Impact of Saab Shutdown on Dealers – and on the New 9-5

…including why the new 9-5 won’t see the light of day.

By Chris Haak

12.18.2009

Saab dealerAs we noted earlier today, the deal for GM to sell Saab collapsed during the due dilligence phase.  This means that Saab will be shut down in an orderly manner and operations will end in the near future.  It also means that all 218 of Saab’s US franchises will also close.

GM Europe President Nick Reilly said in a statement, “We regret that we were not able to complete this transaction with Spyker Cars.  We will work closely with the Saab organization to wind down the business in an orderly and responsible manner.”

He also was sure to note that Saab’s closure is neither a bankruptcy nor a forced liquidation process.  Consequently, the company expects Saab to satisfy all of its debts including supplier payments and to wind down production and the distribution channel in an orderly manner while looking after our customers.”

Saab’s sales have slowed to a trickle over the past few months as the brand’s future has been in serious jeopardy.  Just 7,812 new Saabs found owners in the US through the first 11 months of 2009.  The brand’s peak year in the US was 48,181 in 1986, before GM owned a share in the company.  Peak Saab sales during GM’s two decades of ownership occurred in 2003, with 47,914 cars sold.  In November 2009, just 371 units were sold.  That’s just 1.7 cars per dealer, and hardly enough to sustain the high costs of operating a franchise anyway.  So dealers are now stuck with an average of 10 orphaned cars that they will have to sell over the next few months, likely at large discounts.

Nationally, there are about 2,100 Saabs in dealer inventory right now, which equates to a 130-day supply (or about 10 cars per dealer).  The Saab dealer closest to me appears to have already prepared for the inevitable over the past year.  The stand-alone showroom built in 2000 to accomodate a new Saab franchise in 1998 (pictured above) was converted to a Kia showroom this past year, and the Saabs were moved across the street to the Cadillac store.  Although there are a few Saabs interspersed among new Cadillacs, the dealer didn’t even bother to give its Saab franchise the dignity of a permanent sign.  Instead, a vinyl Saab banner is tied to the bottom of the Cadillac sign.  First class all the way.

We’ve already seen many folks clamoring online for GM to salvage the finished-but-not-launched Saab 9-5 sedan and slot it into another brand.  While it would be technically possible to do, the 9-5 has numerous Saab-specific design and interior features that would look out of place anywhere but on a Saab.  You can’t stick a Chevy bowtie (or even a Chevy front clip) on a 9-5 and take the car seriously.  Yes, it’s a huge shame that lots of money and labor went into a 9-5 that will likely never see production, but the Economics 101 principle of “sunk costs” will probably sink the car.  In case your college economics book is a little dusty, the theory of sunk costs basically states that any costs incurred in the past should not influence a decision going forward if that decision is not the best one at the moment.  GM would spend tens of millions of dollars (if not more) to produce and properly launch the 9-5 as another car, it wouldn’t fit into the lineup, and its chance of success is far from a sure thing.

This situation is truly a shame – both for Saab, its fans, its employees, its dealers, and even the stillborn 9-5.  But in the unlikely event that you can manage to get your hands on one of the pre-production 9-5s, you may want to hold onto that one for a few years.  It seems to have the makings of a collector car.

COPYRIGHT Autosavant – All Rights Reserved

Author: Chris Haak

Chris is Autosavant's Managing Editor. He has a lifelong love of everything automotive, having grown up as the son of a car dealer. A married father of two sons, Chris is also in the process of indoctrinating them into the world of cars and trucks.

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10 Comments

  1. I’ll give you 2-1 odds the new 9-5 gets bought by the same Chinese company that bought the old 9-5 technology and is sold alongside it in China.

  2. But the company that should buy it as their big flagship is Renault.

  3. I don’t think GM will sell the new 9-5 with state of the art technology to the Chinese because of intellectual property worries. I believe that they’d rather see the car die than releasing one of their newest platforms into the hands of a competitor like that.

    You never know for sure, though.

  4. They should at least sell a new 9-5 to ME. I salivated over that car in LA. It really is beautiful. With all of the “sunk costs” which have already been spent on development and tooling, it is such a shame that it won’t come to production. Ugh!

  5. Stop feeding GM our tax dollars and watch how quickly they’ll fold. Those Michigan Miscreants may yet get a taste of their own medicine. “Failed negotiations”, indeed. Wouldn’t it be nice if somehow the Swedes could put together a new Saab, based upon their original principals.

  6. I have to agree with Dexter then Renault should had buy at least, the 9-5 for their big flagship, however will it step into Infiniti’s territory? Better then sell it to the Chinese althought they could try the Indians or the Russians (will GAZ be interested?) or even Fiat (could be reworked into an Alfa-Romeo model, I don’t know if be reworked as a Chrysler, I guess I gived some ideas to carfans to play with Photoshop 😉 ).

    A bit risky to redo the 9-5 as a future Buick model for example, but there was a precedent, Ford originally planned to launched as a “luxury compact” companion of the Falcon, the Comet as an Edsel model but it was reworked as a Mercury once they pulled the plug on the Edsel. http://www.61thriftpower.com/edsel.shtml

    Back to how advanced the 9-5 was, I could compare it to some plans for the proposed and cancelled 1962 DeSoto http://auto.howstuffworks.com/1960s-chrysler-concept-cars1.htm
    http://auto.howstuffworks.com/1960s-chrysler-concept-cars.htm

  7. P.s. GM has NOTHING comparable to the new Taurus! Way to go FORD!!!

  8. One can understand the lamentation of the passing of SAAB by those who have owned their product in the past. But “sorrow” and “dismay” for the loss of a company, which as of December 2009 had nary a gas-electric hybrid in the actual production pipeline, is difficult to comprehend.

    2012 is just over a model year away. Every premium automotive manufacturing concern, which is in this industry for the long haul, has a gas-electric hybrid scheduled for 2012 production. Many such as BMW, MB and Porsche already have models in production with more on the way.

    Just look at SAAB’s neighbor just a few miles to the south in Torslanda. Volvo is the leading developer of plug-in electric propulsion and high efficiency diesel technology for Ford. This is precisely the type of technology the Chinese are wanting. What are the Chinese going to do with E-85 IC engines?

    Ironically Valmet Automotive in Finland is getting in on the gas-electric plug-in hybrid “action”. Valmet, a former SAAB subsidiary, which of late performed 9-3 series final assembly, is now going to take up Fisker Karma assembly.

  9. Shark, was Saab once headed by schoolmasters?

  10. No matter how good the new 9-5 may have been, I don’t think it would have done much to revive Saab. It probably would’ve been the Saturn Aura all over again — a competent car that nonetheless went nowhere in a highly competitive and saturated market

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