Competition Only

A few days ago I wrote a piece here on the site called Competition and Opportunity. In summary, there had been some discussion post-San Diego that Saab were setting some sights on Camry and Accord drivers, pointing out that you could get into a 9-3 for around the same price as a top deck white-goods-on-wheels from Atoyot or Honda.

Saab USA wrote to remind that these buyers are seen as an opportunity for Saab, but Honda and Toyota are not seen as core competitors for Saab. This begged the question “Well who are Saab’s competitors?” and yes, this question was asked via email quite directly.

I received a response from Saab and I think we can call it definitive.

The answer: Audi, BMW, Mercedes and Volvo.

Personally, I’m going to call it a step in the right direction. Much like admitting you’re an addict is the first step to overcoming addiction, acknowledging your target is the first step to getting there.

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  1. I’m going to have to disagree. That anwer shows that they won’t acknowledge their current (or historical) place in the market. Audi and Volvo yes, along with Acura and VW. BMW and MB no, let Caddy take them on.

    I could go on for a page but this is the essential bit: That list shows too broad a target. A Saab made to go after those 4 brands is not a car I want and is not going to have much Saab flavor.

  2. Caddillac might be able to take on BMW and MB in the US. But here in Europe, naha, forget it’s not possible. Europeans DO NOT WANT a Caddillac however great a car it might be. I can only write for myself and the people I know here but Caddillac is essentially viewed as something very american. That means big, gassguzzling, loud and a bit “in-your face” not to say obnoxious. Making people think differently about Caddillac will take alot more money and time than to get Saab up to speed and competetive with the big germans.

  3. I agree with ajf. MB and BMW should be off the list in the US. They are status cars, and people buy them for the message rather than the car. If Saab tried to compete with them, they would come across as “can’t afford a real status car” cars. No thanks.

    Acura are definitely competition. They are driver’s cars.
    VW is competition as well, even more so than Audi. The Passat is in exactly the same price/feature/size bracket as the 9-3 in the US.

  4. I agree with ajf and disagree with Mats (no surprise).

    Rather than BRAND competition, let’s talk specific MODEL.

    9-3: Volvo S40, S60; VW Passat; Infiniti G-series; Lexus IS; Acura TSX, TL; BMW 3-series; Audi A4; Jaguar X-type; Ford 500/Mercury Montego; Pontiac G6; Dodge Charger; Marcedes-Benz C-series.

    Someone else do the 9-5.

  5. Having cross-shopped the new BMW 328i/335i against my 2004 9-3SS Aero SAAB want _want_ to compete with BMW but does not. The pricing realities are not in the same ballpark. SAABs list for $5K-$10K less than their competitors, and sell for even less with normal discounting (not to mention year end sales). BMW’s, particularly the 335i, are selling for close to MSRP. You get what you pay for. The build quality and materials in the 3 Series is superior to either the current 9-3 or 9-5, and the same can be said of the interior build on the A4 and A6 vis-a-vis the 9-3 and 9-5, respectively. I would like to see SAAB realistically compete with those marques but at this time they are at least a step behind, but are priced accordingly. This leaves SAAB in a hole where yes, they are not traditionally cross-shopped against the Accord and Camry, but those they are cross-shopped against tend to win with people who have the extra money to spend and desire a true luxury feel with their sportiness. The rejuvenation of Cadillac is proof that GM can revive a brand when they choose to throw the necessary resources at it. We’ll have to see if they are really serious about SAAB competing with Audi, BMW and MB.

  6. I am a little confused as to what the question here is exactly. Are we asking “against which brands should saab try to compete with, in the future” or are we asking “with which brands do they currently compete with in the market, right now”?

    It seems that many people are answering as to which brands saab should try to, in the future, compete with.

    Even so, whether anyone likes it or not, MB (and BMW probably) do in fact take away potential saab customers, right now, regardless or whether or not saab is even trying to compete with those brands.

    I am not sure why exactly this even needs to be defined. Okay, once we all agree that saab should compete with, for example, VW, what then? They should design cars very similar to VWs in size, price, power, quality, etc… except make them a little better in every way? Also, create an image that appeals to what is perceived as the typical VW customer. In this way, they will steal away VW customers.

    Maybe it is completely absurd, but I believe that a company should make a product from a blank slate. Create what they believe is an outstanding product without (too much) regard to what else is out there. If it truly is outstanding, then they will create their own market niche with a dedicated consumer base. I can’t imagine that this strategy would be any less reliable, in regards to being profitable, than trying to mimic the offerings of other manufacturers.

  7. Erek, I liken this problem to the one of trying to market popular music. Bands that fit into a well-known niche can easily be played on certain radio stations – the audience that listens is well known and what they like is well known. Advertisers understand the audience and are comfortable paying money to those stations. Bands that defy being pigeon-holed as being a certain type of music tend to not get played on the radio because those that make money off of radio have no idea who actually likes this music and who is listening so advertising is a gamble.

    This in a way is SAAB’s delimma. SAAB is like a band that has created an entirely new genre of music that no one can figure out who to sell it to, how to market it or what to compare it with. I understand the desire of GM to have SAAB be their Euro counterpart to BMW, MB and Audi but in order to do so they will have to significantly raise the level of interior refinement and as a result pricing. I think this can be done without diluting the “SAAB-ness” of the cars, but do they price themselves out of reach of current SAAB buyers by doing this? If you try to compete with Accords and Camrys you are immediately losing the demographic that goes car shopping with the attitude “I want something more upscale this time”.

    I think it’s simple. My 2004 9-3SS Aero is a pretty decent car but really feels worn after 35K miles. SAAB needs to spend another $1K-$2K on interior materials and refinement, and fix the gaping technology holes (bluetooth, iPod integration, choice of fully integrated XM/Sirius) that is becoming commonplace in the marketplace. More than anything the redesigns of the 9-3 and 9-5 need to hit the marketplace with unimpeachable reliability and quality so that they don’t repeat the mistakes of the 2003 9-3 that really handicapped the product in the market even up to today.

  8. jc_atl’s last comment reminded me of something. At the dinner at the media event I mentioned lack of Bluetooth to a Swedish SAAB product manager. He said that Bluetooth is tricky because of the difference between Bluetooth in different phones. I then tried to get him to clarify and he explained that though there is a Bluetooth specification each phone seems to vary and deviate from it quite a bit. So from phone to phone the Bluetooth might be implimented differently. We then started talking about OnStar and he was telling me about how he tried the new digital OnStar for the first time very recently (I believe he lives and works in Sweden and they don’t have OnStar over there). He got turn by turn directions for somewhere he was going over the OnStar system. An American SAAB manager told me that OnStar oftentimes gets better phone reception (when used as a cell phone) than most cell phones. Oftentimes you can make an OnStar telephone call where your own cell phone won’t get reception.

  9. Bluetooth really isn’t that tricky. As someone that works with a major computer manufacturer, I can tell you that the Bluetooth software can vary a little, but the hardware should be 99.8% compatible. I think that’s an excuse, quite frankly. Let’s put it another way: other OEMs have it figured out well enough to offer it, why not Saab? They can’t find smart engineers? It makes little sense to even say that it’s ‘tricky’.

    As far as OnStar is concerned, this is a no brainer. The reason that OnStar calls are better in fringe areas than a handheld phone are two fold: 1. The OnStar antenna is positioned for good reception, while your cellular phone is inside the car, with the inherent attenuation of the steel body around it. 2. The OnStar system has the potential for better sensitivity because it’s not limited to a 2″ x 3″ x .5″ shell like your average flip phone.

  10. I would concur on the bluetooth excuse – the list of auto manufacturers who have had a high degree of support for the technology for at least the past 3 years is long. I have 3 different GSM phones and 4 different bluetooth headphones, dongles, etc and all work together well enough to be functional. It may be difficult to get it right but other manufacturers have seen it as a high enough priority (safety benefit/hands free?) to expend the resources necessary to implement a bluetooth solution that is functional and upgradeable to keep up with standards.

    OnStar to me is redundant. Having to pay OnStar for my navigation functionality is frankly like paying the mob for protection money when Lexus and Acura offer excellent navigation integration without the need for a paid subscription. If navigation were a must-have for me I would consider avoiding a SAAB for this very reason – it’s not a matter of money but a matter of principle.

  11. jc_atl: The OnStar navigation is separate from the in car navigation system. If you had the in car nav system, you wouldn’t need to call OnStar to get the turn by turn directions (which is like calling your friend and asking for directions over the phone).

    Onstar also has better reception because the transcever (sp?) is not limited to the power output restraints like a cell phone. Cell phones have to conserver power from the battery and they have to limit the radiation or whatever it is that is being emitted from the phone that next to your head.

    Regarding who SAAB’s direct competitors are, at this point, it doesn’t really matter right now. They first need to build a product that meets very basic standards. Standards that even some Korean cars are meeting lately. Sub-$15 to $20K cars are put together better, have better stereos, more technology, and better reliability than SAAB. No, they don’t drive as nicely but that’s why they are cheaper.

    SAAB is a very mixed bag right now. I liken it to a box of variety pack oatmeal. It comes with a few of every flavor, but you don’t like all of them. The ones you don’t like being the rattling interior and quality issues, etc. You like all the other flavors enough that you’re willing to buy the box anyways. SAAB needs to fix the bad flavors because other manufacturers already have.

    When these basic issues are fixed, then it can focus more on who the competition is.

  12. 1. i think it’s refreshing that the saab cachet comes without the “smarminess” of brands that cater to being status symbols for the never-ending, “gauche” segment. pfft;

    2. as for performance, design, quality and prestige, saab will continue to grow, given no more rebadging follies; and

    3. therefore, its maturation as a premium (european) brand seems quite natural, as are the “targets” in that group. saturation of that market, however, depends on how well it can execute value and distinctiveness.

  13. Brian, on SAAB USA’s site if I go to build a 2007 9-3SS, if I want navigation it requires that I also purchase the $695 OnStar unit regardless of whether I want it or not. I assume this is due to the integration of the GPS functionality but still it makes the navigation unit almost a $3000 option where $700 is for something I don’t want. On top of that I don’t even get bluetooth but am forced to use OnStar’s overpriced minutes or, I assume, switch to Verizon if I want hands-free calling capabilities without adding an aftermarket unit. OnStar is extorting buyers both at purchase time and for phone minutes, IMHO.

  14. Brian: You’re right about the power of the transceiver OnStar vs. handheld phone, but there’s one twist: the FCC limits ALL mobile devices operating on those frequencies to a specific transmit and receive power and unity gain antennae. That is, the power is limited by law for ALL devices, not just those by your head. Therefore, it’s the sensitivity that makes all the difference in the end.

  15. As I see it, this is more of a debate of here-and-now vs. the future.

    Here-and-now: Saab competes very well with VW, Acura, Mazda, Atoyot, and similar American marques (Buick, Lincoln, Mercury). With good reasons too: the Asians just don’t have any passion in the design (“toasters”) and the Americans are either too “dull”, for a way older crowd, or lack mpg/performance.

    Future: I think in the next 10 years, we will see Saab competing against BMW, Audi, MB and leading her sister, Caddy (atleast in Europe). I believe, though sometimes it’s a roller-coaster, that GM plans on “revitalizing” Saab, once it’s money woes are a little more controlled.

    I like to think of Saab as a late 80’s/early 90’s version of BMW and Audi. Anyone remember where they were then? granted I was born in 85 and lived in the country for 10 years, but I remember them being niche themselves until mid-late 90’s here in US

  16. I just bought my first Saab (a 9-3 2.0t) after driving a Camry for 6 years. I definitely wanted a step up and did not consider the Saab to be competing against the Camry. I shopped it agains an Audi A4 and Lexus IS 250 AWD. I did consider a hybrid Camry but was disappointed when I drove it. If Saab could distinguish itself in the US with flex fuel or hybrid, it could capture tremendous market share.

  17. Sorry to disagree with you guys, but I don’t see Acura and the other Asian brands being competition to Saab.. VW, maybe, but people who buy european stay european, and same goes for the people who buy Asian.

    I think Saab is right on when they defined their marketplace being BMW, Merc, Audi, and Volvo. Saabs are definately appealing to younger new car buyers from families who own BMWs and Audis.. they are looking for an a european alternative that fits the class of luxury but isnt as flashy as BMW and more interesting than Audi.. and Saab is a smart choice. I don’t mind Saab stepping up the price of their vehicles a bit, they used to be more expensive anyways. I don’t think their target market is going to care either, but their interior quality MUST improve, otherwise they’ll always be on the losing side competing with the rest of europe’s luxe brands.

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