Saab's Problems Stem from GM's Brand Mismanagement

Here is a quick look at the latest on Saab's attempts to find a buyer and/or become independent from GM:

(From The WSJ):

"GENEVA -- General Motors Corp.'s flagging Saab division will accelerate talks this week with "a number" of potential buyers, the unit's top executive said Monday.

Saab Managing Director Jan Ake Jonsson, in an interview at the Geneva auto show, said Saab is working with Deutsche Bank (DB) and has begun discussions with potential investors from the auto industry and outside it. He declined to name any of Saab's suitors, but said it is possible a deal could be completed by next year...

...Its sales fell to fewer than 100,000 vehicles in 2008, down from a peak of 130,000 in 2006, mainly because it has only had three vehicles in its lineup and GM hasn't updated its main models. The Saab 9-5 sedan has been on the market for 12 years and the 9-3 sedan for seven.

First off, the paragraph above drove me nuts, as it was, well, bloody clueless.

Saab has nearly always had only around 2-3 vehicles in its line-up, and while the model designations 9-3 and 9-5 have been around for some time the cars have been updated several times during the span the author mentioned. In fact, the author mentions last year's launch of the near 9-3 later on in this very same article.

As for 2006, I would hardly refer to the year as a sales peak when so many Saab dealers were closing during that time, and Saab sales in the U.S. have been in decline since 1989.

Regardless, Saab's struggles have nothing to do with its small line-up and everything to do with GM's brand mismanagement, and assembling Saabs from the Opel spare parts bin. Everything you need to know about why Saab is struggling to survive can be found on Saab fan sites, which celebrate the older cars and rarely mention the new ones.

I used to drive an Audi that I purchased from a dealership that also sold Saabs. I can't tell you how many times a fellow customer would tell me about their beloved Saab from the late 80s/early 90s, and how they now drive an Audi because the new cars aren't as good relative to the competition.

I.e. there are quite a few Saab fans left that are just waiting for the company to get its act together.

In any event, I hope that Saab finds a buyer soon, as it would be really sad to see the brand die. If the new 9-3 is any indication, the company definitely has something to offer the automotive marketplace. I just hope that whomever buys the company has something to bring to the table besides a checkbook, in terms of engineering prowess, branding expertise, etc. As I mentioned in a prior article, I would love it if VW took over the brand, and I think Subaru (SBUOF.PK) and maybe even Honda (HMC) would be a good match as well.

In fact, Subaru might even be a better choice than VW because both companies seem similar in terms of being "independent and quirky", and it would give Subaru a more upscale brand that would enable the company to expand the range of customers it sells to. As I think about this more and more I'm starting to lean towards Subaru as a better suitor than VW, as Saab wouldn't have to compete against Audi within the VW product portfolio.

Still, the thought of Saab bringing back the 9-3 Viggen on the same platform as the Audi A4 is a rather intriguing proposition that I would definitely consider purchasing. The last Viggen suffered from excessive torque steer, despite the fact that Saab purposely limited the torque for certain gears in an effort to make the car easier to handle. An updated version with more power and a true sports sedan platform could be just the thing to bring the bring the brand back from the dead.

Basically: I have no problem admitting that I really liked the last Viggen despite its faults, and would probably buy an updated version built with engineering help from Audi or Subaru sight unseen. A Saab that could run with the M3, RS4 or C32 AMG would be ultimate stealth machine.

So, perhaps my wanting Subaru or VW to buy Saab is a touch self-serving.

You can read more here.

Sources:

The Wall Street Journal: "Saab Speeds Up Talks With Suitors" -- John D. Stoll, March 3, 2009

Disclosure: At the time of publishing the author didn't own a position in any of the companies mentioned in this article; the ideas expressed are solely the opinions of the author and shouldn't be viewed as financial or investment advice.

Comments

[dzzkfn56:]

The author fails to mention that before GM bought SAAB it's 2 to 3 car line up was losing millions and had been doing so for years. SAAB's business model was broken long before GM took over...selling 120,000 vehicles in over 60 countries with the highest cost, least efficient labor force in the world. I can't think of any thing that would more ineffecient.

Mar 04 08:12 AM

[john s. gordon:]

basic problem is that the luxury sports sedan market is very crowded. saab in 1961 was a high performance economy car.
> jack

Mar 04 09:14 AM

[optionsgirl:]

Why would Subaru purchase Saab? The author has no clue about Subaru owners, if he thinks Saab is more upscale. Subaru is profitable- even in this market.

Subaru owners have been polled extensively and can purchase more expensive cars, but see no reason to- because Subaru delivers a great vehicle at a fair price. Saab belongs in the trash heap along with most of GM.

Mar 04 09:53 AM

[Fabien Hug:]

Buy a Mustang, they are cool, sexy, cheap and you can mod them to make them better than any Porsche, if you wish.

Mar 04 01:03 PM

[Markham Lee_:]

optionsgirl: the idea isn't that Subaru would buy Saab to have a higher-end car to sell to their current customers, but to have another brand to sell to customers that aren't especially interested in Subaru.

For instance I'm not interested in Subaru but I would be interested in an upgraded version of the 9-3, as I did test drive the current one.

Fabienhug: to each his own, never been a mustang guy. If I guy a Pony car it's going to be the new Camaro - assuming GM survives long enough to produce it.

In any event the overall idea is that Saab has been losing customers since GM took over, and that the brand's fans are more interested in (mostly) in the company's Pre-GM cars than the post GM ones.

In any event GM mismanaged Pontiac into the ground, so it's no wonder that they couldn't do anything with Saab.


-M

Mar 04 03:52 PM

[optionsgirl:]

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Honda
Overall score: 78
Average test score: 78
Reliability: Very Good
Tested vehicles recommended: 95%
Most Hondas and Acuras are very reliable, well-rounded performers. Some new designs don't live up to previous models.
Highs: Crash-test results, handling, ride, powertrains, fuel economy, reliability.
Lows: Road noise.

Subaru
Overall score: 75
Average test score: 78
Reliability: Very Good
Tested vehicles recommended: 100%
Subarus have good ride, handling, and reliability, but standard AWD hurts fuel economy. Newer models are more refined.
Highs: Ride, handling, steering, acceleration, controls, crash-test results.
Lows: Fuel economy.

Toyota
Overall score: 74
Average test score: 74
Reliability: Very Good
Tested vehicles recommended: 89%
Toyota builds a lineup of cars with great reliability across all three of its brands, and most have good overall test scores.
Highs: Quietness, fuel economy, reliability, ride, powertrains, access, acceleration.
Lows: Lack of agility, steering feel.

Mazda
Overall score: 73
Average test score: 76
Reliability: Good
Tested vehicles recommended: 86%
Most Mazdas are fun to drive, with good handling. Reliability has been average or above in the 2008
survey.
Highs: Handling, steering, braking, acceleration, agility, fuel economy.
Lows: Road noise

Mercedes-Benz
Overall score: 72
Average test score: 81
Reliability: Fair
Tested vehicles recommended: 67%
Most models have excellent ride and handling and nice interiors but annoying controls. Reliability has improved.
Highs: Handling, ride, acceleration, fit and finish, quietness.
Lows: Controls, transmissions.

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Copyright © 2005-2009 Consumers Union of U.S., Inc.


On Mar 04 03:52 PM Markham Lee wrote:

> optionsgirl: the idea isn't that Subaru would buy Saab to have a
> higher-end car to sell to their current customers, but to have another
> brand to sell to customers that aren't especially interested in Subaru.
>
>
> For instance I'm not interested in Subaru but I would be interested
> in an upgraded version of the 9-3, as I did test drive the current
> one.
>
> Fabienhug: to each his own, never been a mustang guy. If I guy a
> Pony car it's going to be the new Camaro - assuming GM survives long
> enough to produce it.
>
> In any event the overall idea is that Saab has been losing customers
> since GM took over, and that the brand's fans are more interested
> in (mostly) in the company's Pre-GM cars than the post GM ones.
>
>
> In any event GM mismanaged Pontiac into the ground, so it's no wonder
> that they couldn't do anything with Saab.
>
>
> -M
>

Mar 04 07:15 PM

[Thadeus Tho...:]

More GM "bashing by the ubiquitous "Mr. Lee. Typical one sided farcical article ignoring important details and a lot of circular arguments. Urp....!

Mar 05 08:19 AM