The Trouble with GM – part 3

Just last month I heard, directly from SaabUSA, that Saab’s direct competitors were Audi, BMW, Mercedes and Volvo. Here’s an excerpt from the email:

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To me, that was great news. I wrote at the time that this was where I believe Saab should be aiming. They’re a European brand and they should be aiming to win purchasers from other European brands as well as people looking to move up from the various Asian manufacturers.

In order to do that properly, of course, Saab will need some serious investment and the official word from GM is that they’re committed to Saab. I believe it, but I wonder about the level of commitment and what it’ll mean for the Saab we see in the future. I’d like to see a full range from Saab and apart from a truly large sedan it looks like we may get it.

The 9-1 is in the pipeline. The 9-3 and 9-5 are being redeveloped and the 9-4x SUV will also come to replace the 9-7x. With those primary models there’ll also be SportCombi and Convertible variants, and if we’re really lucky, maybe a coupe as well.

But as you can tell from Part 1 and Part 2 of this series, I’m quite nervous about how much GM are willing to really invest in Saab in order to make the kind of Saabs that a passionate enthusiast would expect. And I’m skeptical about the market they say they want Saab to take on.

The latest news to come out today isn’t particularly reassuring.

Winding Road are reporting that Bob Lutz wants to develop Pontiac into a brand that can take on BMW in the American market.

Sources say that Pontiac’s next G6 is set to go rear-wheel drive and will be the first to use the platform. GM’s Resident Car Czar, Bob Lutz, has said in public and private that he’d like to position the Pontiac brand as the company’s American answer to BMW, but with a more expressive and sexy design language. Along with this goal would be to migrate the entire platform to rear-wheel drive.

So we’ve got the new CTS taking on the 3-series, and the rest of Cadillac taking on Mercedes, and now Pontiac taking on BMW too?

What I’d like to know is where exactly do Saab fit in? And are they going to get the resources to do it properly? We already know that Saab USA and Saab Australia are getting no extra funds for marketing in 2007. Hopefully that’s because they’ll get a budget boost to market the 2008 9-3, but let’s not hold our breath.

That Winding Road article also points out another thing that’s going to impinge on wherever-the-heck-it-is that GM plans to market Saab. Confirming some fears that were raised a few months ago, the article details a new small-to-medium GM platform named Alpha. It’ll be RWD and yes, Cadillac will be using it, most likely as a replacement for the BLS in Europe.

Want to tell me now that there’s not an abundance of funds being spent on Caddy for a European market that has embraced it like bird flu?

I keep hearing from GM that they’re keen on Saab. But the phrase “show me the money” never seemed more appropriate.

What I want is a Saab division that’s allowed to design and build Saabs that uphold the best traditions of the original Swedish company. Those traditions lifted the company well and truly into the BMW and Audi class back in the day. And they kicked some butts.

That’s what I want again.

Eggs n Grits made the best point about Cadillac that I’ve heard for a long time. It’s one that almost got me accepting their existence at some expense to the development of Saab.

Cadillac lets Saab be Saab. Saab doesn’t have to build V8 luxo-boats to satisfy the General. That’s Cadillac’s job. Likewise, Caddy doesn’t want to build functional and fundamentally sound vehicles — they want to build the bling mobiles.

Caddy protects Saab from being defiled further by the number-hungry GM HQ.

That does make some sense. And the fact that the BLS is supporting the continued existence of the Saab plant in Trollhattan is another point in Caddy’s favour.

But I still maintain that the best way to maintain Saab’s presence, especially their critical manufacturing presence in Sweden, is to build the Saab brand. And the best way to build the Saab brand is through investment.

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12 Comments

  1. I’m flattered.

    “But I still maintain that the best way to maintain Saab’s presence, especially their critical manufacturing presence in Sweden, is to build the Saab brand. And the best way to build the Saab brand is through investment. ”

    Here, HERE! On the mark.

    I just don’t think that has to come at the expense of Cadillac.

  2. When is Bob Lutz retiring again?

    Personally I think Pontiac successfully competing against BMW is as likely as Cadillac succeeding in Europe. I don’t think anyone will pay $50-60,000 for a Pontiac. Or $35k for a small Pontiac.

    Having said that, I was impressed by the Pontiac G8 concept car GM introduced recently. I can see selling that car at $35-40,000, while a comparable V-8 BMW is at $65,000.

    Based on price alone Pontiac will be competing against Acura, Infiniti, and Volvo.

    And Saab.

  3. Pontiac against BMW is delusional.

    I’ve said this before, I’ll say it again. A Saab made to compete against BMW and MB is not a Saab I want. Let Caddy get after them.

  4. I should add something – I like the fact that GM is getting ambitious. Ambition is good, it drives progress even if the ultimate goal is somewhat unrealistic.

    Cadillac in Europe, and Pontiac-vs.-BMW in the US, will result in better Cadillacs and Pontiacs.

    Better cars = more sales = a healthier GM, which is good for Saab.

    I just wish Bob Lutz’s delusions of grandeur included Saab, that’s all.

    I don’t necessarily want Saab to build a competitor to the 7-series, A8, or S-class. Cadillac can have that territory.

    But I do want the next 9-5 to scare BMW, make Audi cry, and send Volvo into therapy.

    That’s not too much to ask, is it?

  5. It’s obvious that Pontiac will not compete with BMW in the foreseeable future. I think that what Bob Lutz wants is for Pontiac to be the “performance” division (where Buick is the boring/Lexus division and Cadillac is the prestige/MB division).
    GM’s been trying to sell Pontiac as the performance division for a while, however almost anybody can tell that they are just Chevy’s with fake air scoops.
    Having their own platforms could help Pontiac. Then again, it could just scare away the rental-car crowd and not get them any new customers.

  6. What use is SAAB to GM after they’ve used it as a “stepping stone” into Europe? What reason would there be for continued SAAB funding should GM successfully place Pontiac as BMW-fighter in the U.S. and Cadillac as BMW/Merc fighter in Europe?

    The reasoning I was given for the BLS was it was a little sacrifice SAAB had to give-up so that Cadillac could get into Europe and Cadillac would be competing against brands in Europe SAAB would not. Furthermore, more money for Cadillac means more money for GM, which trickles down to more money for SAAB.

    Then how do they explain the fact that the BLS won’t be discontinued once the CTS and bigger Caddys gain a foothold in Europe?

    The next BLS will be on Alpha? Why will there even BE a next-gen BLS? That would directly take sales away from SAAB. A Pontiac competing with 3-series in the U.S. would also take sales away from SAAB.

    So with all these sales taken away, what use is SAAB to GM anymore? Why have SAAB compete with Pontiac and Cadillac for sales? That just seems stupid.

    At the risk of sounding like a pessmist, I think we’re witnessing the beginning of the end of SAAB. Though we’re getting lip service about how much GM loves SAAB and SAAB sales are all “plus” sales to GM, it seems like GM’s future plans don’t include SAAB.

  7. The way I see it SAAB will go one of 2 ways.

    1. They will be used a small volume innovation brand – hatchbacks, bio power etc. (kind of like the old days) and GM will use the good bits (seat design, engine know how, safety stuff) in the rest of their range.

    2. They will get the model range into shape, get SAAB into profit and then sell it.

    Gripen I think the answer to your question is that (for GM) the BLS is a way of soaking up capacity in Trollhattan while trying to develop a 9-3 class car that appeals to Europeans. Sort of what Honda did with Rover in the 80s and 90s. Or maybe they are just trying to wind SAAB drivers up…

  8. Perhaps it is my American perspective but GM is still in serious financial trouble. They need to further differentiate their products to drive sales. Lutz did not say Pontiac would be “competing” against BMW. He said he wanted Pontiac to “offer” BMW dynamics and performance at a much lower price point. I doubt if anyone looking at a SAAB will be cross shopping a RWD Pontiac. For America this is a good strategy. Currently GM has FOUR (Malibu, G6, Lacrosse, Aura,) FWD mid-size sedans while Honda and Toyota have one each. This will allow some differentiation within those cars. A RWD BLS will further differentiate it from the 9-3 in Europe which is a good thing. While I don’t want to see anyone lose their job, plant closings are a way of life in the automotive field. Keeping Trollhattan open, just so we can say SAABs are built in Sweden is a bad business decision. Trollhattan has to be able to make cars that generate profit or they should be shut down. Just like the plants GM is/has closed in the USA. I don’t know how much money GM is investing in SAAB, but it is not like any GM technology is off limits to any brand. They are developing a new platform for the 9-3 and 9-5. They are developing a new smaller crossover. They are apparently developing a 9-1. To me if GM had no interest in SAAB they would have sold it off long ago, not put more money into them. Time will tell obviously, but GM needs to survive before they can thrive.

  9. GM would still put money into SAAB even if they were planning to sell. If they closed the company there would be massive costs. If they put it up for sale when it is making a loss ie: like BMW did with Rover, they get nothing back. Sell a profitable company with a strong model range, then they can cash in.

    GM will make Cadillac a sucess in Europe whatever our opinions are. They will make the product fit market expectations – look at BMW in the 1950s, Lexus or where Audi came from in the 1970s.

    It will be interesting to see how it all turns out in 10 years time.

  10. Frank A:

    “I doubt if anyone looking at a SAAB will be cross shopping a RWD Pontiac.”

    No, but if GM is successful with their plan, someone shopping for a BMW could buy a Pontiac instead of a SAAB, right? The main advantage SAAB has over BMW right now is price, right? So they’re planning to offer cheaper Pontiacs with similar driving dynamics and performance to BMW? What would be the point of buying a SAAB anymore?

  11. Here’s a question, if ‘GM SOLD SAAB’, would the trollhattan factory go with the brand as a package? What exactly happens if ‘Saab gets sold’?

  12. “I don’t necessarily want Saab to build a competitor to the 7-series, A8, or S-class. Cadillac can have that territory.

    But I do want the next 9-5 to scare BMW, make Audi cry, and send Volvo into therapy.”

    Thanks Greg – my thoughts exactly.

    And about the Pontiac vs BMW thing, the latest TV commercial for the Holden Calais pitches it as a drivers car to rival a BMW five series. The Calais is the luxury version of the Commodore, which will be your next Pontiac G8.

    It’s happening.

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