We are pleased….

From the GM press release on 2nd Quarter results for the company….

GM Europe posted adjusted earnings, excluding special items, of $124 million for the quarter , an improvement of $94 million compared with earnings of $30 million in the second quarter of 2005. The improved earnings reflect favorable material costs and improvements in pricing.

“Our European operations continue to gain momentum, posting a second consecutive profitable quarter, excluding special items ,” Wagoner said. “We are pleased with Saab’s global market performance, posting a sales increase of 24 percent for the first half of the year, and the continued growth of the Chevrolet brand in Europe. We are also encouraged by the response to the new Opel/Vauxhall Corsa, unveiled at the recent London Motor Show and scheduled to arrive in showrooms this fall.”

Saab are producing cars that make sense.

Cars that are bigger than they look. Cars that drink less fuel than their performance would indicate. Cars that perform one hell of a lot better than you think when you read “4 cylinder” on the sales sheet. Cars that protect their occupants like few others. Cars that can swallow an elephant on one trip and be as nimble as a cat on another. Cars that will look as good in 10 or 20 years as they do now. Cars that function in a way that’s intuitive (once you unlearn all that dumb-car stuff from your previous brand).

Saab’s home market in Sweden has always understood it. Saab buyers in the UK are getting it more and more with each passing year. But potential Saab buyers in the biggest market of all – the USA – are yet to be tapped.

As I address this I’m very mindful of the fact that I’m writing from a desk on the other side of the world, addressing the issue from a basis anchored to perceived market conditions. With that proviso, here goes….

Saab are in a difficult position in the US. As mentioned above they produce cars that make a hell of a lot of sense and are fantastic to drive in all conditions. The Saab problem in the US is rooted in the fact they’re a ‘small’ car company in a market that generally speaking doesn’t attach much value to ‘small’ cars.

As I take a look at the US market, there’s hardly a manufacturer still around that hasn’t forged a reputation based on either a) a big family sedan, minivan or utility vehicle, or b) an exceptional sports car. There may be a few recent exceptions such as Subaru and possibly Hyundai, but I don’t think it’s an unfair assessment.

Until just a few years ago Saab had no AWD vehicle in the US. They plugged that hole with a substandard transformation of the WRX Impreza. Until just over 12 months ago they had no entrant in the SUV category. The 9-7x has addressed that, and has done it better than a lot of people expected.

There’s never been a big Saab sedan, or minivan (thank God), or a pure sports car that captured the sporting enthusiast’s imagination. Saab have been steadfast in their dedication to FWD, turbocharged, midsized-at-most vehicles in the belief that it’s a formula that best suits the broad cross section of everyday driving for most people. And they’ve not necessarily erred in doing so. Sometimes 10,000 monkeys can be wrong.

The land of the free is suddenly feeling the pinch of higher fuel prices. The cheap gas that drove their friend-laden boat-towing keg-lugging behemoths is disappearing faster than last week’s pay cheque and in this sort of climate, Saab should be in the perfect position to capitalise.

They’ve capitalised in the UK and Europe with diesel, e85 and high performing gasoline vehicles of decent proportions that suit the conditions and the roads. The model mix in these markets is small, but very effective.

What Saab in the US need to do now is seriously pump up the efficiency, safety and performance attributes of their core model range. ‘Born from jets’ has been effective in fostering some interest and the aviation theme contains suitable imagery for the future. But it can’t stop there. Saab’s ongoing efforts in the US need to put some meat on those bones. Pretty pictures and catchy music music will only get you so far. Substance will carry you home.

The 9-3, 9-5 and 9-7x ranges have a hell of a lot to offer. More than your average John Q would know. If Saab USA could fast track the Biopower versions and find a way to get the diesel to market then the range of cars on offer suddenly expands at least two-fold.

Fortune favours the brave. Saab have been held back in the US by beancounters and market conditions for long enough. If GM want Saab to succeed in this key marketplace – and the upside potential there is huge – then they’re going to have to equip Saab appropriately.

That means engines. That means interiors. That means performance options. And it means marketing.

My concern with the whole future-of-GM thing is based solely on Saab’s continued existence. If I saw a Hummer on fire I wouldn’t even stop to pee on it. The one thing Saab needs (apart from killer cars in the future) is growth in it’s US market share.

Saab is GM’s premium global brand. GM needs to treat it that way and Saab USA needs to live up to that tag with some leadership, innovation and success.

Rick Wagoner’s got good reason to be pleased with Saab globally, but I’m sure that he and Jay Spenchian are more than aware that there’s no reason to get settled.

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5 Comments

  1. swade, this is a fantastic post. My main compaint is I don’t understand why Saab decided that importing a diesel was not “in their best interest at the time”. The only diesel cars being sold in the US are VWs, and they sell well, and there is plenty of room for growth. Saab is a perfect alternative, and with correct marketing it would be an excellent move. I just had to add my 2 cents on that subject, but this whole post is excellent.

  2. “What Saab in the US need to do now is seriously pump up the efficiency, safety and performance attributes of their core model range”

    I wholeheartedly agree with this.

    I’d also like to see SAAB work on being more environmentally-conscious. Try to get emissions (NOx and CO2) considerably lower than the competition. In Britain not only do they tax cars differently than here in the States (when you register your car each year, I believe) depending on CO2 (greenhouse gas that contributes to global warming) emissions, but they also require the CO2 output of the car to be advertised in print ads. I sometimes read the British car mag Top Gear and marvel that every ad has small print showing the fuel economy and emissions of that car!

    Another thing SAAB needs to work on is getting their JD Power and Consumer Reports ratings to improve. I know many SAABophiles dismiss these as faulty gauges of quality, but truth is that when most people in the States are looking to get a new car they consult with one or both of these sources to see how the cars are “rated”. Nobody wants to buy a car that’s going to be an unreliable, expensive problem.

    That brings me to my last point. SAAB needs to somehow change the reputation for being expensive to maintain. I have experienced many occasions where I’ve told someone I own two SAABs and they look at me with astonishment and say, “wow. You must have a lot of money to afford the replacement parts”. For some reason SAAB got the reputation for having expensive replacement parts. I’ve seen a comparison that shows that even Honda charges more than SAAB for an equivalent part, so it seems it’s just going to take information conveyance to kill this myth.

  3. Another thing related to my last post I should have added is the URL for the U.S. EPA’s website where you can pick up to four cars and compare their fuel economy and emissions side-by-side. It’s fueleconomy dot gov (I’m trying to avoid the software here rejecting this post due to the URL posting).

    I chose the 2006 manual-transmission base models of the 9-3SS, Audi A4, Volvo S60 FWD, and BMW 325i. The Audi gets the nod in fuel economy and “greenhouse gas” (I’m guessing CO2) emissions. All the cars tied in “air pollution” (NOx, NMOG, CO, PM, HCHO) except the SAAB which was much worse than the others.

  4. I’m a U.S. consumer and my wife and I recently bought a new 9-3 2.0T SportCombi. Frankly, Saab wasn’t even on our list when we started shopping. In fact, my 19 year old son asked me what I thought of Saabs and my response was that they were supposedly okay, but that they got mixed reviews, had a reputation for unreliability, Saab owners were loyal but a bit strange, and if I was going to throw that kind of money around, I’d get a Volvo, Audi or BMW. The “Born from Jets” commercials didn’t inspire me to run to my nearest Saab dealer, as they really tell you nothing about the vehicles. I didn’t even know the SportCombi existed at the time.

    What sold us was when we did some research and started looking at the vehicles that really fit our requirements – a reasonably small wagon, a nice combination of fuel economy and performance, and safety. Decent styling and some luxury touches were added bonuses. Also, I was very surprised at the price – in the U.S., a Saab is a couple of thousand dollars less than a comparably equipped Volvo and several thousand dollars less than an Audi A4 or a BMW 3 series.

    We came up with a short list of a Volvo V-50, a VW Passat wagon, and the Saab. When we drove all three, the choice was very easy.

    You’re right that Saab has a lot to offer for the U.S. market, but they’re off the radar screen for most buyers. GM really needs to find a way to get the word out. Lose “Born from Jets” and come up with ads that focus on the meaningful aspects of the current Saabs. Show consumers what’s available in the Saab range and emphasize their performance, safety, and economy.

    The reliability concern is real. Justly or unjustly, Saabs have gotten a reputation in the U.S. for being high maintenance and expensive to repair. I guess I’ll find out… There were enough positives for this vehicle to convince me that it was worth taking the risk.

  5. Dont’ know if you seen it… Saab Automobile posted a loss of 3.9 billion SEK for 2005. The loss for 2004 was about 3 billion. Don’t know if there are any one-time posts in this to shape things up for 2006 and maybe post a profit. JÅJ think they can sell 140.000 vehicles this year, and with 150.000 they will be profitable. Me think they will sell 150.000 this year… Only a couple of days to a new month. I think the extremely hot weather in central and northern Europe will show in lower sales.

    Related news. Nissan sold 6% fewer vehicles lats year and the profit was down 26%.

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