What Can This Chronic Loss-Maker Do To Turn Red Into Black?
A year ago, bankrupt General Motors was trying to dump its Swedish premium pretender Saab. By the end of 2009, it looked like curtains as a deal with exotic sports car maker Koenigsegg Group AB crashed and burned. But Dutch entrepreneur Victor Muller made a last minute bid, and the rest is history. Saab really does seem to have risen Phoenix-like from the ashes.
The model line-up, starting with the flagship 9-5 sedan, will be renewed and extended over the next couple of years. But the old problem remains; how does understated Saab differentiate itself from the high-tech German competition of BMW, Audi and Mercedes? With great difficulty; having the ignition keyhole sitting between the driver and passenger isn’t enough.
Saab saviour and new owner Muller, who also owns sports car maker Spyker Cars, has raised the sales target for 2012 to 125,000, (the target was 120,000 a couple of months ago) and reckons that the U.S. share should return to its best ever level of close to 50,000 a year. Muller was addressing journalists at a meeting in London.
Long-term targets are around that level, with 125,000 remaining the goal for 2017.
Saab sales slipped last year to just under 40,000 and should recover to between 50,000 and 55,000 this year, and 100,000 in 2011. U.S. sales dived to under 9,000 in 2009, but should hit 15,000 in 2010. Muller reckons that sales in America should be between 30 and 40 per cent of the global total, so when and if the 125,000 target is made, that should restore U.S. sales to the high reached in 2005/2006 of nearly 50,000.
The sales will include the 9-5, about to reach dealers in Europe and America, the new 9-4X SUV due in 2011, and the redesigned 9-3 in 2012.
Saab is thinking about introducing a new smaller model along the lines of the old two-stroke 9-2, which would compete with the little Audi A1 and the Mini. According to the Swedish daily newspaper Dagens Industri, Saab is talking with BMW about using its engines and transmissions, and possibly BMW’s Mini platform for this small car. BMW might also supply a diesel engine for the 9-4X, the paper said.
Muller is planning a tour of the U.S., culminating in a visit to the Saab owner’s convention late next month in Aurora, Ohio at their July 22/25 meeting to explain his strategy for the U.S.
“It’s a fact that Saab buyers are the most loyal and it should be possible to recapture them. Saab buyers are extremely well educated, they’re internet savvy and read all the media reports. It’s not like trying to find a farmer in Ohio,” he said, perhaps without thinking ahead to his date at the owner’s convention.
“We have lost most of our customers to Audi because Saab could not deliver and has a very narrow product portfolio. But those customers are still there and we can get them back.”
Saab reckons it will have cut its break-even point to 85,000 by 2012, from the previous regime’s 130,000. Muller said Saab will make profits by 2012, but wouldn’t say how much. Old Saab production reached a peak of 137,300 in 2007, but was a consistent loss maker for about 20 years, making money only once.
Saab’s history of hardcore red-ink makes it hard to see why Muller bought the company. The competition is well financed, impressive and established. However, the new 9-5 was designed, built and paid for by GM, while Saab’s traditional appeal in Europe at least, was that it wasn’t brash or German. Maybe those qualities, not forgetting the centrally mounted ignition switch, are all it takes to start snatching sales from the Germans.
Neil Winton – June 14, 2010