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Saab's Broadening Appeal

"We're proud to say that Saab today, in 2005, is engaged in the most aggressive product expansion in its entire history," proclaims Debra Kelly-Ennis, president and COO of Saab Cars U.S.A., of the small Swedish car company that's part of the world's largest automotive company.

"We're proud to say that Saab today, in 2005, is engaged in the most aggressive product expansion in its entire history," proclaims Debra Kelly-Ennis, president and COO of Saab Cars U.S.A., of the small Swedish car company that's part of the world's largest automotive company. The company has been around for 57 years, founded, Kelly-Ennis notes, by 16 aircraft engineers, only two of whom had driver's licenses at the time. And it is small in the context that on a global basis it sells about 130,000 vehicles per year. (About 30% of that is in the U.S.)
At the Geneva Motor Show the company unveiled the Saab 9-3 SportCombi, which is essentially a small station wagon. It is the third 9-3 model, following the '03 9-3 sedan and the '04 9-3 convertible. (It is further evidence of how much can be done with a product architecture, as it is based on GM's global Epsilon underpinnings, which are used for things ranging from the Opel Vectra to the Pontiac G6.) The SportCombi, which resembles the Sport Hatch concept car that Saab campaigned at shows during ‘04, will be built at the production facility in Trollhätten, Sweden, where the 9-3 sedan and the 9-5 are also built. (The 9-3 convertible is built by Magna Steyr in Graz, Austria.)

The SportCombi features a hatch, which goes back to the hatch found on the Saab 95 of 1959. It is, in more conventional parlance, a station wagon, although that term is likely not to be used in promoting it in the U.S., due to the ostensible market toxicity of the label. Because Saab is truly a global player (Kelly-Ennis: "The big draw for GM to Saab is the fact that Saab represents a unique position in the GM product portfolio. Saab is GM's one and only European premium brand. Saab is GM's most recognizable global brand."), it's expected that while the SportCombi will sell on the order of 2,500 to 4,000 units in the U.S. that's only 10 to 15% of what's expected on a global basis (e.g., more than half of the 9-5 wagons, for example, are sold in the U.K.). The vehicle that Kelly-Ennis thinks will resonate quite well with the Saab buyers is the 9-7 SUV, the first-ever SUV in the company's lineup: They've calculated that 40% of Saab U.S. customers have an SUV, too, made by someone else. In addition, some 30% of Saab owners who defect to something else do so in order to get an SUV. So while the 9-3 SportCombi provides a good opportunity for Saab Automobile to move more metal in other parts of the world, and does have the effect of providing more vehicles in U.S. showrooms, it is the 9-7 that should gain even more interest among American consumers.

The 9-7, incidentally, is being produced in the GM Moraine, Ohio, assembly plant. One of the things that Saab has had to grapple with is the issue of currency fluctuations, which has made producing in Sweden only, as it had historically done, problematic. The Saab 9-2X is produced in Japan by Fuji Heavy Industries, which also has its roots in an aircraft company, though one going back to 1917. Says Kelly-Ennis of the diversification of manufacturing locations: "This will put us in a better position to weather the currency exchange issues. It will be a big help to give Saab's financial picture more balance and stability. And this, in turn, will help fund our future product development."

Although Saab's U.S. sales in 2004 were just 38,159, with new products like the SportCombi and the 9-7, there are certainly brighter possibilities.