UPDATE – A bit more background, added below
As you might know, I’m pretty concerned about some of the dealership cuts that Saab have announced in the United States.
I can’t confirm this, but my best educated guess is that this decision would have been made by Saab, not by GM, and it would have been made based on advice by the people in charge at Saab Cars North America, the group who will lead Saab’s distribution and promotion in the US once the deal to transfer Saab over to Koenigsegg Group is finalised.
Saab Cars North America aren’t releasing a list of surviving dealerships, nor is there any concrete information about dealers losing their sales rights but possibly keeping hold of their ability to provide warranty service.
I’ve been trying to build a list of retained dealerships and we’re at just over 100 now, for which I thank all those who’ve made calls and sent emails.
I’ve been doing a little bit of homework on this in the background, trying to understand the rationale behind the decisions that were made. Some of these cuts run pretty deep, in that some old dealerships with strong historical links to Saab have been terminated. Some of these dealerships have small sales bases, but very happy customers who buy again and again from them.
Here’s what I’ve discovered in trying to understand some of these cuts.
A strong dealership base is the #1 priority.
Saab need strong, profitable dealers to take them forward into the future. As you know, there are some regions in the US that have much greater exposure to Saab than others. There’s very few Saab dealers on the western seaboard once you head north of San Francisco, but cross to the other side of the country and you could throw a blanket over 7 or 8 dealerships in eastern Massachusetts.
My count has it at 13 in Pennsylvania, 9 in Ohio, 16 in New York with another 7 over the river in New Jersey, either 11 or 12 in Mass, 5 in Maine and 9 in Connecticut (conditional upon me getting the count right from SaabUSA’s dealer locater). Add to these the dealerships in Rhode Island, New Hampshire, Vermont, Delaware and Maryland and things have got quite populous in that northeastern corner of the country.
Saab’s sales will be under pressure in the coming few years and it’s understandable that there probably won’t be enough to go around for all these dealerships. It’s considered that Saab will benefit from stronger, healthier dealerships and that means reducing the number of them in this densely populated area.
That’s the rationale for the reduction. What I don’t understand so well is the rationale for some of the selections.
The cost to SCNA is minimal, at best.
Having chatted with a few in the business over the last few days, I can tell you there is minimal, if any cost to Saab Cars North America in having a dealership in a certain location.
Dealers do their own local advertising, pay for their staff to be trained up, pay for their facilities, have to finance their floor plan, etc.
I don’t know what a national marketing body’s main expenses are. Staff facilities, marketing plans, wages? There might be an additional network to book an ad for, a few extra promotional items to have printed (though there’s usually overruns on those anyway) but the incremental cost of having 150 dealerships instead of 137 dealerships is minimal, if anything at all.
And all that makes me wonder all over again, why some of these long-term Saab dealerships were cut.
Yes, some were in crowded areas and consequently, would be prime candidates. That goes double if their facilities haven’t been updated in some time (and I don’t know which ones were and which ones weren’t).
But some of these cut dealerships had great reputations, great relationships with customers, great histories that could be leveraged – all without the density problems that might have faced others.
We’ve already talked about Continental Motors in California. What about Meyer Garage, in Iowa?
I’d urge you to go and read Eggs’ account of the recent open house at Meyer Garage. You can’t buy positivity like this, even if you tried. It’s not a fancy dealership and it’s definitely a small community, but isn’t that a micro-study of Saab itself?
And if it costs next to nothing for Saab Cars North America to have a dealership on their books, then why cut somewhere like Meyer Garage?
Sorry, I got on my soapbox there for a moment…..
This is more about the future, than it is about history
I guess this would be Koenigsegg/Saab’s argument to me in reply of my rantings, above. I’ve had another conversation with someone involved, and here are some thoughts that they shared.
Koenigsegg/Saab have plans for certain types of cars at certain price points. Where they can sell these cars in the future and the potential for sale growth is more important than where they’ve sold cars in the past. Remember, this is from Saab’s perspective as a manufacturer. They don’t make the money from service that a dealer does. They make money from manufacturing and then selling the vehicles themselves.
They want sales growth more than service maintenance. Owners will get their cars serviced somewhere – they have to – but new owners may not make the journey to buy if the dealership isn’t nearby. Therefore, if you’re going to cut or keep someone, it makes some sense to keep those with the best growth potential, even if it’s at the expense of an established, happy but non-growth market (personally, I still subscribe to my theory of keeping oldies if they’re no threat to new ones – Meyer Saab and Continental being obvious cases in point – SW).
The strength and potential of dealers is imperative. Dealer service (read as: the ability to kiss the customer’s ass) sells cars and the better off the dealership, the better personal service they should be able to offer. Saab are looking for car sales more than after-sales, which the dealer will hopefully maintain at a good level for their own benefit.
Back to me again…..
I don’t know the formula used for deciding the number of dealerships, nor the rationale for which ones would be cut in preference to others.
The need to pare back crowded areas makes sense, and I understand the attraction of shiny new buildings. What I don’t get is the need to kill off solid, historical connections where they don’t crowd others.
Saab dealers need a good area to cover, they need products to sell (“just give me anything with wheels on it” is one quote) and they need leasing facilities to offer.
Oh, and completion of the sale to Koenigsegg, too.
There’s a lot yet to happen and a lot at stake. I just hope Mike Colleran’s got his selections right and I also hope he’s open minded to the appeals that some of these cut dealerships will make.
UPDATE – A bit more background, added below