More Sobs With Saab

November 28, 2005

From the department of “I’m shocked there’s gambling going on in this establishment” (rent Casablanca if you don’t get the reference), continued losses at its struggling Swedish brand Saab are expected to drag General Motors Corp.’s European operations into the red during the fourth quarter, Reuters reported, citing a source close to the company.

Saab’s passenger-car business has never made money. Analysts, and anyone else with two eyes and their shoes on the correct feet, say the problems stem from poor brand positioning and an uninspiring product range.

Meantime, Saab says its will launch three lines in Europe to augment the 9-3 and 9-5. Europeans will get the Swedish TrailBlazer, a.k.a. the 9-7X sport-utility vehicle, already available in the United States. Alongside it should be a more compact sport-utility vehicle, the 9-4X, which the company expects to launch at the Geneva Motor Show in 2006. Saab is also developing a compact car the size of a VW Golf or Opel Astra. This model, including possible variants, is meant to arrive by 2010 at the latest, according to a report in the Frankfurter Allgemeine Zeitung.

At a time when GM is struggling to cut costs, streamline the company, and make profit, it’s a mystery as to why GM continues to pour money into Saab. The latest attempt in the U.S. to position the hapless brand is an ad campaign that reminds people that Saab was “Born from Jets.” This campaign from Lowe & Partners in New York is dumber than a help line at a computer company on Christmas day. Talk to any one of the legion of GM executives in denial about this brand and they will wax on about how the 9-3 and 9-7X are not just rebadged GM cars, and that their suspension tuning, etc., was carefully done by people named Sven. And that the fact that the Swedes do the final ten percent of engineering on these cars is enough to justify marketing the jet-engine connection to these cars.

GM CEO Rick Wagoner has some tough decisions to make in terms of cutting costs and right-sizing the company. Someone needs to put some smelling salts under his nose and tell him the ship sailed on Saab being a contributor to GM’s profitability way back before Seinfeld was new and on in prime time.

When I criticized the handling of Saab to a senior GM executive recently, including telling him that the new campaign as well as the year-old one they ditched was terrible, he retorted that Saab Cars had never made any money. That goes for before GM bought it and since.

That was a defense? That’s like saying the accused is innocent by virtue of the fact that he committed the crime.

Saab chairman Carl-Peter Forster recently told Reuters that the car company could break even at volumes well below 200,000 units. Last year it made 120,000 cars in Europe and North America.

I don’t dislike Saabs. But I do get tired of seeing GM throw good money after bad. —Jim Burt

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