Saab Going Upmarket?
October 26th, 2009 11:44 AM Share
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).
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.
Published October 26th, 2009 11:37 AM
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4 of 21 comments
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.
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.
This will make an interesting business school case study some day.
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.