saab Gets One Last Chance To Restore Its Profitability
By Paul Lienert, Contributor
Date posted: 08-14-2007 EDMUNDS
Last week, in his GM FastLane blog, GM Vice Chairman Bob Lutz confessed that although "in my younger days I was never what you would call a saab enthusiast," he is now a champion for the Swedish brand. "We in senior management are convinced that saab is a jewel in the GM crown, and we're determined to ensure its success," he wrote.
"So while I've read a number of comments on this blog questioning the future of saab, let me say that it belongs in the GM family and we plan on keeping it there," Lutz added.
Such public support from his boss must be appreciated by Steve Shannon, the new boss of saab Automobile USA, but his job, saving saab while keeping the brand's loyalists happy, still won't be easy. This he knows.
The New Guy
When Shannon posted his first column on the GM Fastlane blog in late April, imploring saab boosters to "be patient with me as I learn the ropes around here," the responses, many from longtime owners, got straight to the point. Typical comments: "saab needs to find its future in the past." "Keep the quirkiness that saab owners have come to love and expect, and resist the corporate 'parts bin' mentality." "Help the brand keep some of its unique identity. It goes way beyond the key on the console."
Uh oh. While it appears that a more coherent product strategy for saab is finally emerging after nearly two roller-coaster decades under GM's stewardship, that troublesome word "quirky" still seems to be missing from the corporate vocabulary. Regarding the brand's well-known and much-loved idiosyncrasies, Shannon, a 25-year GM veteran, says, "I was trained that 'quirky' is never to be used."
Instead, the former Buick general manager is taking a more measured approach. With four all-new models in the next three years, Shannon's mantra is: Keep it simple, keep it saab. Future Saabs will share global architectures with other GM products, but the brand will wrap more distinctive sheet metal around the hardware, with more saab design cues inside and out, as well as specifically tailored driving dynamics, more horsepower and a renewed emphasis on safety and the environment.
Time Is Running Out
This latest game plan sounds brilliant — if only saab weren't dangling on the ropes after hemorrhaging cash for all but two of the past 17 years. While GM Chairman Rick Wagoner and Vice Chairman Bob Lutz continue to publicly express their support for the brand, Chief Financial Officer Fritz Henderson is taking a more hard-nosed approach, telling reporters that saab "has to get results."
The implication is that GM is prepared to take some drastic measures if saab's managers are unable to stem the flow of red ink and sell enough vehicles at least to offset the cost of developing new products. Right now, saab sells about 35,000 vehicles a year in the U.S., which is more than the brand moves in Sweden if you can believe it, but it's also about 90,000 units less than Ford-owned Volvo moves in America.
With the first of those new cars still 18 months away from U.S. showrooms, saab's very survival in the interim will require an additional infusion of hundreds of millions of dollars — money GM can ill afford as it attempts to revitalize its flagging auto operations in North America and Europe.
Wagoner & Co. may be smarter — and saab enthusiasts better served — if they put the brand up for sale, as Ford has done with its Premier Automotive Group. There are enough parallels between Ford's unhappy experience with Jaguar and GM with saab that a spin-off is beginning to make more sense at the General's Detroit headquarters.
Product Blitz Is Coming
In the meantime, saab's new models, including the next-generation 9-5 and 9-3, already are more than halfway through the development pipeline. According to Shannon, the next generation of Saabs will satisfy even the sharpest critics. When the new 9-5 arrives in model-year 2009, enthusiasts will recognize that "the looks, the driving character make it absolutely a saab," even though it will share its basic underbody architecture with the Chevrolet Malibu and the Opel Vectra.
Shannon is particularly keen on the new 9-4X, a five-passenger crossover vehicle designed in Michigan and based on a new midsize architecture that could be shared by four or five other GM brands, including Chevy and Daewoo. Shannon describes the car-based crossover as "the spiritual successor to the station wagon," though he quickly adds that wagons won't fade entirely from saab's future lineup. "We can tune it to ride and handle like a saab," he says when asked how the brand will differentiate the 9-4X from its corporate siblings.
The so-called 9-1 (Shannon says the name has not been finalized) stirs the most passion from saab's U.S. boss. He describes the car, which will share basic mechanicals with the next Opel/Saturn Astra compact, as "a true saab that will be a replacement for the 9-2X." Shannon says the vehicle will have "an interesting body style...an iconic shape with a lot of design flair — kind of the opposite of sensible shoes." He adds: "But it will also have a good dose of utility. This is not just a toy — we don't want to do a generic bread-and-butter car."
Saabaru No More
More good news for saab fans: There may be a performance-oriented 9-1 Aero targeted at the next-generation Subaru Impreza WRX (as opposed to being a near clone of the WRX, as the late 9-2X was) and the Mitsubishi Lancer Evo, with a high-output turbo four-cylinder under the hood and saab's upcoming XWD Cross-Wheel-Drive system which will debut on the 2008 saab 9-3.
As for future powertrains, Shannon says saab "will have more bandwidth in turbocharged engines by then, from 200 horsepower to 300-plus." Advanced "clean" diesels, however, probably won't be seen in U.S.-bound Saabs until the next decade. And while Shannon anticipates that future Saabs might employ a version of the Chevrolet Volt's plug-in hybrid system, "that could be even farther down the road than diesels for us in the U.S."
On the downside, Shannon said there is no plan to resurrect the hallowed Sonett name any time soon on a genuine saab sports car. As for the well-received Aero X concept, "as it stands, it will never see the light of day, but it will serve as a real inspiration" for future saab products, including the new 9-4X and the next 9-3 and 9-5.
Kill or Be Killed
Until the new vehicles begin to trickle into U.S. dealers in early 2009, saab will refocus its marketing on such core virtues as "responsible performance," safety and functionality, with innovative technology as a common thread binding everything together.
Shannon maintains that saab "continues to fill a unique niche in GM's multibrand strategy in the U.S." And while Volvo, lease, Audi and the premium Japanese brands remain its principal competitors, he insists that saab does not — and will not — compete directly with Cadillac. Rather, "people who buy Saabs would never consider another GM product."
But it's by no means clear that Shannon can find enough of those non-GM buyers to keep saab afloat in the States, at least until the new product wave hits these shores. Meanwhile, the question lingers: Will saab loyalists come back to the brand in sufficient numbers, and will they generate enough positive buzz to lure newcomers to the fold?
If Shannon's bosses aren't satisfied with the results, don't be surprised to see GM follow Ford's lead with Jaguar: Pull the plug on the corporate life-support system and spin off saab to the highest bidder.
Print | posted on Friday, August 17, 2007 6:38 PM