Saab Story

Houston, Texas, June 2007

The Saab brand historically had distinct design elements, good balance of performance and fuel economy, and a cult following for its unique personality.

The issue with Saab is whether General Motors can retain the niche brand's unique "Saabophile" demographic (young well educated entry luxury buyers) while integrating the cars into its very homogeneous automotive culture.

GM is notorious for destroying brand equity through chronic badge engineering.

Long time Saabguys say new models, cross platformed with other General Motors stablemates (Opels, Saturns, Pontiacs, and Chevys), now lack the brand's original character.

Why should buyers pay a significant premium for a rebadged Opel or Chevy?

Saabs small-displacement turbocharged engines, and front wheel drive defined the marque. High performance relative to fuel economy was a defining feature.

Will Saab's diehard cult following buy the new, very redundant, very GM, 9-7X V8-powered SUV?

The brand is currently marketed using reminders of its aviation heritage, which was split off in 1947.

While successful in other parts of the world, in the US, the New England region accounts for 40 percent of Saabs sold.

Despite a recent uptick, and high incentives, Saabs sell at only 40K annually per year in the US, and less than 150,000 worldwide.

Corporate Culture

The company was on the verge of bankruptcy in 1990, when GM began the buy-in.

GM execs insist there are no plans to sell the money losing brand. With the fizzle of Cadillac's BTS in Europe, Saab is GM's only global premium brand.

While execs have promised to retain the car's original character, the evidence of desaabing continues to pile up.

GM laid off 1300 technical personnel at Saab world headquarters in Trolhattan, Sweden.

Consolidation of stateside headquarters to GM offices at Renaissance Center (Detroit) was seen as the final indignity to the brand.

Quality Record

Consumer Reports has one Saab, 9-5, "recommended."

The 2007 JD Power Initial Quality Study awarded 26 stars out of 40, about average.

In the J.D. Power and Associates 2006 Customer Retention Study, Saabs ranked 29 out of 37 makes. Only 33.4% of those surveyed returned to purchase another vehicle.

In my opinion, repeat buyers are the strongest indicator of overall quality.

Several of the company's 1998-2003 cars were implicated as oil sludge prone. Initial corporate response to these issues was inadequate. Turbochargers with lube lines close to hot exhaust manifolds require synthetic lubricant and careful attention to maintenance intervals. These cars had fine-pore oil pickup screens which clogged.

Saab eventually extended engine warranties to eight years for the engines most at risk.

Note that several other manufacturers also had similar problems in the 1998-2003 period. See link at bottom of page.

The 9-3 and 9-5 are still manufactured in Trollhättan, Sweden. But the Saab 9-7X SUV is built in Moraine, Ohio

Saabs have about average depreciation, but share high maintenance and repair costs with other euro luxury vehicles. Insurance costs can be high for the turbocharged engines.

Dealer Network

Here the problem of the franchised dealer model and the lack of investment in support infrastructure shows its face again.

Saab's dealer network consists of 248 locations. Only One-third are exclusive. A second third is paired with GM house brands. Another third are combined with non-GM brands.

US dealers sell an average of about 25 Saabs per month.

This, in my opinion, is not dense enough to support sales, and not voluminous enough to promise prospective dealers profits from new vehicle sales.

Six of these dealerships are in Texas.

Conclusions

This is a badge-engineered GM product now.

The brand's traditional fun-to-drive aspect is preserved, but the unique character is lost. Defenders point out that without the Detroit influence, the brand would be long gone.

Chevy, Saturn, and Caddy are the future of GM. If considering GM, I'd stick with those brands.