Should a re-born Saab sell in the United States?

For the record, I think the answer to the question is ‘Yes’. But it’s worth exploring nonetheless.

There are plenty of cars that don’t get sold in the United States. Alfa Romeo, Peugeot, most Fiats, Renault, Skoda, just to name a few. Even Volvo have been re-thinking what they offer in the US and plenty of other car companies offer a restricted range, keeping some of their hotter models away from the US.

Why?

First and foremost, the margins are so small in the US market. You really need to have the economies of scale that Saab won’t have (for some time, if at all) to drive the cost down. Local manufacturing helps, too, as it avoids most of the freight costs that overseas manufacturers have to deal with.

The reason why margins are so small, of course, is that the US is such a cutthroat market. I’ve covered it many, many times over the years, but new car prices in the US are very, very low compared to nearly every other market.

Some of you might remember my Turbo X comparative price chart from a few years ago…. (click)

That pretty much sums it up. That was back in 2008 and nothing’s changed from then to now.

US customers are very vocal, very aggressive, demanding the most features and at the absolute lowest price. The majority will unashamedly abandon you if you don’t meet those demands. Unless a product is overwhelmingly compelling, it’s likely that it will win the attention of only the most rusted on Saab fans.

Let’s assume a best case scenario and say that a re-born Saab may be able to manufacture the 9-3 in the near term after takeover, perhaps after modifying some bits and pieces. It’s not going to be a new car by any means and whether or not it would be beneficial to the brand to sell that vehicle in the US would make for an interesting discussion. The 9-3 is still an excellent car, but the automotive press in the US won’t be gentle when it comes to pointing out its ageing platform. Unless any pre-sale modifications are substantial, it’s arguable that an ageing 9-3 being the debut vehicle from a re-born Saab might actually be damaging to what should be a brand aspiring to move upmarket (for reasons discussed earlier in the week).

Another point to consider is the advertising investment required in order to make a dent in the US. It’s one of the world’s noisiest markets, requiring BIG dollars to make an impression. You could easily make a case for a new corporate owner keeping their powder dry for when they’ve got a new car to debut there.

——

Of course, the reason Saab should go back into the US market is because it’s still a place with huge potential. The brand is known there, it has a following there and it will have customers there. Those brands that don’t sell in the US are doing OK, but the US is still widely regarded as one of those essential markets for a successful company.

Over all, I think it will be important for a re-born Saab to return to the US. Any debate on the subject might relate to the timing. Perhaps they should wait for a genuine new vehicle to be ready prior to a re-entry there. They can work on established European markets first and build them as a beachhead prior to marketing in the US. There were plenty of European markets that should have done better for Saab in the last few years and concentrating on those, with their higher margins and cultural similarities might prove to be a better initial strategy.

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31 Comments

  1. I see the U.S. market as a place for lease cars , a fad market , and the automobile as a throw-away when your done . I live in the U.S. and people are so abusive to their cars , and then complain that it costs real money when it’s time for repair , or forbid clean their car . No not all people are like this but so meany are . ” I want the antenna fixed but dont worry about the brakes and tires I dont hear anything grinding ” I just changed the Oil ( 9,000 ) miles ago ! Sad but true we are a diposable bunch on the whole , this is not a blanket statement , some folkes do care for their “stuff” check fluids , change oil and check tire P.S.I. ( Including the spare ) . Once the lease is up I’ll trade it in anyhow. Car companys here are in the business of selling new not repair and it’s infected the culture . Craft is going away fast , people who repair and not replace something thats broken , and once broken it’s a whine fest . Sure the U.S. is a good market , we lease and trade -up . Rant over and for you that do care for your autos good on you , they serve you well .

    1. I’m from the U.S. and your comments seem spot on, especially about leasing. Best way to buy a used car that has had zero maintenance is to buy a lease turn in. Oh well.
      I’m afraid I’ll have to abandon my hopes of buying the next new Saab model. Either it won’t be sold here or it will be so upmarket I’ll have to buy used. πŸ™

    2. Come on now, you are making vast generalizations and stereotyping $300+ million people. Your “not all people are like this but so meany (sic) are” doesn’t cut it. The US is home to some of the most passionate auto enthusiasts out there, minus maybe Italy. Some of the most beautiful cars out there are only produced because Americans have the passion to buy them.

      For example, would the Fiat X1/9 and Fiat Spider 2000 have even been made had it not been for the US market?? The same argument exists now for the Alfa Romeo 8C or even the new 4C.

  2. Those Turbo X prices include taxes so they are useless for cost price comparisons between countries. Does the price for the US include state sales tax?

    Exchange rates are another variable. There is a 65% tax on new cars in the Netherlands that goes directly to the government, not to Saab. And the cost of doing business in many European countries is higher than in the US, another reason why European importers have to charge more. You mention the margins on new cars in the US are so small but how much are they compared to other countries? Before taxes?

    What was the cost of producing a Turbo X (or any other Saab)? How much does each importer pay Saab and what is their markup? That is the only way to reliably compare prices.

    Having lived in Europe for half my life and the US the other half, buying cars in the US is so much easier, better and less expensive. And because they are less expensive and essential for getting around this country, they are more seen as an appliance. And there is nothing really wrong with that for the average consumer.

    [quote]US customers are very vocal, very aggressive, demanding the most features and at the absolute lowest price.[/quote]All 300+ million of them? I am not like that.

    1. The prices were gathered from various Saab websites around the world back in 2008, Wulf. Same method for each. State sales taxes are not going to make up for the difference between the US price and many of the others on that list.

      You can regard it as useless if you like but that won’t help the guy in Norway paying three times the price. This is a discussion we’ve had numerous times, I believe.

      All 300 millions of them? Or course not. It’s a generalisation and in general terms, based on 7 or so years or communications with customers all over the world and observing their behaviour, I’m quite comfortable writing it here.

      1. I think that guy in Norway moved to Sweden a few years ago and now drives a 9-5. [big grin] I still grin whenever I tell my friends and family in Norway that I bought my car for half the price.

        What worries me, whenever this topic surfaces, is that I start worrying about who will suffer. What corners will be cut so that US consumers can have a Audi-class vehicle for the price of a Honda? Audi is already cutting corners (engine in a weird spot, so the simplest operations require you to disassemble the whole car, and during winter your clutch pedal might snap in two because the plastic is too brittle), yet my 9-5 cost at least USD 6000 less than what I’d have to fork out for a similarly equipeed A6.

        My wife’s 9000 was bought for a song and has been very easy and cheap to maintain. I see newer vehicles from other brands that are in much worse conditions. I am willing to pay a little bit extra if my future Saab can match our old one.

  3. What would fascinate me is to see how, if Saab indeed comes back to the US market, a retail network would be established. Not unlike the challenge of a Saab Cars (Trollhattan) buyer trying to win back key employees who left since the bankruptcy, MANY US dealers have closed their doors or moved on to other endeavors. In turn, the aggregate Saab talent here is getting absorbed and diluted, and I could imagine it would be hard to woo these dealers and experienced Saab personnel back if they find, in the interim, other compelling occupations, no matter their passion for the brand.

    1. SCNA headquarters is pretty much gone as well, the building in Royal Oak is up for sale. Only a few employees are left. Not too mention the value of the brand or lack thereof. It is going to be difficult to start that up again as well.

      1. If SAAB do return to operations, they would be very wise to place their US headquarters back where it all started for SAAB, and that is somewhere in New England. And hopefully WITHOUT any GM employees. 99% of them never got the whole SAAB brand identity. And that includes the supposed “Great Car Guy” Bob Lutz. He was SAAB’s worst enemy. πŸ™

        The move to Atlanta, GA was nuts. The move to Royal Oak was a GM decision that was equally idiotic.

        There is still a large SAAB customer base in New England (and the entire Northeast US for that matter), and if SAAB can return to the US, I do not think they would have much trouble recapturing those buyers. I for one, would be one of them. πŸ™‚

        1. I don’t think moving to Royal Oak was a GM decision. It would be expensive to move all existing employees out of state and replace the ones that do not want to move.

        2. Atlanta, Royal Oak…all penny pinching. New England, Minnesota, or the Pacific Northwest for a new North American HQ and yes, Saab needs to be back in North America.

          1. I don’t thing a re-born saab “need” to be back n the US. At least not for a while. SAAB “needs” to get the markets right this time. And producing a lot of cars and try to sell them with a loss in not a good business.
            To be in the US is a good sign thou, customers seems to believe that if a car brand is sold in the US it is a better car. But for financial reasons, I think saab needs to stay of the US for a while or get a financial backing that so that they can dump the prices for a while and sell with a loss until they get the volumes up. Spyker tried that, but it took 6 month to long before the US market responded and there for the US market is a part of why the Spyker-Saab failed in my mind

  4. This is why I am so sad to see all the BMW buzz end. With their current dealership network dismantled, I don’t see a way for Saab to return to the US marketplace – not to mention the American shoppers attention.

    However, if BWM or other brand with a US presence buys Saab then I could see a successful return. Start with one model and grow slowly – just like MINI.

  5. If Saab had tried (or doo try) half as much to sell cars in Europe, Asia and Canada as in the US, Saab might just have made it. It’s outright Silly to read salesnumbers for Germany that ought to be a big market. Yeah yeah BMW, MB etc… The french and Italian makes have a good market there.

    Saab Will be back and I doo believe in being present in the US… But Please do Not try and make it over night. And yes maybe it would be wise to wait with a relaunch until the new 9-3 is out.

    Cheers/Tom

  6. Agree with many of the above comments. Having returned to the USA after living in Germany for the last 3 years, I can confirm that cars are indeed cheaper here and come standardly equipped with more kit than their EU counterparts. It’s also correct that taxation on new cars in a lot of European countries is astonishingly high, so direct and accurate comparisons will be difficult to come by– but bottom line, cars do cost less here.

    Saab owners and loyalists will seek out dealers (even hundreds of miles away) to buy new cars, so I don’t think that sales will take -too- much of a drop providing Saab at least has service centers in major cities (former dealers who may want to take a wait-and-see approach to the new management would be an excellent place to start for service locations). I’d also venture that Saab owners take better care of their cars than most other brands– it’s just part of the makeup of Saab folks. The real problem lies in getting new or conquest customers– to grow the brand, you have to grow the customer base. That being said, site the North American office in a traditional Saab power base like New England or the Pacific NW and perhaps try a regional growth and a slow roll-out strategy, similar to what Suzuki and Toyota’s two brands Daihatsu and Scion did when those marques were new to America– an acquaintance of mine had the very first Scion in Portland, Oregon by going to his closest dealer–in Los Angeles, 960 miles away.

    I’ve mentioned this on the SU boards, but as a placeholder, explore the idea of stripping 9-3’s of all non-essential content, limit the options, and sell them at an aggressive price as a safe commuter/ second car/ starter car for young drivers, much like Volvo did in the last years of the venerable 200-series (which were sold side-by-side their 700-series replacements for some 3 years). There were a lot of kids in New England whose first car was the classic 240 “flying brick,” and a new cult of fans was directly born from that. Alternately (and providing these stampings still exist), why not take the classic 900 body and bolt it on to a modified 9-3 frame? The amortization for all of the parts was achieved a long time ago, so this should be a fairly inexpensive car to produce. Retro cars are all the rage– this could be sold as a classic body shape with modern car mechanicals and safety and performance updates. Price it right and the car critics will be intrigued, a new wave of buyers will seek it out, the workers and suppliers in THN will have jobs, Saab 3.0 will have a revenue stream– and it will buy at least 3 years goodwill until the Phoenix is ready for prime time. That’s a lot of winning all the way around. For engines– thank the stars the TTid is GM free, but why not license the B235 mill back from BAIC? It will fit in the engine bays, the kinks were worked out long ago (making it reliable), and it’s easy to repair.

    Just spitballing ideas– but yes, if you want to be perceived as a legitimate car company, you have to have some presence in the USA. Mahindra has been trying to get in here for a while. Even Alfa Romeo sells a few token 4C’s here, and Carlos Gshon has been trying to figure out how to get Renault back into North America (via Nissan) for a while.

    1. Neither the c900 nor ng9-3 are body on frame… reworking a ng9-3 to look like a c900 would be costly. There are a small few who would love the c900 to be put back into production as was or with a few mechanical improvements, but there are many many reasons that won’t happen. I love the c900 (own 2), but I agree with those who say we don’t need to revisit history… but, as a 1975 911 compares to a 2005 911 (different but immediately distinguished as the same car that progressed), so should the future 900/9-3 compare to the c900… imho… that grainy “leaked photo” to me largely embodies that: future that relates to the past, but is still, the future…

      I agree with others that the North American market is all about leasing + cars are widely viewed as disposable. Cars are being built for that purpose now also because it is lucrative + newer Saabs also don’t seem to hold up as well as the c900’s + 9000’s did. Buying used is tougher now. But they’re still great cars… but to the point of leasing, the market is choosing cars like VW + Audi because of what they offer to the new/lease buyer, never mind the ownership costs down the road (VW/Audi are way down the reliability surveys + have some costly maintenance needs, eg the timing belts)… They are nice cars if you ditch them before the first timing belt though! Similarly the popularity of Hyundai/Kia: who cares if they rust out in 5-10 years if you only lease for 4. They are packed full of the features of a high end euro car nowadays + that sells.

      Those of us who do care have to be more discerning than ever before, and end up following brands (like Saab) that struggle somewhat in a broader market that doesn’t hold those values. It’s not cheap to make something with real value!

  7. Saab needs to sell in Sweden first, then Great Britain, and then the US. Everything else comes after that. Just remember each area has a different profile.

  8. Maybe Saab should focus on densly populated states, and set up three importer regions acting independently from each other. According to Wikipedia, that would presumably be California, Florida and a North/East corridor reaching from Illinois to Rhode Island. That is where they have been strongest anyway. Those are also the richer parts, willing to pay more, I would assume.

  9. One reason why cars are generally cheaper in the US is that the overhead is much lower. One head office covers 300 million customers, and logistics are second to none. Dealers also tend to be very big, which lowers per-unit costs.

    I agree that Saab should sell in the US, but I also think that Saab should no longer be governed by what the US market supposedly wants. There’s plenty of space in the market for niche cars that are mainstream overseas (especially upmarket hatches like the Mini and Prius).

    Saab also needs to revisit the way that they sell in the US. They need to establish a large service network in addition to a smaller dealer network. They should consider pushing custom orders rather than off-the-lot sales. That will seem like a recipe for disaster, but it’s the way Porsche runs their business, so it can’t be all bad. It certainly takes some of the emphasis off of the selling price: if you want to pay less, you don’t order the matching centercaps for $2000.

    They also definitely need to fix the parts business. We’ve heard too many stories of Saabs being off the road waiting on parts. That should never happen again, and Saab shouldn’t re-enter the North American market if they don’t have spare parts.

  10. SAAB absolutely needs to be in the US and Canada as well. The fact is that if a brand is not in the US, it is deemed internationally as second rate. This has been the case for the French brands and Fiat/Lancia/Alfa for many years. The Japanese brands owe a lot of their success for being “good enough” and even excelling in the US.

    Your price comparisons have a critical fault, you are neglecting to mention that these prices reflect taxes. Singapore, for example, has huge taxes/tariffs on automobiles and that is reflected in that price. In no shape or form is that money going to the dealership or SAAB.

    No matter what some might like to believe, the North American market drives the automobile world, even with the rise of China. Why else has Fiat pushed back to the US, and Alfa Romeo is soon to return as well.

    States like California have done very well to influence the trends in both styling and emissions… some would argue more so than even Western Europe.

    1. Your price comparisons have a critical fault, you are neglecting to mention that these prices reflect taxes.

      How could that be a mistake? Customers pay these taxes. They influence the price of the car, the differences between which are the entire point of the chart. I’m not trying to illustrate the difference between wholesale prices here. It’s the difference between (retail) prices asked for the car in those respective countries.

      1. Sale price makes a huge difference.

        As my mechanic says “If all cars cost a hundred thousand, people wouldn’t ask me to install cheap aftermarket rotors.”

        Most Americans “premium” customers see cars as something that costs a few hundred a month for 36-48 months and then disappears into the ether.
        That’s always been a problem for Saab, because that type of customer doesn’t care for million kilometer engines, extra thick body stampings, high quality materials, or a bunch of other things that make a Saab a Saab.

        1. Then there are those of us in the US who never lease cars, but instead buy them and if we like them keep them until they wear out or become unreliable. Which means I need a car that can go the distance, be safe, multi-purpose, fun to drive….hmm…no wonder I drive a Saab!

    2. @ Anna. You wrote:
      “The fact is that if a brand is not in the US, it is deemed internationally as second rate. This has been the case for the French brands and Fiat/Lancia/Alfa for many years. The Japanese brands owe a lot of their success for being β€œgood enough” and even excelling in the US.”

      ? What ?
      Ask anyone remotely interested in cars and they would not say Alfa is “second rate”.
      The Japanese have earned a good reputation and success due to the fact that they build high quality cars… Not because of being present in the US.

      Cheers/Tom

  11. I think Saabs should sell in the US when (the re-born) Saab starts to have the correct product portfolio. Until then if it just tries to keep it’s toe in the water with something like the old Saab 9-3SS ‘de-GMed’, it could prove more costly than it’s worth. Re-launch Saab in the US with the 900 (as VM said it would likely be called) and then build upon that with subsequent new models.

    1. That’s magnificent. I still want to get one, one day. In purple, though. Much rarer than orange and nicer looking (to my eye). I actually had access to a purple one a few years ago but didn’t pull the trigger. Didn’t quite have my circumstances right at that time. Someone’s going to get a nice one there, and you must be pretty happy to see a five figure price on it, Mark πŸ™‚

      1. Not that I plan to sell mine any time soon, but it is nice to know that it looks like the value of a well sorted Sonett is going up again, or at least holding good value.

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