My 2 cents on the proposed Koenigsegg business plan for Saab
October 26, 2009 in Editorial
I guess I better start this by revisiting the basics of the plan that Dagens Industri claim to have got a copy of.
The 3 phases for Saab:
2010-2011: present phase
- 115.000 cars sold gives break-even financially
- Average price per car: 189.000 SEK
2012-2015: transformation phase
- 80.000 sold cars gives break-even financially
- Average price per car: 208.000 SEK
- New models including a 9-5 Koeningsegg Edition
2016 – : premium phase
- 65.000 sold cars gives break-even financially
- Average price per car: 280.000 SEK
- New models including a New 900
NOTE: A note on the monetary amounts mentioned here.
This comment was from ‘R’ in the original article. ‘R’ is a Saab dealer.
The prices mentioned are ex SAAB and therefore need to be increased by 1.4 plus country taxes to find the retail customer price. Thus the retail prices will be cost ex SAAB plus 55% to 60%
Hopefully that gives you a better idea as to what those figures mean.
I’ll be honest with you….
My first thought after reading this was to wonder if I can afford to be a Saab enthusiast any more. I was hoping to buy my first ever brand new Saab in about four or five years from now but with these plans, it looks like I’ll be a second-hand buyer for the rest of my life.
But as long as they build cars in the Saab tradition, that’s fine. There’ll be enough new buyers out there for them not to need my money. I hope.
Getting beyond my own circumstances, I guess I would say that my own reactions were mixed.
With this deal on the verge of being done, who can’t get excited to finally see some flesh on the bones of what we’ve been reading about the last few months?
GM chose to sell Saab just at the time when they had a bunch of new models about to come online. Realistically speaking, Koenigsegg couldn’t have got a better situation if they’d have scripted it themselves. GM pour the resources in (finally) just when they’re about to give it away.
The move to a more premium sector is exciting, as well. It means even better cars with even better materials – albeit at what will probably be higher prices. I have a feeling the prices won’t need to rise that much on current models, though. What we should really see is a slight price rise with a reduction of the incentives offered for purchase.
Of course, the things one should get most excited about are the cars. A Koenigsegg-Edition Saab 9-5? Woohaa!
And having we all been asking for a new car that really does follow in the very long shadow cast by the Classic Saab 900? Could they really do it?
The snag in this plan for me is the timeframe. I don’t know how 189,000SEK per car (for 2010 and 2011) on a wholesale basis compares with what they’re currently making. I assume it’s a raise.
The plan says that they need to sell 115,000 cars per year in these two years, at that price, in order to break even. Now it was only 2 years ago that Saab sold around 125,000 cars in a year but that was then, this is now (thankyou S.E Hinton). Saab have since sold 93,000 vehicles in 2008 and will likely sell something in the order of 45,000 vehicles in 2009 – if they’re lucky.
Saab will have a new 9-3x, a new 9-5 wagon and combi, and the 9-4x come online in the 2010-11 period. But they won’t all be for sale for the whole period and then there’s that pesky separation from GM issue, and distribution, and marketing, and consumer concern.
Companies don’t just double-plus their sales overnight. I can’t help but feel that breakeven is going to be pretty hard to achieve in this timeframe and that the new owners are going to have to kick some money in to really get this plan moving.
Companies like Hyundai and Subaru have built their recent stellar success on 20 years of continued improvement. There’s no such thing as an overnight sensation in the regular passenger car industry. Not yet, at least.
Some have decried the move upmarket, but I say Saab should go for it. Being average hasn’t exactly helped them. Back in the go-go 1980′s, Saab’s were premium vehicles. They were at the forefront of new technologies, had comparatively luxurious interiors, great driving characteristics and a great looking, four seater convertible.
Yes, they had more plain options available, too, but a move to the premium sector now would be bringing Saab back to a place that they moved into back when things really started to get going for them around the world.
The other element in this is that with low volumes, they really have no choice but to move upmarket in order to charge enough for their cars so they can make some money. Saab will never be a company that makes and sells millions of cars per year. Nor would I want them to be.
I’d love to see Saab return to being smart cars for smart people. Call me snobby if you like, but the fact that I don’t see my car replicated at every set of traffic lights feels good to me.
As I mentioned earlier, you don’t go from being a company with a doubtful existence to a sales renaissance overnight – not without some serious help.
The Koenigsegg name hasn’t been the blessing that we thought it might be. Not yet, at least. In fact, it’s been somewhat of a hindrance due to their perceived inexperience, which has been seized upon by the press and the politicians for some time now.
So in order to kickstart some serious interest in the company, they’re going to need to do something seriously special. Marketing’s one thing, but there are no guarantees there and they can’t go taking a marketing plan to the bank.
Like everything else in the car industry, this will come down to one thing – product.
Koenigsegg want to sell Saabs for more money than what they sell for now. Quite a bit more. What they need is some sort of incredible infusion of product. Something that will get the people buzzing and wanting – really wanting – Saabs again.
Hybrids and electric Saabs are one thing and there’s plenty of talk about them being on the mid-term agenda. They’re going to command higher prices but they’re also going to cost more to produce. The question is – will they produce so much extra demand that the effects will spill over to other models?
I think the Koenigsegg influences in this organisation will more likely revert to type. They make exceptional performance cars for a living and if you want to create some desirability, then there’s nothing like an exceptional performance car.
A Koenigsegg Edition Saab 9-5 will be a good start, but I tend to think there’s something more to this.
Here are two things I’ve heard in the last six months. One from a very credible source and the other from two third party sources.
- Saab’s concept cars in the last 10 years have all been realistic bases for production vehicles. Yes, they were concepts and were futuristic, but they weren’t fantasy.
- I’ve heard from two separate sources who don’t work with Saab but have been talking with people who are connected there, and both have said quite independently of one another and unsolicited from me, that there’s favourable opinion within the organisation for building some sort of production version – limited numbers only – of the Saab Aero-X.
I realise that’s a very big call and I do not know how much credence to give it. I can only pass on what’s come through to me. I do not believe that a production version of the Aero-X would feature the canopy roof, but we all know that Koenigsegg know how to make performance cars happen and that Saab can do engineering as good as anyone when they’re let off the leash.
If Koenigsegg really want to grow the Saab business, to bring about some serious and credible coverage – enough to re-engage clients who can contemplate a more expensive Saab – then they’re going to have to swing for the fences.
A campaign like the Alfa Romeo 8c Competizione would go a long way to raising Saab’s profile. The Alfa has the looks and the sound, but reputedly doesn’t quite have the driving experience to match. If Koenigsegg and Saab could bring about the whole package – remember, it’s about the product – then they’d capture plenty of imaginations.
One thing’s for sure. The next two years are going to be a whirlwind for the people at Saab and the customers trying to figure out when and which Saab to buy.
If this Dagens Industri plan is reliable then we’re definitely in for some interesting times because Saab are going to really have to pull a rabbit out of their hat to get this done.