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Saturday, January 7, 2012

Who killed Saab Automobile ? brought me to a couple of interesting articles about Saab in Forbes issued in December 2011, short before Christmas. All are analysing Saabs bankruptcy from different angles and one of them is pointing to an in-depth study of what happened.

The first one called What Every Marketer Can Learn From Saab's Crash And Burn is describing lack of positioning and vision of Saab. It is basically repeating an older animadversion to Saabs marketing strategy, which changed after the "Born from jets" campaign starting in October 200, which was too late.

Saab 9-5 Sport Combi 2011

As a long-term car enthusiast I have to disagree on this one. In 2001 we were buying 5 company cars and had to agree on the manufacturer to get good price. Saab was in game, 5 people were excited about it. We were on a test drive on a 9-3 I and it was great. A bit unusual but that was an advantage. The problem was price / performance ratio. Big time. Saab ended second after Volvo (S and V 40) and before Ford (Mondeo) and Honda.

The second one Why Saab couldn't be saved is naming as the main reason lack of money. It's a claim of the wide known thing.

Yes, Saab wasn't profitable and after GM sold it to Spyker there wasn't enough funding to keep it alive until it gets profitable.

The third article Saab Lives On; That Is, Some of Saab's Ideas is focused on the U.S. market and is pointing at Saabs basic idea of four-cylinder turbocharged engines. These cars were not conform with the american thinking about cars at the start of this century, which preferred V6/V8 large volume engines. And also the, in that time economy cars, were not profitable. But after the petrol prices started to rise, the smaller turbocharged engines started to be again interesting for the market, but to be profitable, they had to be styled more distinctive.

Saab 9-3 Independence Edition

Well I cannot speak for Americans. I liked the european models, disliked the 9-2X (Saabaru) and was neutral about 9-7X. But to be honest, even now looking at the modern american cars like f.e. Jeep Compass and simillar, I cannot understand how people can like their interior. To me it looks like it was designed uncles in Siberia which never seen something else than a Lada or Volga.

The most interesting artice of them called Why Saab Had to Die is extracting several points from the mentioned in-depth analysis Who killed Saab Automobile ?. Firstly it says, that to blame GM is too simplistic :
To GM’s credit, it supported Saab despite making losses in almost every year of its 20 year ownership of Saab (with the exception of 1994, 1995 and 2001). But GM-Europe’s configuration as a very high-volume producer of economy to mid range cars sat uncomfortably with Saab’s niche of individualism, technological sophistication and premium positioning.

Well than why GM bought Saab and what was the strategy with it ? From todays point of view it looks like they bought brains, milked them and threw them away.

Maybe I have to shut-up to blame GM, my father was working 15 years for EDS in Vienna at the GM factory for Opel engines as a programmer. He had a long-term job there ...

Saab 9-4X interior
Secondly it says a big truth about production volumes and pricing :

In its final years, Saab produced the same volumes as Porsche, yet was competing with Audi who had not only almost ten times Saab’s volumes but also benefited from well-executed platform-sharing and economies of scale within the Volkswagen Group. In simple terms Saab had the worst of both worlds—Porsche volumes and Audi prices. This was not sustainable.
This is absolutely true. But why was that ? In the GM time maybe lack of focus and strategy for Saab. GM filed for bankruptcy in June 2009 and there were reasons for this. Bad decisions ? Incompetence ? U.S. government helped them to survive.

The third thing is a warning for other small car manufacturers and again about money :
Other smaller premium or niche manufacturers also risk being caught in the unhappy middle between high-volume luxury producers (such as Audi, BMW, Mercedes) that all produce around a million units per annum, and the high-margin/low-volume producers (such as Porsche, Ferrari, Rolls Royce) who recover their costs through high margins. Companies that fall between these camps will find it hard to generate the cash necessary to develop new. 
Well yes, but even if this is true, they survive somehow, whether with help of some big brothers or somehow else.

There is much more in this 40-pages very interesting and eye-opening analysis. You can read or download it in this link [pdf]. A must-read for every car fan.

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