggs in that omelette – please take them out and sell them off.”

Mr York last month demanded GM dump Hummer and Saab to refocus on its
core American brands, which are in deep trouble.

GM lost $US5.6 billion last year in its US automotive business as
market share crumbled and sales of its most profitable vehicles
collapsed.

Mr York said that, if his plan were adopted, Mr Kerkorian might buy an
extra 12 million shares, worth $US244 million ($330 million) at the
$US20.36 they were trading at early on Tuesday afternoon, when they
were up US25c.

Elements of the plan, including personal wage sacrifices by top
executives and a halving of the dividend, have been carried out. Saab
is expanding its model line-up, with a small car being considered and
a car-SUV crossover already approved.