The Puzzle That Is Saab

Sales figures for Saab in the United States for 2006 came out recently, and showed an 18% drop in units sold. This surprised no one; Saab has been struggling in the United States for years, and 2006 was no different. However, Saab had a phenomenal year outside the United States, with a global increase in sales of 5.4% and additionally notching an all-time sales record in Europe. In its home country of Sweden, Saab was even better, with a sales increase of 20.5%, most of it driven by the new 9-5 model. Their order bank for 2007 in all their international markets is stuffed to capacity, ensuring an excellent start for the next 12 months.

So why can’t Saab get it going in America?

People in the U.S. are quick to point to several things right away. The Saab 9-5 is dated; almost ancient in automotive terms since it debuted in 1993. And that is derived from a platform jointly designed a long time ago (early 80’s) for Lancia, Alfa Romeo, Fiat, and Saab. You may remember the Alfa 164 and (only) if you’re overseas, the Lancia Thema and the Fiat Croma. So the platform is starting to look and feel a bit elderly. And, of course, the hatchback model is long gone in the U.S. The Saab 9-3 is not too old (four years) but it has also lost the iconic hatchback model that Saab fanatics loved, and is now only available in a sedan, cabriolet and a new wagon version called a Combi. Many parts on both of these cars now come from the huge General Motors parts repository, which doesn’t sit well with a lot of Saab enthusiasts. There was a 9-2 model which was a re-badged Subaru, and although a very good car, it was derided as a “Saabaru”. There is a 9-7 model which is a re-badged Chevrolet SUV, which is not liked by Saab enthusiasts on two counts: the fact that it’s an SUV, and the fact that it is yet another make disguised as a Saab. Many potential buyers also feel the engines in the 9-3 and 9-5 are underpowered compared to other luxury makes. Add in some corporate neglect and a shrinking amount of marketing over the past few years (rectified somewhat in 2006) and you have all the ingredients for the current state of Saab in the U.S.

And the reasons for Saab’s success everywhere else?

Outdated or not, the 9-5 platform is available with much different engines in other places, i.e., in Sweden and most of the rest of the world; the 9-5 BioPower flex-fuel is available. It is the world’s only turbocharged car able to run on bioethanol. Saab sells a lot these cars and the 9-5 BioPower flex-fuel is a big reason that Saab did so well globally in 2006. The big 9-5 sedan and hatchback estate still sell well in Europe, and with the turbocharged 4-cylinder, too. Diesel versions also do very well in these big cars. The standard 9-3 and the cabriolet do well with diesels and gas engines. The new 9-3 Wagon (9-3 Combi in the U.S.) also did well in sales internationally. Although a poor seller and passed over in the U.S., it is considered a desirable car in Europe, in fact, that type of vehicle is associated with a young, active lifestyle in Europe. Think hiking, camping hang-gliding, etc. As a general rule, the typical Saab customer in their international markets is intensely loyal to the brand, and doesn’t cross-shop a lot of other makes. They pretty much want a Saab and nothing else.

General Motors is acutely aware of the huge chasm between Saab’s performance in the United States and the rest of the world, and is doing everything it can to find the right products with the right sales triggers for Saab in the States. They are trying to carve out their piece in sales results from the Audi/BMW/Mercedes/VW/Volvo crowd, but their efforts aren’t paying off so far, and the former core of Saab followers in the U.S. is shrinking as a result of the changes to the lineup they view as negative. Since its not likely Saab under GM will appease the former core, Saab needs to keep trying to get products in front of Americans that they might want to buy, regardless of where those products come from – Opel, Saab (International), Saturn, or any other part of General Motors. But, in my opinion, it’s not a good long-term strategy to make Saabs out of Japanese cars or American SUVs. The future Saab customer, as well as some of the former core customers, is going to come from the ranks of people that are predisposed towards European style and performance, and additionally, want something different than the other European cars all around them. Saabs have always been different, and it’s not a bad strategy to keep letting them be a little different. General Motors cannot afford the same sort of individuality that Saab used to enjoy, but it would be wise for them to give the brand as much differentiation as possible from both a strategy and marketing perspective. And maybe, just maybe, Saab will get new life in the States.

Author: Brendan Moore

Brendan Moore is a Principal Consultant with Cedar Point Consulting , a management consulting practice based in the Washington, DC area. He also manages Autosavant Consulting, a separate practice within Cedar Point Consulting. where he advises businesses connected to the auto industry. Cedar Point Consulting can be found at http://www.cedarpointconsulting.com.

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