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Saab Making Big Plans


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2003 Saab 9-3
(7/22/02)

Has Saab finally found a formula for success? With the upcoming launch of a completely new version of the entry-level 9-3 line, the Swedish automaker insists it will see a big jump in sales that will finally push the long-troubled General Motors subsidiary back into the black.

Along with the 9-3 sedan scheduled to hit the road this autumn, Saab has at least three additional variants set to follow over the next several years. But how to expand beyond the narrow niche of its two primary product lines remains a challenge Saab is struggling to find an answer to.

What’s clear is that a turnaround couldn’t happen too soon for Saab and its U.S. parent. Since 1990, when GM first acquired a 50-percent stake in the automaker—later expanded to a full 100 percent--sales have consistently lagged forecasts. And despite hefty investments, Saab has returned the American giant just one modest profit.

“Without GM owning Saab today, I am absolutely convinced we wouldn’t be sitting here today,” conceded Peter Augustsson, CEO of the Swedish company, during an interview in Stockholm, where TheCarConnection went for its first drive in the new 9-3.

Growing pains

Part of Saab’s growth strategy becomes visible with the first glance of the updated model. Instead of the traditional hatchback, the new 9-3 debuts in sedan form. The move reflects the reality of the entry-luxury passenger car market, Augustsson explains, where sedans account for 60 percent of volume, and hatchbacks are traditionally little more than niche players.

On a global scale, Saab is likely to remain a niche player, but compared with where it has been, the automaker is setting some aggressive growth targets. “We are anticipating at least doubling sales in this (9-3) range in the U.S. and I’d expect a similar increase in the rest of the world,” Saab’s U.S. president, Dan Chasins said.

There may be good reason for that confidence. Saab sales are up 11 percent worldwide this year, and even more in the U.S., despite a decline in the overall entry-luxury segment. Of course it hasn’t hurt to have some hefty incentives—including subsidized leases and zero-percent financing—as momentum builders in the States, which accounts for nearly a third of global volume, Chasins concedes.

But whatever the reason, Saab expects to top 140,000 sales worldwide when the books are closed on 2002, its best performance in some years. And it is now confident it can reach a target of 200,000 by mid-decade.

Variations on a theme

The 9-3 sedan alone won’t be enough, officials acknowledge, but Saab is ready to roll out a variant strategy that will ultimately bring four different versions of the 9-3 platform to market. Approximately a year from now, it expects to add a convertible, with a wagon-like crossover on tap for the 2005 model-year. Executives are unusually tight-lipped when asked about the final spin-off.

One of the concerns observers express is the potential for cannibalization of the larger 9-5 line-up. Augustsson admits that is a possibility, though he also contends that good reviews for the 9-3 could draw potential buyers to Saab showrooms -- potentials who might then choose to upgrade.

Even before GM stepped into the picture, Saab was debating the need to expand its product line-up beyond two basic platforms. A planned 9-7 was scrapped, however, for as Chasins cautioned, it would be difficult to compete in the “rarified air” of the ultra-premium market against the likes of BMW and Mercedes-Benz.

These days, something below the 9-3 seems to be the favored alternative, though as Augustsson stressed there are yet “no firm plans.” Almost certainly, insiders suggested, Saab would make use of an existing GM platform, much as it used the U.S. automaker’s global Epsilon architecture as the starting point for developing the 9-3.

Chasins also hinted that were Saab to move ahead with such a third line, it would very likely go outside to have the vehicle assembled. It wouldn’t have the capacity at the existing Trollhattan plant, nor, Chasins said, would it make economic sense for Saab to build a second assembly line.

Whatever direction is taken, it’s clear the ties between Saab and Cadillac are going to expand, though exactly how far they will grow is unclear. It’s likely that there will be expanded marketing ties between the brands, particularly outside the U.S. There had also been some consideration to using the upcoming Caddy SRX crossover as a basis for Saab. That has been rejected.

Halo vehicles

While it could take a few more years to lock down a profitable business plan for a smaller car, Saab is also looking at several extremely low-volume halo products. They’d likely be closely based on the distinctive and sporty 9X concept first shown at the Frankfurt Motor Show last September, and the quirky hybrid 9-3X debuted in Detroit in January 2002.

“These two cars are showing the long-term design direction we’re taking,” said Augustsson.

Industry observers feel a turnaround at Saab couldn’t happen a moment too soon. GM has invested hundreds of millions of dollars into what was starting to look like a black hole, one analyst suggested. And there were more than a few questioning how much longer GM could or would continue to lend its support.

There’s still more than a bit of skepticism about the Swedish carmaker’s long-term prospects, but should it meet its near-term sales and profit goals, it could go a long way towards winning over its critics.

 
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