This is a long one. 3000 words. Settle in.
I got a Kindle for Christmas.
The first book I bought was one that was difficult to get in bookshops here in Australia: Bob Lutz’s Car Guys and Beancounters. Bob Lutz, for those who are unfamiliar, was one of GM’s Vice Presidents during much of the time when they owned Saab Automobile. He was responsible for lifting the overall quality in both manufacturing and design and if you consider GM to have had any sort of renaissance over the last 10 years, Mr Lutz is the man you can thank.
Lutz is a controversial figure, which is why GM loved to wheel him out at any big announcements. He was always good for a quote, so the press loved him, too.
I’ve got mixed feelings about Bob Lutz. On the one hand, there’s a lot that he says that makes sense. The opening of this book contrasts his thoughts on quality with those of some of Ford’s beancounters when he was working there in the late 1970’s. Ford had huge problems at the time with camshafts in their four cylinder engines, with many of them failing just after vehicles had passed their 12,000 mile warranty. Lutz investigated, approved the marginal costs needed to make more durable camshafts and was subsequently lambasted by the beancounters, who enjoyed booking profits on the service work associated with the failures. They estimated the improvement in the camshaft quality cost Ford roughly $50million. To the beancounters’ eyes, these customers were a captive market, with no choice other than to replace the failed camshafts (and associated damage from failures). Lutz correctly argued that the customers’ choice would be made when it came time to replace the vehicle, and the choice wouldn’t be another Ford.
That’s the good Bob Lutz. Make the product better for the benefit of both the company and the customer.
The Bob Lutz I don’t like is the one who cancelled nearly all of Saab’s proposed model range in the few years after GM took 100% ownership of Saab. My understanding is that the Saab 9-3, for example, had 5 different body styles in the works when it was being developed. Saab eventually got just 3 of these to market, but even then the SportCombi took three years to arrive (after the sedan). The planned small crossover version was cancelled as it was thought no-one would like the idea of a smaller SUV ……… right.
This article is going to show you more of the bad Lutz. It’s not necessarily intended that way. My intention was simply to share the quotes referring to Saab that appear in his book. As it happens, those quotes don’t paint him in a good light if you’re a Saab fan.
….General Motors embarked on a series of initiatives to overcome both the perception and reality of the growing import threat. Some of these taxed the comprehension of rational minds at the time, such as the creation of Saturn, an all-new auto company, making a new kind of car with a new and more productive relationship with the UAW. Another was a mind-boggilingly bold move into China with, of all brands, Buick. There was a series of alliances with various Japanese brands and – after GM was jilted in its quest for Jaguar – the purchase of the decidedly weird Swedish brand Saab. As we shall see, many of these initiatives were ill-advised and ultimately failed. Some were successful, but not enough.
OK, that’s not so bad, I guess. Some might even take a description of Saab being “weird” as a compliment. I don’t think Bob meant it that way, though.
The comment about Buick being a mind boggler when it comes to entering China is one that’s somewhat typical in this book. It’s a book with many contradictions – he thinks the choice was mind boggling but it turned out to be the right one, yet there’s never any self-deprication at his own lack of understanding. Similarly, very little that afflicted GM in the 30 years before the bankruptcy appears to be GM’s fault in Lutz’s eyes, even if he lists GM’s shortcomings in detail (which he does).
Quote 2 – this is a big one….
A far sorrier tale is that of Saab. This was a “marriage on the rebound” if ever there was one. Irked, feeling diminished, and worried over rival Ford’s successful acquisitions of Land Rover, Range Rover, Jaguar and Aston Martin, GM decided that they, too, needed a premium European brand and set out to buy one. Naturally, in this particular dance hall, all the pretty girls (Mercedes, BMW, Audi, Ferrari) were taken. But what of the lonely, somewhat undernourished wallflower over there, the one called Saab? Thus commenced a journey into misfortune.
Saab had never been a strong or powerful company. An offshoot of Saab aircraft after World War II, the company built small, unusually shaped cars, initially with two-stroke engines (which trailled blue smoke and went “ring-ding-ding” when the driver lifted the foot from the throttle) but later with the European Ford V4 – a lumpy and charmless engine, but the only one that, presumably, would fit in the Saab 900 engine compartment.[Yes, he really wrote that – SW]
The very weirdness of the cars endeared them to those in academia and other intellectuals. Saab ownership was like a badge of non-conformity, of daring individualism. Some of my professors explained their Saab devotion by repeating the fable that the company’s cars were superior because “it’s the only vehicle in the world designed by aircraft engineers.” (Having flown various US military jets in the 1950s and 1960s and experiencing their less than stellar reliability firsthand, I’m not sure how impressive, albeit fictitious, a claim that really was.)
Saab, always hovering at around 100,000 units per year, never could survive without a partner, and thus later, larger and more conventional Saabs shared their basic architecture with a midsize Fiat. Financial breakeven still eluded poor Saab. If you add up all the professors of sociology and political science, all the leftish intellectuals who admired the failed Swedish experiment in 90% tax rates and womb-to-tomb welfare, all the well-to-do who for some reason eschewed Mercedes, BMW, and Audi, you still couldn’t get to 150,000 sales. But GM bought it anyway, first at 50% and then 100! Saab would henceforth use two sizes of GM Europe’s Opel architectures and share systems such as heating and air-conditioning; the resulting better cars and lower cost would make Saab successful at last. (Frankly, I would have steered clear of this charming loser, and I later advocated sale or winddown every chance I got.)
Every effort to expand the appeal of Saab by making it more “mainstream” and less “quirky” ended in failure. Mainstream buyers simply didn’t consider Saab (or had never heard of it and thought it was spelled “sob”) while the intellectual fringe that adored “the unusual” was deeply resentful of what they considered a sellout to mass taste. They didn’t buy, either. The media were also very harsh on the “mainstream” cars, writing scathing pieces on the absence of the old Saab charm and decrying its “normalcy”. (“Saab story,” as the reader can well imagine, was often too tempting a headline to pass up.)
But GM’s worst failing was not in the purchase of Saab, but in the failure to do what is normally done in the acquisition of a smaller competitor: consolidate. Saab continued to operate largely autonomously, with all functions, including design, engineering, and purchasing, soldiering on as though they were still independent. The last Saab 9-3 was supposed to share most major systems with the well-engineered (but stylistically challenged) Opel Vectra. But, in a spirit of “we know better,” almost everything was changed, including the entire wiring and electrical system, as well as the engineering-intensive heating and air-conditioning unit. Since Saab sourced these and others to new suppliers, the economies of scale were lost, and the car became needlessly expensive. The fact that the specific Saab electrical system turned out to be heavily failure-prone didn’t help. This type of “brand character” can only be called wasteful stupidity. As I frequently (and irritatingly, I’m sure) said, “As if a Saab owner is going to crawl under the instrument panel and declare ‘What a ripoff! These are the same wires as in my neighbour’s Opel Vectra!'” Systems like electrical, air-conditioning and window lifts are customer-transparent: if they function well and are dead reliable, they can and should be shared across similar size cars, as they are between Toyota and Lexus. (The state of affairs I found at Saab when I joined GM in 2001 will be described in a later chapter.)
Patronising, dead-set inaccurate, and missing the point.
Saab did have some problems sticking to the GM playbook in those early years after 100% acquisition. The 9-3’s fibre-optic system was indeed quite futuristic and made for a wonderful dashboard that was in some ways future-proofed for the information overload that cars are just starting to take on today. I’ve not heard of mass failures of that electrical system, either, by the way, and I’ve been writing about Saabs for a long time. Maybe they just didn’t cross my desk.
Whilst Saab might have strayed from the playbook, it was the corporate parent that dropped the ball. GM used Saab as a management training facility, cycling their executives through the place on short term assignments to give them experience. If Saab were not sticking to the plan, why didn’t anyone at the Ren Cen know about it? Maybe Bob will get to that later…..
Bob mentions in the same paragraph that a) people wouldn’t care about a lack of individuality when it comes to shared parts, and b) that the customers and the press alike complained about a lack of individuality. He doesn’t seem to understand the disconnect here.
What he’s saying is right in theory. Unseen parts should be able to be shared and money saved. It’s just that GM employed this principle over the whole vehicle, sharing way too much and dumbing too many areas of the vehicle down. They had a clientele ready and waiting, and it was significantly bigger than what Bob touts here. They just never authorised the cars to be up to a standard to fully engage the public the way they should have.
Meanwhile, back in the USA, the pressure was on to find some way to share a platform with Fuji, thereby demonstrating to the world the frequently doubted value of the “alliance strategy”. A modern crossover was to be developed, shared between Pontiac and Subaru. After months of fruitless haggling over features prices and sales volumes, it became abundantly clear that the aspirations of Pontiac, a low-priced brand, were incompatible with the upmarket ambition of Subaru. The program was shelved, mercifully, only to resurface later with Saab as Subaru’s partner. That one bit the dust as well, as the vehicle was deemed insufficiently Saab-like and too investment-intensive. Still, the pressure to “make use of the Subaru alliance” existed, resulting in one of my less good ideas: creating a small Saab, the 9-2, off the Subaru Impreza station wagon, the rear two-thirds of which bore a remarkable resemblance to the large Saab 9-5 wagon. With all-new Saab identity sheet metal, it would be credible, right? Wrong! It was hated even before testing by the media, who called it a “Saabaru” and we managed to offend both the quirky addicted Saab loyalists as well as the hardcore Subaru fans. Sales were dismal; the 9-2 required heavy discounting, and arguably damaged both brands.
Finally, an admission of some fault.
Aside from that, though, this paragraph goes to show how a lot of the decision-making seems to have been made at GM. It wasn’t “let’s make the right car for Saab”. It was “we have to make use of this alliance”. Always the shortcut. Always the path of least resistance, the shallow reasoning (the back looks like the 9-5).
I believe the 9-2x could have actually ended up being a decent Saab. It was, after all, a five-door two-litre turbo with fantastic drivability. That’s a formula most Saab lovers would like the sound of. As problematic as the decision-making process was, however, the execution of the car was even worse.
Given a meagre budget, Saab’s own Peter Dörrich was put in charge of the project but was constrained in the mechanical changes he could make, and the interior guys seemed to be cut out of the equation completely. The Saab 9-2x was a disaster not because it existed, but because the same shortcuts that lead to it’s conception were applied tenfold to its execution.
The 9-2x typifies GM’s attitude towards Saab, something I’ll get to in greater detail further along….
One of the first things Lauckner did was to ascertain the supplier prices for the major components of the then-current Epsilon cars: the Opel/Vauxhall Vectra, the Saab 9-3, the Daewoo Epica, the US Chevrolet Malibu and the Pontiac G6. Jon’s team analysed the costs for all these cars of such “invisible” things as seat frames, fuel tanks and fuel management systems, window lift mechanisms, heating and air-conditioning, brake systems and many more……
…. None of us were prepared for the shock we received when we saw the results: some seat frames cost three times as much as others. Heating and air-conditioning was no different; there were huge divergences in component cost. Lauckner’s assigned purchasing executives immediately went to work, picking the best features and then dangling a huge prize in front of the global supply base: instead of 200,000 parts here, 150,000 parts there, the supplier companies were now asked to bid on as many as one and a half million identical parts.
This is not so Saab specific, but at least 9-3 owners now understand why the radio in their $35,000 Saab 9-3 looked the same as the one in a $15,000 Chevy.
It was during these first few months of 2009 that plans were drawn up to eliminate Saturn, Pontiac, Hummer and Saab. (Buick and GMC were also on the list, but survived when their profitability became better understood. Clearly, though, the future emphasis was to be on Chevrolet and Cadillac.) Personally, I shed nary a tear for Hummer, as the brand, justly or unjustly, had become a lightning rod for the enviro-left and was taxing GM’s credibility as a creator of fuel-efficient vehicles. Saab, a perennial money loser, was a failed son I was glad to see leave home. Again, not a tear from me!
I’m not angered by the separation, but I am angered by the flippancy of an executive who should have been able to do something great with a distinctive brand, but just didn’t care.
As you read the book, there are vague assertions and notions present (like the V4-into-a-900 quote from earlier) that give the impression of Lutz simply not knowing some key things. We’ll get to another example of that in a moment…..
As I stated earlier [I’m not sure where, I’ve quoted everything he’s said about Saab in this article – SW], I liked the Saab cars themselves but not how we were permitting Saab to continue as a money-losing, quasiindependent entity. I would have thoroughly consolidated it into GM Europe and eliminated all of the unique fixed costs associated with the brand [presumably, whilst arguing for it’s winddown as per Bob’s quote above – SW]. In 2006, I was a strong advocate for the brand’s sale to whomever, but the general consensus was that it could be “made profitable”, a perennial hope that never materialised. Love the brand or not (and I do), from a business perspective, GM should never have purchased it. In retrospect, I see not one single scrap of evidence that GM ever benefitted in the least from the ownership of Saab.
This is the money quote, right here. This is the quote that should have Lutz certified.
Firstly you get his non-genuine “love” for the brand he constantly argued for the divestment or closure of, the brand he was glad to see leave home – “Not a tear from me!”
And then there’s the last sentence – I see not one single scrap of evidence that GM ever benefitted in the least from the ownership of Saab.
Saab were GM’s center of excellence for turbocharging, for safety systems, they implemented the XWD system – the world’s best on introduction and a system conceived at Saab – into GM’s global FWD portfolio. GM cars the world over are better cars today because of the technology, expertise and commitment of Saab engineers. Next time you see a SAHR-inspired headrest, or a 5-star rated GM vehicle, or one with a turbocharger, consider which part within GM adapted and implemented that technology into the GM family of vehicles. And all of that’s just for starters. There’s so much more I could talk about here.
This quote just goes to show exactly how off-base Bob Lutz, and quite possibly the entire GM executive team, were when it came to matters concerning Saab. “Not one single scrap of evidence”
You know what I think? I think this is symptomatic of a condition that haunts Saab to this very day.
GM quite simply put Saab in the too-hard basket. The margins, even if Saab became profitable, were too small for them to ever care about developing this brand. They absented themselves in the earliest days of their ownership and when they finally started to take notice of Saab, it was just too left-field for their rigidly six-sigma mindset.
Today, that means that even though GM would be capable of protecting their interests in a deal with a Saab buyer, they won’t. They’ve shut up shop and by their own public statements, it’s not opening again, regardless of who knocks on the door. We’ll wait and see if that’s true.
Bob Lutz’s book is a good read. As I said at the top, there’s a lot in there that I found to be insightful and educational. It’s well worth reading.
It’s just a shame that it confirms what we all thought with regard to Saab. GM simply didn’t have a clue in the beginning, and by the time they got one they were both too destitute to be able to do something, and too indifferent to anything other than quick profits to care.