Saab's U.S. margins improve as sales plunge

DETROIT (Reuters) - Jacking up car prices by some 11 percent has helped General Motors's GM.N Saab brand improve margins in its key U.S. market last year despite a sharp decline in volumes, the head of the ailing Swedish carmaker said on Monday.

“We lost more than the market in terms of sales last year but our profitability went the other way around in the U.S. because we have increased prices, we have repackaged the specifications of our vehicles, we have exited from some sales channels that were not profitable,” Saab Managing Director Jan-Ake Jonsson told Reuters.

Under pressure to raise cash in the face of slumping sales, GM is attempting to sell Saab and said this week that it has been in contact with a single investor interested in buying the brand.

Ford Motor F.N is looking to sell its Volvo brand.

Saab’s sales in the United States in 2008 fell 35 percent to 21,368 vehicles.

“Instead of having a negative contribution on our vehicles here, we now have a positive contribution,” the Saab chief said in an interview on the sidelines of the Detroit auto show.

He said that the debut of the upcoming 9-4x crossover that will be built in Mexico and go on sale in 2010 would bolster the brand’s position in the United States by offering a natural hedge against harmful exchange rate effects that have plagued Swedish carmakers Saab and Volvo in recent years.

“For us the U.S. is pretty important. It’s our number one market. In our opinion we need to be here and we need to show that we can make money in this market independent of the exchange rate,” he said.

“And of course building the 9-4x is a good way of balancing the footprint.”

For the moment, though, the company has traded off improvements in the United States with a deterioration in the UK market due to a sharp depreciation in the pound.

“That has been the major impact on our result,” the Saab chief said.

Saab plans to gain access to a Swedish state aid package for the local auto industry amounting to as much as 25 billion Swedish crowns by presenting a business plan that foresees among other aspects a dramatic rise in sales.

“If we consistently are between 150,000 and 175,000 units, we will have a good return on our business,” Jonsson said.

Saab sold a total of 94,000 vehicles last year, a decline of about 25 percent, roughly 80 percent of which were its smaller 9-3 model.

The company is pinning its hopes on the roll-out at the end of this year of its next generation 9-5, which it says could contribute peak annual sales of about 50,000 units.

It will also launch the 9-3x crossover in the middle of this year, a model it will display at the Geneva auto show this March.

Editing by Phil Berlowitz