It’s no secret that I think one of the biggest keys to getting the US market on the right track is refining the current pricing strategy. Clearly something is off with the current model when Saab only sells 1/3 of Porsche’s volume. There are obviously other key issues to focus on like brand identity, confidence in Saab’s future, and model competitiveness; we’ll get to these in the near future. Today I’d like to focus our attention on how best to price Saabs in the current marketplace. Be sure to take the poll at the end of the article.
Using actual sales data from Truecar.com, one can see that the new 9-5 averages a 5% lower sales price than sticker (the 9-3 is about the same). In car sales numbers, that’s actually pretty good, right? As of yesterday however, we can see that Saab’s current inventory of 9-5 sedans alone in the US sits at 1,776 cars and of the over 200 dealers selling them, only 93 were sold last month. Clearly while some cars are going at 5% off, even that won’t move most of them off the lot. The sad truth is that there are still tons of brand new 2010s left over that haven’t sold and are going for 26% off, and even the 2011s are being marked down and advertised in many cases near 15% off.
Some might argue that Saab’s financial situation is the sole reason that it hasn’t achieved sales success in the US yet, but I wonder if that’s really the whole story. To the SU reader, the idea of buying a Saab right now is almost like going to an outlet mall and getting a great deal on a designer suit– they’re amazing bargains yet no one seems to know it. We clearly understand the value, but it’s not easy to convince a buyer that not only are the cars reliable, safe, loaded with new technology, uniquely designed, but that they actually sell for way less than sticker. The casual buyer is left asking, “What’s the catch?” Could it be that the sticker prices themselves are turning away customers who otherwise don’t know enough to find the real pricing info? Do huge discounts instead of attracting buyers actually turn some away?
Could the idea of a No-Haggle pricing strategy that Saturn once used be a turning point for Saab’s image in the US? By coming across as an honest, solid value proposition instead of trying to compete at an image level on price with the luxury European brands, it could perhaps be argued Saab might be able fill the void that Audi has pushed itself out of and Volkswagen seems to be shying away from. If you’re unfamiliar with the concept, it’s basically that dealers aren’t allowed to haggle with customers over price– a price is a price. That obviously has downsides when the cars are in high demand, but when the opposite is true it reinforces the brand’s value. For a good summary, try reading this 2006 article from CNN.
We’ve already had a pretty spirited discussion over in comments on May US Sales data, but I think we’d all like to hear each other’s viewpoints in greater detail and come out with some general conclusions to take to Saab management from a grass roots customer level. Without giving out too much info, I’ll have a chance to do that within the next 24 hours– your voice at SaabsUnited actually matters and will be noticed by top sales execs at Saab.
In comments I’d like you to keep a few questions in mind:
- Do you think Saab should align their prices more closely to their current final sales prices and adopt a no haggle strategy that gets customers in the door. If so, do you think this will hurt the brand image or improve it by coming across in a Saturn-like honest way?
- What are you willing to pay for a new Saab 9-3 or 9-5 and with what options? Be realistic and fair in your answers, what price would you be comfortable paying a dealer if you had the resources to go buy a new Saab tomorrow?
- Do you think Saab should have a referral program to pay loyal customers who act as brand ambassadors towards the purchase of a new Saab (example: for every customer you get to buy a Saab, you get $500 off the purchase of a new one down the road).
- Do you think it’s possible for Saab to compete at an image level with Audi, BMW, and Mercedes while charging (high end) Buick to Infiniti prices?
- What are other ways Saab could get out the news that their cars have more for the price than any competing model bar none? Do you think they could leverage the power of new internet discount sites like Groupon, Gilt (as VW did with the new Jetta), and the like to gain huge publicity and focus on Saab’s enormous value?
If you’re going to post a comment and you’re comfortable doing so, please mention if you work for a Saab dealer or are current customer. It’s nice to have a perspective on everyone’s thoughts. Please feel free to throw out your own questions. This post can continually evolve and be a place for dialogue. Keep it respectful and more about helping find solutions, not lecturing us on why you think Saab is bound to fail if they continue on the same road. Keep it positive.
Finally and especially for those anonymous folks out there who would rather not comment but still want their voices heard, here’s a quick poll you can take to help us get a broader opinion of what you think Saab Cars North America can do to use price to their advantage, not detriment. Ignore the weird formatting, I’m not sure why the margin is so massive.
Call to volunteers- if you’re interested in summarazing key points from the comments section and making an outline with me, I’d love some help. We’re going to use as many ideas from this post as the basis for a new project we’re working on with SCNA. Big news to come, for now we could use all the help we can get 🙂