Saab 9-5 on hold – for this?

I’m just guessing here, but there seems to be little other reason to slow down the development of the next 9-5 and the ensuing Saab range other than the fact that GM’s got ‘better’ things to do with its money. It’s basic economics. You have finite resources and you have to make decisions about where to best use those resources.

In the case of GM Europe, you have small but loyalty-inspiring brand called Saab and you have an aspiration to compete in the higher-end of the market. You can either invest in Saab, which has a distinct European heritage and environmental and technological credentials. Or you can try to establish an American luxury brand – Cadillac.

I’ve written plenty on this before, but a news article today in the Detroit News takes the argument against Cadillac in Europe to a whole new level. Here’s just a few salient points:

….the recent launch here in Spain of three new gas-guzzling leviathans suggests that GM’s attempt to sell in Europe’s premium sector with Cadillacs, Corvette sports cars and Hummers is more of an attempt to sell a few more cars into niche sectors with high margins, rather than a serious attempt to storm the luxury citadel owned jointly by BMW, Mercedes and Audi…..

…..Cadillac said from the start that to build its brand in Europe would take time, and it was careful to post modest targets….. the BLS is stumbling – sales reached about 1,300 in 2006 after the launch in April….. Although CCHE staunchly stands by its 20,000 by 2010 target, automotive consultancies are crunching their numbers and finding that less than half this is likely…..

The CCHE they’re talking about there is Cadillac, Corvette Hummer Europe, a Dutch operation set up to market the three brands.

CCHE%20range.jpg
Some of CCHE’s range for Europe. Three motoring Pavarottis and not a diesel amongst them.

…..Walt Madeira, British-based Europe Sales Forecast Manager for CSM Worldwide, believes Cadillac sales will reach between 7,000 and 8,000 by 2010…..

…..Jonathon Poskill, Senior Analyst, Europe, for J.D.Power Automotive Forecasting, has slashed his forecast again. Last year J.D. Power reckoned Cadillac would sell 16,000 vehicles by 2010; now this has been more than halved to between 6,000 and 7,000.

These industry experts forecast a best-case scenario for all of Europe that totals 8,000 units a year by 2010. Saab sells more than this in their home market in Sweden, one of the smaller populated countries in all of Europe.

Allow me to ask the big question once again – how much is GM spending on the launch and development of vehicles for Cadillac in Europe? A market that apparently deems them to be “comically inappropriate gas guzzlers and …. irresponsible examples of conspicuous consumption.”

Saab was spoken of as GM’s global premium brand by GM themselves as recently as 18 months ago and yet in their own native market they seem to be treated like second class citizens. I know there’s some good work being done on new models and I’m sure we’ll all be chuffed with the new Saab range…….eventually.

But as good as a car like the 9-5 is (and the new BioPower 9-5 I drove last week in Brisbane was just magnificent) there’s little doubt that in order to stand proudly amongst the Germans and succeed, it needs replacing. That takes investment and right now GM seem content to expend funds on Cadillac in a manner similar to how they expect their EuroCaddy customers to spent money on fuel.

As noted in the article, the motoring game involves a long-term outlook. I can’t believe, however, that Cadillac has a potentially brighter future in markets outside the US than Saab. And Saab could definitely benefit more within the US market itself with a fresh new lineup that utilises some well-placed R&D funds.

When I am king, Cadillac will be first against the wall.

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29 Comments

  1. “When I am king, Cadillac will be first against the wall.”

    I would like to be the first to request an invitation to be present at that event.

  2. Saab for the past 15 years has been the red headed step child of GM. Its now the red headed 3rd cousin once removed. The coneheads in Detroit ought to just DO IT…sell Saab and stop treating good faithful customers, hard working dealers like crap. Spenchian is a good man, but the heavyweights at GM are more concerned about their bonus than they are Saab. Shame shame shame…

  3. I am both a fan of Saab and Cadillac. It pains me greatly to see GM stumble again and again to do _anything_ to actually support development of real Saabs.

    I have to agree with Max…sell off Saab to a company that will actually invest in the brand and see how far Saab can go.

  4. I am both a fan of Saab and Cadillac. It pains me greatly to see GM stumble again and again to do _anything_ to actually support development of real Saabs.

    I see Cadillac’s problem in Europe as one of insufficient resources as well as trying to figure out how to make Cadillac and Saab compete with each other as little as possible…and neither gets what they need.

    I have to agree with Max…sell off Saab to a company that will actually invest in the brand and then we’ll see how far Saab can go (my guess is ‘further than GM has ever imagined’).

  5. It’s like deja vu all over again. We’ve been here before with GM over the last five years.

    Incredible that they just have not learnt by their own (previous) mistakes.

  6. I dont think 9-5 is hold at all. Next CTS is on different platfrom, different engineer core group.

    I think main slowdown of 9-5 is production place, story says that Saab has already asked GM to produce it in Sweden because it takes too long time before production capacity is available at Germany.

    Other slowdown is totally new platform, no cars are made from it yet.

    Third reason is that decision about 9-5 was made very late, for many years it was not clear what platform will it use.

  7. I am also a fan of both brands. I think it is much more likely SAAB will be sold. If GM wants to establish Cadillac as a world wide luxury brand they will have to do so at the expense of SAAB. They are looking at a 3 series sized car, and Lutz has mentioned wanting a 1 series sized Caddy also. I think GM can do it, remember Caddy does not have to sell in the volumes that BMW or Mercedes do for GM to make money. GM’s investment in Cadillac world wide is not that great and Caddy IS making money at home. The question I have is who wants SAAB? Those of us fans advocating a sale of SAAB (me included) should be careful what we wish for. The Chinese companies have money and ambition!

  8. Unfortunately to GM bean counters: our opinion which is of no consequence at all… We may be paranoid, but not androids…

  9. I’m gonna’ try an optimistic approach:

    As the article suggest, GM may just be looking to turn the Caddy, Corvette and Hummer’s into Euro niche cars… Low sales and high margins (don’t know about the margin part)… Here’s the optimistic part: That would leave Saab as GM’s Gladiator to de-throne the German oligarchy.

    Then again, I might need to wake-up to reality.

  10. SAAB’s product development under GM is like watching grass grow. I say “please GM, please sell SAAB to someone who can nurture the brand, not squeeze it dry.” Let’s face it, GM can barely manage the brands they created (except Cadillac) so what hope does SAAB have?

  11. GM’s got it wrong. Plain wrong. Saab is the marque in Europe in which they should invest.

    As for Cadillac, they should make the car a superlative luxury vehicle not competition for middle weight Audi and BMW. It’s an expensive mistake.

  12. Saaboy,

    They do it to themselves, and that’s what really hurts.

    I mean, who’s going to keep the wolf from the door, call them on the phone, tell them all the way that we’re gonna mess them up?

    Creeps.

  13. Just goes to show you, GM is not interested in Saab.

    If GM was interested the 9-5 would be replaced ASAP and the new 9-3 would be out in early 2009 followed by a baby Saab in 2010. Instead, GM try to sell cr@ppy American cars in Europe that nobody wants!

    They should sell it to someone else quickly before I, and the rest of the world, lose total interest in what was Saab!

  14. Well I don’t think GM is putting too much money into selling these already designed and produced cars in Europe. And as to the BLS, that was a pretty minimum investment made to try and keep up higher numbers of production in Trollhattan. I do heartily agree the 9-3 needs a strong refresh and the 9-5 needs to be replaced asap. But I think both of those things are on the front burner as is the 9-4X. I personally do not want to see Saab sold, but understand that Cadillac is going to be more important to GM in general, and currently outsells Saab globally in a large factor. I think GM will do the right thing and invest wisely in Saab, but we should not expect the billions that they need to invest in their american brands.

  15. Cadillac clearly are the black swans of the euro market, before we try and erase them they have to analyse the market a bit more and realise that Saab are the Euro brand, not just the wicked child of GM

    al, Thom and Johnny

  16. I hate to be dense, but has GM announced a slow-down of 9-5 development? Are we still expecting an all-new 9-5 for model year 2009? Or are we (justifiably) upset that GM management let the car run in its current mechanical form for over a decade?

  17. Swade,

    … Is that you do it to yourself
    Just you [gm] and no-one else

    GM’s excuse:
    You fell into our arms
    You fell into our arms
    We tried but there was nothing we could do
    Nothing, we could do…

    They [gm beach counters] have not, been, payin’ attention, payin’ attention, payin’ attention, payin’ attention… theyave noooot been, payin’ attention, payin’ attention, payin’ attention, payin-a-tten-TION…

    We’re rotten chassis’s
    We’re damaged turbos
    What the hell, we’ve got nothing more to lose
    One gust and we will probably crumble
    We’re backSaabers…

  18. Ah screw it, let’s pass around the hat and make GM an offer. Originally I would have thought US$2B would have been the kind of money one would be looking at, but give it another year or two of this shit and I reckon GM will pay us to take Saab away from them! 😉

    Dare I ask, what other company could buy Saab and not have it stomp on their existing brands? That would rule out VW (Audi and VW), Ford (already have Volvo) and probably some others too. Hmm….

  19. Why did GM buy Saab from the ABB crowd in the first place? Or did they smoke something akin to Thor’s marine tobacco the previous night and it was too late to back out? How come GM ended up beating around the bush with the Nissan/Renault alliance and even if the numbers made sense, the idea was ditched in quick time? What was so convincing back them for GM to have bought SAAB only to botch it up now? They are diluting the value of the brand, allowing us faithfuls to have our blood pressure reach the zenith and then see us being beaten in broad daylight by the VAG/DC/BMW crowd with no recourse. I don’t even want to make the association with that other make on British roads. I think the name starts with a Vaux…

  20. I just had a look at the Swedish sales data for last year. Cadillac BLS (made in Trollhättan) came in place 158 on the list with 151 vehicles. Examples of cars that sold more up here in Sweden are Mazda MX 5, Porsche 911 and Skoda Roomster (and that just in 1-2 month?). Not even all the people actually building the car in Trollhätten wanted to buy it…

    I have a friend who bought a new car 6 month ago. His company paid. I suggested a fully loaded Saab 9-5 of course, but he is not a Saab person. But, he is very interested in all things American. McDonalds, American Fotball… And he likes gadgets. He want his car to be comfortable and fully stuffed with electronics. I mean, of all people I know he would be the most likely to fall for the brand. And he got the money fto buy one. So I suggested he test drive the BLS. “Cadillac? Who want’s to own a Cadillac? Forget it!”

    I bought a Volvo.

  21. I’m quite clear about that. If Saab doesn’t get a new 9-5 with BioPower by 2008/09 I’ll go for the Volvo XC60 with Bioethanol. So dear GM, if you don’t want to loose a loyal client, hurry up.

    PS: I’ll never ever buy a Cadillac!

  22. Porsche makes a lot of sense as a buyer for Saab – there’s experience with turbocharging, a performance heritage, and they need to sell something other than sports coupes, but without diluting the sports heritage of their brand.

  23. Porsche would, IMHO, make for an awesome parent company!! It has a strong history of racing, performance and quirkyness… after all, they did invent the rear-engine, rwd car!!

    With the current profit margins on Porsche’s, there could be serious R/D money for Saab… And Saab would highly benefit Porsche by, as mentioned by Greg, being the “high volume” (vs. the current volume of Porshe)sales…

  24. Isn’t the desire for Porsche to buy Saab just pie in the sky? VAG has a big stakeholding in Porsche and they might perceive Saab to be a rival that they do not need for VW / Audi models?

    This Porsche thing has been banded around for a long time now. Whilst it would be great to see Michael Mauer designing cracking concepts like the 9-X and the 9-3X, I can not really see this one coming to fruition.

  25. I’d even hazard a guess that Porsche sells more cars worldwide than SAAB, so SAAB wouldn’t really be a “high volume” brand for Porsche, diregarding all the other already stated problems with a Porsche purchase of SAAB.

    I know I see a lot more Porsches around here than SAABs…

  26. Porsche and it’s representatives in the VW group borad, have their hands full with solving problems within the brands they already have. They will not add any more, but rather take away some (Seat, Lamborghini, Bugatti…)

  27. The Porsche situation has indeed been discussed at some length prevously. Porsche even altered their company constitution (or similar document) last year to allow investment in non-German companies, which got me quite excited.

    At the end of it all, though, they’ve invested a whole heap on money in VAG, which people beleive is an effort to assure themselves about their supply chain.

    As mentioned above, VAG has a lot of Saab competition in it’s ranks. Otherwise, I think porsche would have been the best corporate parent, hands down.

    I’m pretty sure Porsche sells less than Saab per year. The kicker though, is that they make a whopping $28,000 profit per vehicle, which is more than any other carmaker.

    KenB – next 9-5 now believed to be pushed out to MY2010 (i.e late 2009)

    Danni – they bought Saab because Investor AB were selling it for the automotive equivalent price of a glass of lemonade on the side of the road.

    Saaboy – Karma police, arrest Bob Lutz. He talks too much….

  28. I am a Porsche fan, but they would make a terrible owner for SAAB. Porsche has no experience selling mainstream cars. Remember the BMW/Rover fiasco? Porsche would look to VW to “help” make affordable cars. I think PSA is probably the best and most realistic buyer out there. They do not have a true premium brand. They are trying to stretch Citroen up to the premium class, see the C6.

  29. I AM FROM POLAND I HAVE A 93 TURBO X ITS MY SECOND SAAB (now a have both of them) AND I WAITING FOR NEW 95. SAAB HAVE A S O U L …..

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