A story appeared in Trollhattan’s local paper yesterday stating that NEVS were considering the feasibility of bringing back the Saab 9-3 for sale in petrol-driven form. Within an hour of that story coming out I had several messages asking for my thoughts on the issue. So, here goes.
The first thought that came into my mind was “the cracks are beginning to show”.
I’ve called NEVS’s business plan (or what little we know of it) into question a number of times here on this site, not because I don’t believe they can do it, but simply because it makes no logical sense and I want to understand it. It seems to be a very long term strategy, which is exactly the perspective they must have in the automotive business, but one that simply doesn’t add up.
Now there’s this story about rebuilding the 9-3, which seems to be a very short term solution. That’s strange from a company that was speaking to the Saab faithful gathered in Trollhattan only a few weeks ago, telling them that their focus remains wholly on the electric vehicle market and the potential in China as the EV market expands there.
So why would they change their direction so quickly?
Primarily, to get the wheels of the company moving, I’d say. It costs a lot of money to have that factory sitting idle and they’re going to need to hire staff at some point. Best to do it sooner rather than later, if possible, whilst some experienced hands are still available. Best to try and get some cash inflow and start to rebuild the brand based on a product rather than just a thought.
But it still smells a little funny to me.
You’ve got to take off your Saab enthusiast’s hat here and look at this objectively, from a market point of view. In my opinion, this plan’s going to face a number of very serious challenges. A re-built petrol driven Saab 9-3 would have to be:
- Legal and reputable
- Cheaper than the old model
- Better than the old model
Legal and Reputable
I guess this will be dependent on where they want to sell a ‘new’ Saab 9-3. Right now, the 9-3 that Saab sold prior to bankruptcy would not be eligible for approval in the European Community as it doesn’t meet pedestrian safety regulations that will come into force in February 2013. If they don’t want to sell in Europe, that’s OK. Maybe China doesn’t have such strict approval requirements and they could sell it there, but that’s when you move into the “reputable” part of my argument.
NEVS has secured the use of the Saab brand name and that implies that certain things about the brand are important to them. Safety is an attribute that Saab placed above all others. They made no compromises when developing a new vehicle and if NEVS were willing to make such compromises (and I’m quite sure they don’t want to do that), they’d be making their brand-rebuilding task all the more difficult.
What’s more, safety is no longer the selling point that it used to be. Safety is now considered standard across the industry, so to offer a vehicle with sub-standard safety ratings stands out for all the wrong reasons.
A rebuilt Saab 9-3 would therefore need to be modified in order to improve its pedestrian safety ratings if they want to get EC approval for sale in Europe. The Saab 9-3 (MY2003 onwards) got just one out of four EuroNCAP stars for pedestrian safety, hence Saab’s determination to replace it with a Phoenix-based vehicle in the last quarter of 2012, before the new regs came into play.
I spent much of my last few years at Saabs United trying to teach a bunch of impatient enthusiasts that there are no fingersnap solutions in the car business. Improvements, enhancements and upgrades take time and cost significant money. An item as innocuous as a door handle can be connected to a dozen or more different electrical systems and any change to that component means development of the part and testing of all the components connected to it. (Read my piece from Inside Saab on electrical integration.)
A remodelled front end along with the active safety systems that may be needed to help an ageing Saab 9-3 pass 2013 EC ‘Ped-Pro’ regulations will require significant investment.
And that leads me nicely into the next bit…..
Cheaper than the old model
Everyone wants something for nothing and everybody wanted the Saab 9-3 for less money than what Saab were asking. And that was back in 2011. By the time a rebuilt Saab 9-3 is available in 2013 or 14, the vehicle is going to be lumbered with extra development costs and the higher per-unit costs they’ll pay for asking suppliers for small quantities of parts. There will also be more significant barriers to entry/acceptance in the general marketplace due to the car’s age. It’s going to have to be priced accordingly.
Despite all that, it’ll still have to be…..
Better than the old model
This one might be dependent on where they wish to sell it.
If they skip the EC requirements for pedestrian safety and sell it only in the remaining markets in which it might be eligible (i.e. most likely as a foothold, entry-level vehicle in China), it’s quite possible those markets won’t be all that familiar with Saab. They won’t have so much exposure to the previous model for comparative purposes, nor will they have a motoring press so quick to compare the new model with the old.
Assuming that they want to do this properly, however, they’ll have improvements to make.
I had a chance to drive the Saab 9-3 Griffin with the direct injected 220hp engine and it was fantastic fun. I have no disputes with the car’s merits and the improvements that Saab were already making to the 9-3 in its twilight years. The market, however, did have its disputes and a rebuilt Saab 9-3 would have to be significantly better in terms of handling dynamics, standard equipments and interior materials (to start with) in order to make an impression on two years worth of improved competition.
Remember, too, that a rebuilt Saab 9-3 will most likely have to be re-engineered to take a new engine as GM supply of that DI 2.0T is unlikely. The costs associated with such a task are huge. Then there’s the question of whether or not a new engine has to have comparable specs to the old one. The Saab fans that I’m used to dealing with wouldn’t accept anything less, but then maybe they’re not the target market here.
I won’t say too much on this because it’s self-evident to anyone with an interest in Saab – the trust between the company, its dealers and its customers has been significantly damaged. It’s not beyond repair by any means, but like everything else, it’s going to take massive investment to get sales channels established again. Added to that, you don’t want to try and re-establish a damaged brand with a half-assed effort. You’ve got to do it right, from your vehicles to your network and then your marketing.
Still, they’ve got to make that investment some time. Maybe sooner rather than later is better?
Like everything else that NEVS has said so far, the possibility that they’ll start building the old Saab 9-3 as a petrol driven vehicle once again leaves me scratching my head. It raises more questions than it answers.
The 9-3 was a great car for Saab enthusiasts even just 12 months ago but it’s a very expensive proposition to update it to 2013/4 standards. The fact that NEVS, only a few months into their ownership, are interested in doing such an about-face on their EV-only strategy also makes me wonder about their business plan. Is their EV plan so tenuous that they need to consider this? Has their resolve been shaken? Or is it just opportunistic pondering on their part?
I find it hard to see how this is feasible, given the costs of updating the 9-3 and the potential negative feedback from the industry. I can’t see it selling in big numbers without significant improvement and I can’t see how the cost of those improvements would make it economically viable.
The major brand recognition for Saab is in Europe, yet they’ll have to spend buckets of money to qualify the car to sell there. NEVS’s focus has always been on China and yet the question still remains – why build in Sweden to sell in China? The only way this makes sense is to do a minimal-cost upgrade but if you want to start building Saab as a premium brand in China, selling a lesser car first time around is only going to make brand-building harder when your EV-1 comes around. And don’t forget the opportunity cost of updating the 9-3 as opposed to completing the EV-1 quicker.
Everywhere I turn, I seem to run into a brick wall.
Of course, as always, the solution could be as simple as “We’ve got buckets of cash and we can do this”. I hope so, because it’d be great for Trollhattan and great for Saab if they can. I (still) just can’t see how at this point.