DAVE GUILFORD

Saab's bid for scale, pricing power fell short

Automotive News | December 20, 2011 - 12:48 pm EST

It's sad to see the efforts to rescue Swedish automaker Saab fail. But for anyone watching the attrition of marginal brands in the past few years, it's not surprising.

Going back to General Motors' ownership of the brand, no one was able to puzzle out a way to make Saab viable. Finally a tangle of Chinese investors and GM's desire to protect its technology pushed "this beautiful company," in Chief Executive Victor Muller's words, into bankruptcy and apparent liquidation.

GM tried to solve the Saab riddle by putting Saabs on high-volume platforms. But homogenizing Saab worked better on paper than in practice. The awkward results -- the Subaru-based 9-2 "Saabaru" and the out-of-character 9-7X Saab-badged GM SUV -- pointed to a basic difficulty.

Saab's traditional appeal was to buyers who valued its distinctive Swedish character (invariably described as "quirky"). But that was diluted in the pursuit of scale economies.

More fundamentally, the problem was that Saab was a low-volume brand -- occasionally edging over the 125,000 global sales mark -- that couldn't command true luxury prices.

You can do just fine with low volumes if you can charge Rolls-Royce/Ferrari prices, or even Porsche prices.

If not, then you're in trouble.

Dave Guilford is enterprise editor of Automotive NewsDave Guilford is enterprise editor of Automotive News

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