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Wednesday, May 4, 2011

Buying into another Saab story

In my years of automotive enthusiasm, there's been a particular brand that I never understood. Saab isn't small or attractive enough to be considered prestige, nor is it large and common enough to be considered mainstream.

Of course, I'm aware of the Saab 99's historical success in rally racing. I'm also aware of the 99's design success that carried on for decades, even though I am not a fan. And finally, I'm aware of the Saab 900's cult following from diehard turbo Saab enthusiasts, although I'm indifferent.

I can only conclude all this to bad timing. Saab's darkest period under the ownership of GM, a decade of neglect from 1989 to 2010, started when I was only in day-care and didn't end until just last year! All my life, I've only got to witness Saab's steady decline.

Some of you could well argue that I should theoretically share the same impression of Alfa Romeo then, as it has terminated North American sales in 1995, back when I was in the third grade. Well, apples and oranges and passion... and a quid in the Italian swear jar.

But let's bring the focus back to Saab. According to an article by Sam Knight of Financial Times, Albert Muniz, an Associate Professor of Marketing at Chicago's DePaul University, claimed that Saab owners possess a "Snaabery" cultivated from pre-GM Saab ownership, the "Mac-head" equivalent in the automotive world. Saab drivers allegedly flash their lights and tip their hats to other Saab drivers. A Saab driver also stops to help a stranded fellow Saab driver. Muniz further claims that no other group of car enthusiasts despise BMW more (I'd argue that award goes to Prius owners now). And moreover, a psychologist Rudiger Hossiep discovered that Saab drivers have the highest levels of "psychological involvement" with their cars: a claimed 10x that of Volkswagen enthusiasts.

gawker media

Clearly Saabs must be something special and that level of community can only be good for automotive enthusiasm as a whole and I, for one, would want to see that continue. But in light of its current condition, what is Saab now? On paper, the cars are a bit expensive for what it offers, they don't have a young buyer's market, they don't possess an "image," their sporting pedigree has eroded, nor are they especially luxurious or known for their dependability. They were innovators for safety, but safety is no longer an element of competitive edge; it's a modern vehicle requirement. And finally, any of its quirkiness has long gone the moment GM took over.

GM's plan to amputate Saab from their core operations were actually in motion a year before GM's own bankruptcy and restructuring. Then, after Saab spent a year under new Spyker ownership, which even sold the sports car operation to Coventry in efforts to provide Saab with undivided attention, Q1 efforts resulted to a $107Mil loss. Supplier relationship is also critically endangered, as outstanding debt to suppliers resulted to a plant shutdown that lasted for weeks.

This Monday, multiple publications reported that Saab secured a short term convertible loan of 30Mil Euros. Followed closely the day after, China's Huatai motors puts up 150Mil Euros for a significant 30% share of Saab. This can be a good investment for Huatai as their clean diesel project can certainly benefit from Saab's established small displacement turbo engine technology. Most importantly, Saab's international network can also help Huatai plan for global distribution. Otherwise, I doubt Saab's sales in China will be of any particular significance as Saab is an unfamiliar brand with little or no badge equity in the country and I'm afraid Huatai doesn't give a damn.

For all the Saab loyalists out there, it's been a great run for you guys and I'd rather matters didn't have to end this way. Perhaps the only way for Saab to rise from the ashes would be to use the new Chinese capital for aggressive and ambitious product development, a la Lotus's ambitious 5 model project and more recently Jaguar/Land Rover's ridiculous 40 model development plan. Hire a formidable design director, develop a radical chassis and powertrain, and find the best marketing agency conceivable... basically to start from ground zero. As it is with "flight or flee" animal instinct, it is also important for a company to go all-in if it wants to survive. These days, delivering a "good" car is no longer good enough.


  1. Saab just needs to go away. Their chance for a come back is long gone at this point. If they go mainstream they can't compete in price unless they sell their outdated technology which was sold off to the Chinese. If they are after the bread and butter of the entry luxury market they must be out their minds. Competitors like BMW, Mercedes and Lexus have preexisting vehicles that are well established, they have the financing arm, the marketing and are on buyer's first to check out list. Honestly anyone that ends up buying a Saab just wants to be different which unfortunately is not going to be enough to support Saab sales.

    To be competitive a rebadged GM vehicle is not going to cut it. At this point of the game it'll cost far too much and take far too long for them to roll out a vehicle worthy enough.

    The only people that want to keep Saab alive are these fan boys who think about the good old days. I'm sorry they whine about Saab's "death" like the world just clubbed a baby seal. At this point Saab's is just a name (sorry not enough worthy enough to call a brand) and nothing more.

  2. I've always had a huge soft spot for SAAB as a brand, mainly because they do things differently----very differently. They don't have the 'on paper' credentials like other brands do (cue: Alfa Romeo, Audi, BMW, Mercedes, etc) but they have a lot of charm and enthusiasm. They are not the fastest cars, nor are they the most beautiful....nor are they on the cutting edge of design and development---but they offer a niche product which is well defined under their brand, and if you've ever driven a Saab, it is plainly obvious that it DOES feel very different in every way....something I cannot readily say about other brands. I really hope Saab does great under swedish control as it is under now----and here's hoping to a resurrection of the Saab i grew to love as a child.

  3. I heard that Saab owners are likely to own Macs and vice versa. Then I realized that Jerry on "Seinfeld" owned both!

  4. It's hard to put your finger on the matter of charm, but after a year, I know my 9-3 convertible has charm in abundance, so much so that I'm now looking at a 9-3 Combi with 75K miles to replace the VW Golf tdi I recently purchased. The VW is a very good car, better in many mechanical aspects than the Saab. But I don't like the VW. I've developed no fondness for it. It's too hard with a stiff personality that does nothing to encourage relaxed, easy driving. I bought it for its great economy. Its numbers are fantastic.

    There's much more to any car than the numbers it garners on a road test. Saab cars, even the ones produced under GM's stranglehold, dim-witted management, transcend their numbers.