Bailout Watch 36: Elias Votes Nay

Ken Elias
by Ken Elias
bailout watch 36 elias votes nay

Selling eight brands’ worth of vehicles under the “Employee Pricing for Everyone” banner does nothing to reassure jaded “I won’t ever buy domestic” car shoppers that GM isn’t Wal-Mart. Even so, GM makes some great– well very good anyway– rolling stock. But a quick bailout from the Feds won’t fix the cash-burning automaker in time for consumers to discover this fact. It will simply prolong The General’s “we’ll muddle through” mess until the next crisis. What GM’s North American ops really need is a full, head-on crash into the wall of bankruptcy, followed by private DIP (debtor-in-possession) financing. Meanwhile, it’s a real Saab story.

News flash! During the last GM fire sale, I bought a 2007 Saab 9-3 2.0T. The 9-3 offers a great combination of comfort, handling, performance and decent fuel economy. Safety? Top pick of the IIHS. In an era of high gas prices, when every automaker scrambles to make small cars “cool,” GM’s got a darn good one.

Only no one knows about it. Instead, The General is busy trying to convince the public that the electric car of the future is on its way. Wake me up when the Volt arrives. Until then, why bother? What IS the point, especially when it comes to Saab?

GM began its Swedish odyssey in 1990 (with 50 percent ownership). The takeover reached fruition in 2000, with complete ownership. GM’s thinking at the time: Saab would provide the company with a Euro entry lux vehicle for the U.S. market. GM would gain sales by expanding the Saab offerings upwards, fending-off rising competition from both the new Japanese and stalwart Euro lux brands.

Wait. Wasn’t Cadillac supposed to be GM’s upmarket brand? Did GM really need Euro-badged vehicles? Perhaps Saab’s takeover was an admission of the damage already done to Cadillac. Or maybe it was reverse badge snobbery from the Powers that Be. No matter how you look at it, GM never figured out what to do with Saab.

Saab launched its volume leader, the 9-3, in 2003. It had a host of problems, mostly electronic. Vehicle testers/raters like Consumer Reports ranked the 9-3 as “problematic,” giving the brand a black eye. No one really expected a Saab to be as reliable as a Toyota; the car’s quirkiness, Swedish design elements and turbocharged engine offered a trade-off. But for a company (GM) as supposedly committed to vehicle quality to build and sell a modern era car that didn’t work well (to put it mildly), well, the damage was done.

In subsequent model years, the problems were mostly resolved. But Saab’s sales never recovered. They declined from 2003’s peak of 48k units to last year’s 30k last year. Sales in ’08 are set to be much, much worse. It’s been widely reported that GM’s lost money on Saab for all of the years it’s been involved.

During this decline, RenCen decided to expand the Saab lineup on the cheap. It looked to leverage its investment in Fuji Heavy by rebadging a Subaru WRX as a Saab 9-2x. No one was fooled; the small Saabaru never sold more than a few hundred units a month, and the experiment quickly ended. GM also decided Saab needed an SUV on the other end. The General repackaged it’s less-than-stellar Chevy Trailblazer as a Saab 9-7x. Same result. Like anyone really thought this vehicle-– built in Ohio– had any linkage to the brand? Where was the true Euro-flair, the ride, the design? Gone.

To make matters worse, GM launched a new tagline for the brand in the fall of 2005 with a massive (for the brand’s size) media campaign: “Born from Jets.” Ok, like anyone in the USA had any clue that Saab started life as an airplane company? Can anyone name a Swedish jet? Did anyone care? Suffice it to say, as mentioned above, the campaign failed miserably.

Strangely, the Saab 9-3 today could be the right car for times. But GM bungled the handling of the brand from the beginning, and then compounded mistakes. It’s too late to breathe fresh life into this dead brand.

Think of other GM brands where this exact pattern has been repeated. GM’s mistakes with the Saab brand reflect the problems GM faces with consumers across its entire vehicle line-up: poor build quality and mechanics (now mostly resolved), lagging technology, stale designs (much improved today), overlapping vehicles (still an ongoing problem) and weak brand equity (getting worse all the time).

I want GM to make it. I’m an American. But why should the Feds give money to a corporation that’s done such a piss-poor job handling its North American business, such as selling one of its only competitive cars? What makes anyone think GM will do better with a bailout? No, GM needs to crash in North America and then rise from the ashes. It’s the only way.

Ken Elias
Ken Elias

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  • Speedlaw Speedlaw on Sep 13, 2008

    had the classic 900 Turbo. Stout seats, built strong, liked to cruise at 85 mph with the boost gage at zero. Great mileage, hatch a bonus. Occasional Cranky Saab Syndrome. Later a 9-3, 1st gen. The same flavor, in a Opel derived body. Fischer Price interior, great seats. cross shopped the 9-3 before the current car. Loaded, near 3 series price WTF ? but stripped could be had for slightly over 20k and a deal there. I wanted it loaded, but if you are going to pay BMW $ you should probably get the BMW. I never understood the 9-2 or 9-7. Saab had a true unique selling point, the "anti-style" car, both fast and efficient before that became a buzzword. Saab folks were the perfect hybrid customers, hold the smugness

  • Ashy Larry Ashy Larry on Sep 23, 2008
    psarhjinian: It’s an Italian car, not a Swedish one. I’m not sure of the details, but I think the 9000 was mostly a Fiat design that Saab adopted. The 9000 had a column ignition key, unlike either old or new 900. And yes, I’d totally believe that Fiat would put a water pump in the fuel tank. The 9000 platform was the result of a joint development effort by Saab, Fiat, Lancia and Alfa. It wasn't an Italian design adopted by Saab -- Saab actually had a big hand in making it. Saab's mismanagement is a crying shame and is part of the reason Saab is now floundering hopelessly. But what really killed Saab wasn't BMW or Audi or Mercedes or VW or even GM's indifference -- it was the G35/IS250/TL/TSX. Historically, Saab benefitted from the fact that if car shoppers wanted a European style car in the entry level range, they were limited to BMW, Audi, Mercedes (at the high end), Volvo and an occasional Alfa. Each of these car brands, Saab included, had a distinct brand identity that each wore on its sleeve -- BMW as performance driving, Mercedes as ultimate luxury, Audi as German precision, Alfa as Italian Passion, Volvo as cautious Swedish comfort, Saab as Swedish comfort juiced by turbo engines and unique features. When the Japanese carmakers started hitting the entry-level luxury market with cars that came damned close to the Euro competition in performance and luxury terms but also featured impeccable reliability. These cars proved real challnges to the big selling Euro's but in the process crowded out Saab. Saab just fell further and further behind, unable to drum up the resources to adjust to the changing marketplace. In fact, I suspect Saab never even took the Japanese seriously in part because they never understood that the hyper-competitive US market was their largest market, choosing instead to benchmakr their cars against a European market that, while obviously helpful, did not provide the kind of trial-by-fire that the US market provided. Hell, many years ago I spoke to a US Saab product manager who admitted that he had fought for years to get Trollhattan to take the G35 leel cars seriously, only to be ignored. The final nail in the coffin for Saab is the SUV. People who needed to haul stuff bought SUV's, not the 900/9-3/9000/9-5. Wagons may be Euro-popular but they are dead in the water here in the US, and it took Saab 4 years to come up with a wagon version of the 9-3 to try to compete. Saab has a valid reason to exist -- style, utility, unique features, creatiuve technology and quality/durability, coupled with turbo engines. And a litle batsh*t-crazy-uncle-Olaf thrown into the mix with fun experiments like the Viggen. Someone should have done better. But GM had too much baggage of its own to carry to worry about making sure Saab's brand identity was seen through the last 10 years. It's time to euthanize Saab or sell it to someone who gives a crap.
  • ToolGuy "Mr. President, no government agency, no think tank, and no polling firm knows more about the automobile customer than us. We talk to customers every day. As retail automotive dealerships, we are agnostic as to what we sell. Our business is to provide customers with vehicles that meet the needs of their budgets and lifestyles.”• How many lies can you fit into one paragraph?
  • Spamvw Three on the tree, even Generation X would have a hard time stealing one of those.
  • ToolGuy This trend of cyan wheels needs to end NOW.
  • Kwik_Shift Interesting nugget(s) of EV follies.
  • SaulTigh I've said it before and I'll say it again...if you really cared about the environment you'd be encouraging everyone to drive a standard hybrid. Mature and reliable technology that uses less resources yet can still be conveniently driven cross country and use existing infrastructure.These young people have no concept of how far we've come. Cars were dirty, stinking things when I was a kid. They've never been cleaner. You hardly ever see a car smoking out the tail pipe or smell it running rich these days, even the most clapped out 20 year old POS. Hybrids are even cleaner.