Amazing Swedish Supercar

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News & Features - BusinessWeek Online - March 24, 2006
By Matt Vella

A Revolution in Swede Speed
Sweden's Christian von Koenigsegg always dreamed of building the
ultimate supercar. Now, his Koenigsegg CCR is breaking records

Swedish automobiles have long been known as safe and steady, not fast
and furious. It's no accident you've never heard the phrase "Swede
speed." Right now, you're thinking about boxy, safe Volvo wagons, handy
in the snow and adept with the kids and groceries, not high performance
roadsters.
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Enter Christian von Koenigsegg, a 33-year-old Swede with fast dreams.
And he's got a former fighter jet assembly plant to bring them to life.
Clocking in at 245 miles per hour, Koenigsegg Automotive broke the world
speed record for a production car last year with the Koenigsegg CCR.

Since the first production car rolled off the assembly line in 1996,
Koenigsegg has shipped ultrafast autos to the Middle East, Hong Kong,
Eastern Europe, Russia, Britain, and Japan. Everywhere, it seems, except
to the U.S., because Koenigsegg's cars have not met stringent U.S.
safety and emissions standards.

That's about to change. Koenigsegg and his team of engineers are
celebrating a decade in the high-performance auto business with a new
model -- the Koenigsegg CCX -- engineered to comply with U.S.
specifications. The CCX will carry a supercar price tag -- $722,534,
fully equipped and before taxes. (The price even includes driving
lessons from the world record-setting driver himself, Loris Bicocchi.)

GET IT RIGHT.  Christian von Koenigsegg doesn't see the price as an
impediment to sales. He estimates his company will ship 20 to 25 cars
this year alone, doubling the company's entire output over the last 10
years. That means even if he's wildly successful, the car is going to be
scarce. "This car is perfect for those who find Lamborghinis or Ferraris
too common, too pedestrian," he says.

Cracking the U.S. market is imperative if the company is to reach its
goal. Philipp Rosengarten, an analyst at Global Insight in Frankfurt,
Germany, who keeps track of the world's fastest and most expensive cars,
says "I would put a big question mark on the whole thing. The money, the
demand is there, but you have to have the right cars to whet the
appetite. They can do it, but it's going to be a challenge."

Indeed, the global market for these supercars is about $3 billion, a
market that analysts say will double in the next five year. The U.S.
represents about half of global sales, and California alone accounts for
half of the American market. "It's the most challenging market, from a
legalization point of view," says von Koenigsegg, "but now that we've
done it, California is going to be big for us."

CHILDHOOD FANTASY.  California has the world's toughest emissions
standards. American safety standards, meanwhile, differ significantly
from European. The new 2006 Koenigsegg CCX is an evolution of the
previous record-breaking design, tweaked to meet U.S. standards. Not to
worry, the car retains its speed rating, and it's the industry's only
car with 806 horses under the hood. That's nearly twice the horses in
Porsche's top-of-the-line 911 GT3, and more powerful than
Mercendes-Benz' supercar offering, the SLR McLaren.

In setting the new speed record, von Koenigsegg realized a childhood
fantasy. As a youngster, he was captivated by a cartoon series in which
a repairman souped up his bicycle into an ultimate racing machine
capable of competing with cars. The impression was lasting. At 22, von
Koenigsegg financed his dream company with proceeds from selling a
lucrative trading firm he started as an economics student in Brussels.

Not so much speed freak as precision-obsessed technician, von Koenigsegg
says "I enjoy driving fast, but I'm not reckless. We've converted an old
air runway into our 'proving ground,' where we can get our cars up to
190 miles per hour."

EAT MY DUST.  Koenigsegg is located near the city of Ängelholm, in
southern Sweden, in a facility that was once home to a unit of the
Swedish Air Force. The company builds its cars by hand in a hangar that
used to house JAS 39 Gripen fighter jets. Like those jets, the 2006
Koenigsegg CCX is a study in lean design and space-age materials. The
body and chassis are made of extremely lightweight carbon-fiber
composite, reinforced with Kevlar and aluminum honeycomb.

The CCX may have a price tag that's out of reach for most car buyers but
it's a steal compared with the competition. Speed-wise, the only car
capable of keeping up with the CCX is the VW-built Bugatti Veyron, which
comes fully equipped for a whopping $1.47 million.

In fact, the CCX will be competing with a wide variety of
high-performance vehicles, some with much-recognized, race-winning
nameplates. Koenigsegg will have to battle it out with offerings from
Ferrari, Porsche, and Mercedes-Benz, among others. Rosengarten notes
that established brands are beginning to sell out and that Koenigsegg
has an opportunity, "a risky one, but definitely worth it."

CALIFORNIA DREAMING.  Whether for sheer speed or relative value, the
response to the CCX at this year's Geneva Auto Show has been impressive.
The U.S. road-worthy model is in such high demand that there's currently
a nine month waiting period. The first model will roll off the line
during the second week of April.

Meanwhile, Koenigsegg is rapidly building an American network of
dealerships for sales and service. The first U.S. dealer location is
expected to open during this summer. Where? The company won't say,
because the details of the deal have not been settled. But it's a good
bet that it will be in the Golden State.