By on October 26, 2009

Inspiration? (courtesy:autoevolution.com)

Swedish daily Dagens Industri claims to have their hands on Koenigsegg Group’s secret market-plan for Saab. The one they used to secure a 600 million Euro loan from European Investment Bank. And they are aiming…upmarket! The ultimate goal is, by 2016, to establish a true luxury brand, and by then have such exclusive and expensive cars that an annual sale of 65.000 cars will suffice (by doubling the average prices).

By then the plan promise there will be an all electric 9-3 on market by 2012, and before that there will also have been established hybrid versions of 9-3 and 9-5, a 9-5 Koenigsegg Edition between 2012 and 2015, and a new 900 (900??) by 2016. Oh, and a 600 million Euros will be invested by the owners to secure the plan.

There’s also a nice timeline table:

2010-2011, Current phase:
* Break-even on 115.000 sales annually
* Average price pr car: SEK 189.000,-

2012-2015 Transition phase
* Break Even: 80.000 sales
* Average price: SEK 208.000,-
* New models, amongst others a 9-5 Koenigsegg Edition.

2016 Premium phase
* Break even on 65.000 sales
* Average Price SEK 280.000,-
* New models, amongst others a new 900-model.

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21 Comments on “Saab Going Upmarket?...”


  • avatar
    Lokkii

    Well that will certainly work!

    Their last move upmarket made the success they are today.

    There is a huge and growing market for high end luxury cars particularly in this economy.

    There’s plenty of room for really expensive highbreds along with Tesla and Fiskar…

    /Sarc off.

    Sigh

  • avatar
    Viceroy_Fizzlebottom

    Maybe they should focus on getting their vehicles to actually be worth what they currently charge brand new before trying to move upmarket.

  • avatar
    psarhjinian

    Oh, the Aero-X.

    The car GM trotted out in hopes of distracting people from the fact that they were still making the same old 9-5.

  • avatar
    John Horner

    This sounds like the kind of plan MBAs will love … and which will not work.

    How many successful independent ultra-high-end automakers are there?

    Rolls, Ferrari, Maserati, Lamborghini, Porsche, Jaguar … all have been gobbled up as part of much larger broad line manufacturers.

  • avatar
    Lokkii

    Well, upon reflection – it doesn’t have to work.

    It only has to keep the company alive for 3-4 years so that the executives can draw large salaries…. right?

  • avatar
    Tstag

    Snap! Jaguar have had the same idea. They are planning an upmarket hatchback and sister company Land Rover has the upmarket baby Range Rover on the way. I fear there isn’t the room for SAAB. Someone’s got to go. BMW, Merc, Audi and JLR have big money backing and large ranges. SAAB does not and the new 9-5 is not a good place to start from…

  • avatar
    mpresley

    I really have a soft spot for SAAB, but the last thing the world needs is another lux brand, especially one named SAAB. Maybe they can sell tens of thousands of cars in Europe, but the US is a bust for them. Did the article mention China? That’s probably their only hope. The Chinese will buy anything, right now. And they have no bad history with owning a SAAB.

  • avatar
    Jerome10

    So all you have to do is wish, snap your fingers, and get a hook up from the government?

    Sweet.

    Seriously, what the governments around the world do has become the biggest question as to which company you want to invest in. Forget markets, products, talent, etc. Get a government contract and you are the chosen one to succeed. Don’t get that contract/loan/grant or don’t get purchased by the government and good luck trying to defeat that one….

    You think the US gov is ever gonna let GM fail now? No, they’ll put everyone else out of business. Or health care? Or green energy? Blue Cross & GE, jackpot. Everyone else? Sorry….

  • avatar
    Pch101

    An average sales price increase from 189,000 Swedish kroner to 280,000 kroner wouldn’t be a doubling of price, but an increase of 48%. When you factor in inflation, the effective real increase is less than that. And when you factor in the sale of a few exotics with higher price points that were not part of the corporate lineup until now, the net price increases on the 9-3 and 9-5 models are even less than that.

    The idea makes sense — the alternative is death, because the current price points are not sustainable — but the timing is rushed. Such a plan would probably need ten years to work, not just five, because the cachet value just isn’t there.

    If this results in a 9-3 costing perhaps 20-25% more than it does now, that puts it that much closer to BMW territory. Saab has been a GM-style discounter for quite some time, and that’s a stigma that’s hard to fix.

  • avatar
    DweezilSFV

    PCH101: Saturn went upmarket in only 3 years. Saab should be able to do it in at least 5…..

  • avatar

    OK…youve got turbocharged four,(maybe five cylinder someday?) petrol, ethanol and diesel cars. With AWD and maybe hybrid options. Theyre already at $30-50K. How much more upmarket do they think theyre going to head? The unintelligeable superfulous CRAP that invades most “luxury” car interiors these days is hardly worth the extra $20+K.

    Saab should stay just about where theyre at. Now that theyve been released from the GM dungeon, theyre free to take on much more and different market-share.

  • avatar
    jonotron

    SAAB should really market and engineer their products for bomb-proof reliability in crappy climates, just like the old 900 series was famous for. Perceived quality could be easily increase with a little more care over basic stuff like interior plastics. Having a dash surround that could be bitten through is not really a good thing. I own a 9-3 which has given me no serious problems in nearly 80,000 miles. These are not badly engineered cars, and if the price and quality is right i’ll buy another.

  • avatar
    wsn

    Pch101 :
    October 26th, 2009 at 3:40 pm

    but an increase of 48%. When you factor in inflation

    Is Saab competing with Walmart beef? If not, don’t put inflation in your equation.

    During the past 10 years, a Toyota Camry (or any other mainstream car) actually dropped price, despite becoming larger and better.

    If “inflation” has to be considered, don’t use the general CPI that government publish (that focus on gas and food). Instead, use a “car industry inflation rate.” Again, if you need data, just look at the Camry.

  • avatar
    wsn

    Actually, it’s not a bad move.

    Move up market to be what Jaguar used to be = 1% chance.

    Stay put and compete with FWD Acura and Audi = 0.01% chance.

    Move down market and compete with Camry for reliability = 0% chance.

  • avatar
    jmo

    There is a huge and growing market for high end luxury cars particularly in this economy.

    If it takes 3 years to bring a car to market you need to focus on where the market will be then, not where the market is now. The “all SUVs all the time” with no thought to where oil prices would be in a few years destroyed the big three.

    That being said – in the affluent suburbs of Boston SAAB has always been the sporty alternative to Volvo. A way to show that you’re doing well as a research director at Draper Labs. If we are moving towards a less ostentatious car market, then SAAB could thrive being what it’s always been.

  • avatar
    Pch101

    don’t put inflation in your equation.

    There’s no reason not to. Car prices tend to increase with the rate of inflation. Content may be added, but the prices still increase.

    The expectation for 2010 is average price per unit of SKR 189,000. Add a 2% inflation factor, and that alone gets it to 213,000 SKR by 2016. Make it 3%, and it’s about 226,000 SKR.

    If they hit their targets, a 3% inflation factor accounts for about 40% of the increase. They need to create cachet for the other 60%. The timeframe strikes me as being too ambitious, but the concept makes sense.

    Saab should stay just about where they’re at.

    If they were to do that, they’re dead. They can’t possibly make a profit selling cars at those prices and in those low volumes. They need to either increase the volume in order to amortize their costs across more product, or else they need to sell the same or fewer units for higher prices.

    Since the volume route involves competing with bigger, better companies, the remaining choices are limited and obvious. This is the only possible choice, even if the odds of success are far from high.

  • avatar
    therealtruth

    SAAB should really market and engineer their products for bomb-proof reliability in crappy climates, just like the old 900 series was famous for. Perceived quality could be easily increase with a little more care over basic stuff like interior plastics. Having a dash surround that could be bitten through is not really a good thing. I own a 9-3 which has given me no serious problems in nearly 80,000 miles. These are not badly engineered cars, and if the price and quality is right i’ll buy another.

    Here’s the ‘truth’ from someone that has owned 4 Saabs dating from 1985 to 2006. The Saab 93 (model year 2003 forward) is BY FAR the best Saab ever – quality/performance wise. Now I will admit nothing looked as good as my 1987 Saab SPG, but other than that the new ones blow it away in every way. Those of us that owned purely Swede Saabs INVENTED car forum repair websites. Or darn close. Falling headliners, cracked dash consoles, sunroof failures, CONSTANTLY rebuilding calipers, ball joints/suspension components, trannies needing rebuilt, head gaskets, turbo seals, etc… The list goes on and on… YES, the old Saab 900’s would run forever. And the actually engine was bulletproof. BUT, they’d take you broke in the process. ESPECIALLY if you couldn’t do the work yourself… There’s a reason the old Saab forums are primary dedicated to repair questions, whereas the 2003 forward Saab forums talk about performance upgrades and car detailing. GM did a LOT of good things for Saab. Where they failed was MSRP pricing them along the German sedans, and then offering deep discounts to sell. This KILLS any car review, because they compare cars based on MSRP. NOT real world price. At the price Saabs ‘actually’ sell for, they were/are a compelling option.

    As for what Koeneg. should do? Hmmm… Tough one… GM actually had the right idea, but horrible execution. Although not as unique as the older 900’s, the 93’s still look pretty sharp. Offer a very sporting driving experience, great safety, and excellent fuel economy. Unlike WSN, I think competing with the premium Camry/Accord is where this car could have shined. Ever ‘drive’ a Camry/Accord? Enough said… At $25,000 the 93 would be one of the few sporting options in a classy Euro design. Too bad GM couldn’t figure this out, and MSRP priced them in a league they couldn’t compete.

  • avatar

    Again , the name of the game is to dispel this crazed “german auto myth”. Chase/take market-share from VW/Audi and Volvo esp., but also the dry-road “UDM” & yes even MB. All way over-rated. They all are bigger, no doubt. Better is the question.

    Actually SELL competitive product at close to those numbers will be profitable. Get diesels and hybrids here NOW.

    And for Ksegg??? Theres plenty of Ferrari, Lambo and Maserati tail to chase.

  • avatar
    carsinamerica

    I don’t know that this is a winning strategy for Saab, but what choice do they have? They can’t go downmarket — they’d alienate their last remaining loyalists. They don’t have the capacity, either in manufacturing or distribution, to support the volume figures that would be required to make them profitable.

    Their current strategy as a ‘tween brand doesn’t work, either. Acura does the same thing, without much success, and they have far more resources behind them than does Saab. The company lacks the cachet (and hence, profit margins) of a luxury marque, and has insufficient volume at present levels to survive. This is no small part thanks to the neglect lavished upon it by GM (leave your flagship on the market without a platform update for a decade?!), but it also speaks to more fundamental marketing problems.

    People buy premium cars, in no small measure, because they’re known to be premium cars. “I drive a Mercedes,” still sounds good to lots of ears, even it’s a C300, rather than an SL65 AMG. If Saab isn’t seen to be a luxury player, but costs much more than a Toyondissan, why buy it? To be safe? All modern cars are much safer than their predecessors. To be quirky? Perhaps, but Saabs are no longer quirky, and all the quirky people already have one. There aren’t enough of them.

    So, if they can’t go high-volume and cheap, and they can’t go on being low-volume and in the middle, then they have only two options. One, they stay at their current market position, but magically increase volume. This is unlikely. Or two, they go upmarket, build cars that are more competitive in the compact and executive luxury range, and come up with a better flagship than the 9-5. If they can do that, then they have a chance to acquire some cachet. Quirkiness will still be a trait, but the cars have to be comeptitive enough to make a case on their own merits, at which point individualists might buy them. That only works, though, if there’s brand cachet. Then, maybe, they can support low sales volumes on higher-margin luxury models.

    It might not work. It’s unlikely, even. However, I don’t think that Saab has any other options left. They’ve been in the hole for too long.

  • avatar
    ZekeToronto

    This will make an interesting business school case study some day.

  • avatar

    Two of the biggest problems I see with Saab are:

    * Too many spec levels. If you’ve seen a recent buff car mag’s price list, there are at least 100, and probably closer to 200 Saab models. with small but subtle differences between each other. Saab need to adopt the VW / Toyota model of “packs” of options. This would reduce the cost of manufacture, marketing especially, and reduce consumer confusion.

    * “Premium” / “Prestige” is no longer good enough. The 9-3 and 9-5 are based on the same platforms as GM EU models available for considerably less. The high spec versions of those cars compete directly with the Saab models. Folks know this. Saab has to be more than a different hat for the same body if they’re to be taken seriously. So in some ways, asking more for the same GM body is not going to cut it.

    They’re going to have differentiate themselves considerably from the GM platform they’re based upon. Quirky should rule the roost again.

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