Bloomberg on the struggle for Saab’s revival

Bloomberg writer Ola Kinnander has written a piece on the challenges faced by both Saab and Volvo in reviving their flagging sales in the United States.

It may not an easy piece to read for a Saab enthusiast but it does bring home a few truths, and in light of recent posts about people getting back to visiting dealerships and buying Saabs again, it makes for some very interesting reading.

Saab is pricing the 9-5 in the U.S. in the luxury segment, with the Aero version of the car starting at $47,565, according to the manufacturer’s website. The BMW 5-Series begins at $44,550 and Audi’s A6 at $45,200. The strategy will be difficult to implement, said analyst Michelle Krebs.

“Saab priced the 9-5 very aggressively,” said Krebs, a senior analyst at Santa Monica, California-based Edmunds.com. “They priced it right on top of BMW and for a brand that’s trying to come back, they didn’t earn that spot yet.”

There’s no doubt that Saab are positioning themselves at a certain price point, and quite deliberately, too. What’s in question is whether the 9-5 has ‘earned’ that price point or not. It’s questionable whether it even has to earn it – do companies have to do some time in a theoretical pennance before charging what a car is worth?

The 9-5 is a superb car and the Aero version is definitely a viable alternative to the cars mentioned. What Ms Krebs and Bloomberg fail to mention, however, is that whilst the Aero version starts higher than the BMW and Audi alternatives, 2011 pricing for the base model 9-5s that are coming right now will actually start at $38,585, much lower than those German alternatives.

Both brands (i.e. Saab and Volvo) need better design to succeed in the U.S., said Jim Hall, principal of 2953 Analytics Inc. in Birmingham, Michigan. The Swedish carmakers in recent years crafted cars that were too bland or confused buyers, he said.

Saab will indeed need to continue to evolve their design. The 9-5 is an excellent starting point, however. The 9-4x will continue it and lest they forget, Saab have hired Jason Castriota and charged him with the responsibility for making this evolution complete with the next generation 9-3. That will take time, but it will happen.

“A lot of our customers still think there is nothing going on,” said John Carter, a Saab dealer in West Chester, Pennsylvania. “We’re reaching out to them and showing them we’re here and mean business.”

And that’s exactly what Saab and their dealers need to do. Let people know that Saab are still alive, and with new models, too. John works at Ruggeri General Sales Saab, who recently put on a great event to promote the launch of the 9-5.

The road ahead isn’t easy, but for the tenacious, no road is impassable 🙂

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