Can Saab Be Turned Around?
There are turnarounds of an average degree of difficulty, and then there are turnarounds that might take a couple of years off of your life.
Bringing Saab, the Swedish automaker, back from near-death, is probably in the latter category.
Just a quick recap, for those unfamiliar with the Saab story:
Saab originally made airplanes (and a subsidiary spun off long ago still does), developed a prototype car in 1949, started selling cars in earnest in the Fifties, entered the U.S. market, and developed what could probably be accurately called a small but fanatical following in America. Saabs were quirky, front-wheel drive when almost nothing else was, extremely safe, very economical, and, last, but hardly least, had design that was truly innovative and different-looking.
Saab owners tended to be somewhat offbeat, intellectual individuals – think artists, college professors, industrial designers, architects, engineers, etc. A Saab did not appeal to everyone, and that’s just the way Saab enthusiasts liked it.
In the Eighties, Saab got into financial difficulties. GM came along, bought 50% of the company, saved it, and by 1995, Saab made a profit – their first in seven years at that point. However, there were a great many rumblings from the Saab faithful that the Saab design and engineering ethos was being diluted.
In 2000, GM exercised their option to purchase the remaining 50% of Saab, which effectively made Saab a Swedish subsidiary of the American giant. Sales went up over the next several years, but many of the company’s hardcore fans become disillusioned with what they saw as the homogenization of the brand and its cars, and so decamped for Audi and BMW, among others.
It is interesting to note that most of these former owners will tell you in no uncertain terms that GM “ruined” Saab, but seem oblivious to the fact that Saab would have died in the Eighties had not GM shown up on a white horse to rescue the insolvent company. But, that is merely a sidebar to the company’s current perilous situation.
In 2007, Saab produced 102,915 passenger vehicles, and in 2008, a swooning GM announced that Saab could be shuttered or sold. A buyer (Koenigsegg) was found, but the potential buyer backed out at the last minute of the last hour, and in November, 2009, GM stated that it would close Saab for good unless a buyer was found by the end of the year. In January, 2010, a deal was announced to sell Saab to Spyker, a Dutch manufacturer of supercars. GM itself declared bankruptcy in June 2009.
Unfortunately for Saab, most of the public heard at least one of the statements about Saab shutting down and now believes that Saab is no longer selling cars in the U.S. The small numbers of people that do know that Saab is still alive believe that they may go under soon. The company has very little money for marketing, a tiny dealer population, and all of this is adding up to a niche automaker becoming even more marginalized, with very little prospect of any more capital being available in the future.
Add in the fact that their volume model, the 9-3, a mid-size model, is long in the tooth, and the new-generation of same won’t show up until mid-2012.
Saab sold 32,048 cars globally in all of 2010, and sold only 1,074 cars in the huge U.S. market in December 2010.
So, what to do if you’re in charge of Saab? How do you turn this around?
It’s a great question, and Jan Ake Jonsson, the president of Saab, and Victor Muller, the chairman of both Spyker and Saab, are ready with a response.
The company executives say they have more than enough money to make it through the rebuilding period, provided they spend their cash wisely. The company has slashed costs, and believe they now only need to sell 85,000 units a year worldwide in order to be profitable.
Saab has a new 9-4 crossover coming out, they just launched the large new 9-5 sedan, and they have a small car (rumored to be called the 9-2) on the drawing board. In addition, Muller is eager to tell you that Saab is going to reclaim its “Saab-ness” by embracing innovation and daring design, and he expects many of the Saab enthusiasts that defected to other brands to come back into the fold, where he plans to welcome them with outstretched arms and warm entreaties.
I have interviewed Jan Ake Jonsson several times over the years while Saab was owned by GM in my capacity as an auto journalist and industry analyst (my other life), and once last year at the New York Auto Show after the sale to Spyker. I’m familiar with Mr. Jonsson, and I have always found him to be unfailingly gracious, extremely competent, knowledgeable about the auto industry in general, diplomatic and upbeat about Saab and its various travails. He lives and breathes Saab.
I also interviewed Victor Muller last year at the New York Auto Show, a short time after the acquisition. You can read the interview here, but suffice it to say that Mr. Muller is approaching the task of turning around Saab with almost messianic zeal. He wants that result pretty badly, and there is no doubt in my mind that he intends to completely exhaust himself in pursuit of that outcome. It’s not in the interview, but after the interview, Muller expanded upon a comment that he made in speech he gave to reporters at that Saab press event, in which he remarked that his bedroom in his family’s house in Amsterdam overlooked the Saab dealership next door, which had a glass roof, and therefore allowed unencumbered views of both the cars on the showroom floor and the activity around those cars. He stated, rather wistfully, that he used to go to sleep dreaming about Saabs.
He considers it his destiny to save Saab and restore it to glory.
I don’t know if Muller and Jonsson can pull Saab out of the ditch, because it will be a Herculean task, but if they can’t, I don’t know of anyone else I’d pick to take up the task. These are the sorts of people you want as part of your turnaround efforts, because their zeal is infectious and will get everyone believing in the goal.
AND, they have the business acumen and experience to go along with the desire to make good things happen.
Can they pull off this turnaround? Will they pull off this turnaround? I think they can, but it is going to be a very close thing, and we won’t know the answer for at least 18 more months.
This post was originally published by Cedar Point Consulting.
Brendan Moore is a Principal Consultant with Cedar Point Consulting, a management consulting practice based in the Washington, DC area, where he advises businesses in marketing, sales, front-end operations, and strategy. Cedar Point Consulting can be found at http://www.cedarpointconsulting.com.