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The Undeniable Strengths of Saab

The alleged Mark Twain saying “The reports of my death have been greatly exaggerated” comes to mind vis-à-vis the future of Saab AB, the division of General Motors that has been cited by the corporation’s board member Jerry York—before he was named to the board, mind you—for extinction.

The alleged Mark Twain saying “The reports of my death have been greatly exaggerated” comes to mind vis-à-vis the future of Saab AB, the division of General Motors that has been cited by the corporation’s board member Jerry York—before he was named to the board, mind you—for extinction. To be sure, in ’05, with U.S. sales of 38,343 units (and the U.S. is the company’s biggest market), Saab is outsold by every other GM division, including HUMMER. But there are several reasons why Saab is (or should be) important to GM, which became apparent during a conversation with Jan-ke Jonsson, managing director of Saab Automobile AB. Consider:

  • “Live Green, Go Yellow.” GM has launched its E85 program in the US. The Swedish government is actually pushing the use of ethanol-based fuel in that country. Saab has sold more than 5,000 of its “BioPower” vehicles in Sweden, cars that run either on gasoline or E85. What’s interesting is that Saab engines, which have long been known for being turbocharged (remember: as the ad says, the cars are “Born from jets”), actually perform better with E85. The BioPower 9-5 2.0t model provides 180 bhp when running on E85 as compared with 150 bhp on gasoline. This is a result, Jonsson notes, of the higher octane of E85, which means the ignition timing can be advanced. Saab engineers worked with GM engineers in Brazil, where there are vehicles that run on E100—all ethanol, not cut with 15% gasoline like E85. The Saab engine modifications for E85 included reprogramming the engine management system (for the adjustments of the ignition as well as the fuel-air mixture; it should be noted that the system senses whether the vehicle is using E85 or gasoline, as it can run on both) and deploying more durable valves and valve seats, as well as using ethanol-compatible materials in the fuel system.
  • Safety. As vehicle manufacturers report their various safety ratings, Saab (like its Swedish competitor, Volvo) is fairly synonymous with “safety.” The Saab 9-3, for example, was awarded the Top Safety Pick-Gold Award from the Insurance Institute for Highway Safety in December 2005 for its front, side and rear crash occupant protection. Additionally, the Saab 9-5 and Saab 9-3 hatchback were rated the safest cars in Sweden by Folksam (www.folksam.se), a leading insurance company in Sweden, which biennially analyzes data from actual accidents on Swedish roads. This is evidently a vehicle manufacturer with safety in its core; it’s not something that has to be grafted on through marketing.
  • Eurostyle. GM is working to get more traction in Europe. For example, there is the Europe-only Cadillac BLS being launched (it is based on the Epsilon platform—which is also used by the Saab 9-3). With Saab, it has a bona fide European luxury brand. Jonsson notes, for example, that in the U.K. Saab sales increased 35% in ’05 over ’04.

According to Jonsson, since 2002 there has been a concerted effort to improve the productivity at Saab facilities. “We’ve reduced structural costs by a third,” he says, adding, “that’s hundreds of millions.” He suggests that if the company can get to 150,000 to 200,000 units per year up from the 129,000 that it currently sells, the company will provide “a good return on the business.” “We’ve positioned ourselves to be in excellent shape,” he says, and notes that ’06 looks like it will be “pretty nice” for Saab. Although there have been some people who have been concerned that Saab is becoming less Swedish and more GM-like (e.g., given products including the 9-7, based on the GMT 360 platform (also used for the Chevy Trailblazer) and the 9-2X, which is a modified Subaru), Jonsson says that they’re establishing a Saab Brand Center that will help assure that the designs, engineering and positioning of Saab products are authentic to the brand.—GSV