“Saab: The Importance of an Unimportant Brand”
By: James Sawers
Saab cars have always been known for their quirky ways, their owners, and their design. They have always had a loyal following, usually associated with the latte sipping lefties of society. Saabs are an international icon, an icon on the edge of being out of business. Saab is a Sweedish automaker that has been under the management and control of General Motors since 1990. This column is not about Saab per se as much as it is about the lesson we can learn in business from the acquisition made in 1990.
Saab was once a car company known for innovation, engineering, reliability, quality, and safety. Today many don’t even consider a Saab when thinking of purchasing a car. General Motors had an opportunity and wasted it with this Saab business deal. Once a company always in the black, Saab became debt ridden and in the red constantly. They are a Sweedish icon that was denied a bailout in December 2008. This has left no option but for GM to put the brand up for sale, probably a blessing in disguise.
First we must take a look at Saab pre-GM to understand why they are in the current situation. Saab was a well perceived, quirky brand, and was known to the world as solid, reliable, jet inspired cars. They had turbo engines, diesels, safety, innovation, distinct styling, and a loyal following. In fact it was once reported in 1988 that nearly 66% of Saab buyers bought a Saab again when they purchased a new car. Two-thirds loyalty among the customer base in enviable for all business. Even Wal-Mart can’t touch those numbers, yet today, in 2009 that number is a small 20% for Saab. A 46% drop is not acceptable and needs to be investigated. General Motors let Saab fail, and here is why:
• Poor Quality
• Poor investment into an “investment”
• Generic design
• Lack of pride and soul in the product
• Poor materials, fit and finish, and quality
• Mass produced cars built on true assembly lines
• Arrogance, refusing to listen to the customer
This leads one to believe that General Motors management isn’t capable of managing anything, let alone the world’s second largest automaker and the Saab division.
General Motors management needs to take a lesson from a successful Indian car company, Tata Motor Group. In 2007, Tata finalized a deal with Ford Motor Company and purchased Jaguar. Jaguar was another brand that was hurt dreadfully by poor American management that wanted to produce Jaguar for the masses, as GM did with Saab. Ford hurt Jaguar in many ways and eventually almost to the complete failure of Jaguar. Ring a bell GM? Tata has successfully turned Jaguar around with innovative products, engineering, and design. The root of success for Tata is simply to be a financial backer and in the end successful investor in Jaguar. Tata allowed Jaguar to return to its soul, roots, and heritage.
Tata is a formidable buyer for the likes of Saab. Saab carries a global name, a loyal following, and a true heritage. General Motors ruined Saab. It alienated its customer base, it ruined the products it made, and manufactured Saab on the cheap. It tried to make Saab appeal to the masses and in the end that plan failed miserably. General Motors ruined Saab so much that even Hummer, a division that loses four times more money annually was sold faster to a Chinese firm.
The title of this column mentions the importance of Saab. That importance isn’t in the brand itself, but rather the lessons that can be learned from the debacle of a deal GM made 19 years ago. It’s a lesson in business that can be learned and should be learned from. In the auto world or any business remember the old adage: “If it ain’t broken, don’t fix it” and remember the General Motors and Saab deal that took place over the course of 19 gloomy years.
