The Death of Saab and What Went Wrong
Our View 7 mins read 24th Jul 2019
But they do have a point. I mean it’s almost pure fact. Eight years ago Saab was declared bankrupt. So can we lay blame for its demise squarely at General Motors’ door?
Not so fast. Now the dust has well and truly settled we can unpick the financial, strategic and marketing oversights (perhaps circumstances would be more appropriate) that wiped Saab off the map.
When GM acquired Saab in 2000 the brand was iconic. Iconic. And yet they seemingly failed to understand what they had and how to leverage it. Saab was the darling of an educated intelligentsia willing to forgive engineering shortcomings and irregular updates because the cars were quirky, eccentric, and perhaps most importantly, not Audis or BMWs.
Marketing people might argue that GM didn’t explain how Saabs were different, what their USP was, how they should be used. Critics say they stood for nothing.
I counter with this: brand values imbued not by a company itself but by its highly influential customers (often characterised as architects, graphic designers and civil rights lawyers) is surely the holy grail for marketers. If you want proof look how much Instagram Influencers are paid today.
That the marketing people at GM failed to perpetuate and expand on the myth of Saab as the thinking person’s car might be partly to blame for the brand’s demise. But there were other straws weighing down on this poor camel’s back.
GM’s failure to track buying trends with the Saab brand is slightly more complex than just not being cool enough. It is underpinned by financial issues (to be covered later) but it is worth pointing out some gaping holes in Saab’s European range during the 2000s. It can be argued whether or not these holes are the cause of its death or a symptom of a disease long since set in. What is not in doubt is that the world had moved towards SUVs in a big way.
BMW introduced the X5 in 1999, the X3 in 2003. Audi brought in the gargantuan Q7 in 2005 and the Q5 in 2008. What were Saab up to? Well, they redesigned the 9-3 in 2003, then facelifted it in 2007. Similar story with the 9-5. OK, GM launched grim SUV monsters like the 9-7x for the North American market but, and perhaps this goes back to the brand oversights, the intelligentsia cult followers weren’t able to look towards Sweden and dream of owning Saab’s quirky take on the burgeoning SUV craze. It didn’t exist. By the time they had got their heads around the opportunity, with the promising 9-4x (above) not yet a year into production, another critical factor got in Saab’s way…
Fear of the Chinese
By 2010 the financial crash had claimed numerous household brands. GM went bankrupt and were forced to eliminate poorly performing companies from their portfolio. Just when Saab were getting close to developing vehicles that might be commercially successful, like the 9-4x and the brand new 9-5, the rug was pulled. Dutch company Spyker bought Saab for a song. Financing followed from around the world and a vital deal took place with a Chinese consortium only for GM, who still supplied engines and components to Saab, to block the move.
So GM are to blame! They were paranoid about IP and losing market position to the Chinese.
Again, not so fast. Two business school professors named Matthias Holweg, of Cambridge Judge Business School, and Nick Oliver, of University of Edinburgh Business School, looked at the Swedish car company’s whole 62-year history and found that the heart of the story is that Saab got stuck in a deadly place between mass-market luxury and high-end prices.
Don’t blame GM, they say:
“To GM’s credit, it supported Saab despite making losses in almost every year of its 20 year ownership of Saab (with the exception of 1994, 1995 and 2001). But GM-Europe’s configuration as a very high-volume producer of economy to mid range cars sat uncomfortably with Saab’s niche of individualism, technological sophistication and premium positioning.”
The basic problem was that the company was too small, never making more than 150,000 cars a year. It couldn’t survive on the prices it was able to command.
“In its final years, Saab produced the same volumes as Porsche, yet was competing with Audi who had not only almost ten times Saab’s volumes but also benefited from well-executed platform-sharing and economies of scale within the Volkswagen Group. In simple terms Saab had the worst of both worlds—Porsche volumes and Audi prices. This was not sustainable.”
So to the opening provocation. Would you have done anything differently? Would you have seen the EV trend coming and manoeuvred Saab to be an eco pioneer? Would you have pushed safety as a key feature? Doubled down on the jet engine heritage story? Devoted more cash to making a classy SUV in the early 2000’s?
Obviously hindsight allows us to toy with these questions. A long chain of events both saved Saab (GM taking over) and killed Saab (also GM taking over) but the timing of the financial crash seems to have been the final nail in the coffin. I firmly believe that if Saab could have somehow just survived they could be ‘doing a Lotus’ right now. To be clear, Lotus haven’t made a profit for 20 years either, but with generous new owners who seem to understand about the value of cult brands they have a great chance.
Saab is a strong brand. In a recent meeting we said that we wanted to be seen as the Saab of Innovation Consultants! And we were only half-joking.
Oh, and there is a small twist to the tale. ‘National Electric Vehicles Sweden’ (NEVS) bought Saab Automobile’s remaining assets following the collapse. Since then, NEVS has tried to revive Saab (at least in spirit), forming a series of partnerships with a range of Chinese and Japanese technology companies. A fully electric saloon based on the 9-3 is now in full production, exclusively targeting the Chinese market. For now at least.