US Sales Strategy: The Price Is Not Right?

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.

What's wrong with this picture?

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:

  1. 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?
  2. 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?
  3. 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).
  4. 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?
  5. 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.

How should SCNA change their pricing strategy in the US?

View Results

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UPDATE:

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 🙂

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Atomicauto
Member

Wow. This thread has gone in numerous directions, and lots of great comments. From a technician and independent Saab repair shop owners perspective: The 9-5 has been long term a very expensive car to maintain (for some owners, some have good luck some have bad.) I have three in here with melted pistons currently. We joke about how until about 2003, we almost NEVER saw engines needing replacement in Saabs. I never saw one in a 900 or 9000 break in ways like we currently see. Honestly we think it has a lot to do with underhood operating temperatures. As… Read more »

davidgmills
Member

Well, as a Saab technician you certainly would know about the mechanical issues a North American Saab owner faces. You are absolutely right about the heat under the hood. I think many of the Saab engine failures have come from the usage of oil that can not take the heat produced by the turbo. For about the first three or four years of the 9-5’s existence, and the 9-3’s existence, many dealers were still advising their customers that they could use non-synthetic oil. Apparently Saab headquarters never figured out that American non-synthetic oil is a much poorer grade of oil… Read more »

goofy
Member

davidgmills: Perhaps I am misinterpreting your comment – in that case, I apologize. When it comes to your Saab issues, I feel your pain since one of my Saabs is roughly that vintage – I’m sorry you got burned. However, should a prospective Saab buyer pass on Saab because of experiences that owners like us had with Saabs built 10 years ago? The issues with the B2XX series engines in 9-3s and 9-5s produced prior to 2004 have absolutely nothing to do with the powertrains available in new Saabs. Period. There are people on the fence about Saab – rehashing… Read more »

davidgmills
Member

I am not saying we should dwell on the past, because I want a new 9-5SC if it gets to the states, and I can figure out a way to afford one. Since I presently have five Saabs (one not working) and am looking for two more, it is difficult to buy new. But if I can figure out a way I will. That is why Saab being competitive will be a huge factor for me. If I only had to have one car, or even two, for my family, maybe price wouldn’t be the concern it is. But I… Read more »

goofy
Member

Who said anything about there being serious issues with the B207 Ecotec?

goofy
Member

Am I missing something? It does not appear that Atomicauto said anything about the B207/B208 engines used in the 2003+ Epsilon Saabs, and the B2XX engines never had an aluminum block. I think you are a bit confused, and It is a bit disconcerting that you were unaware of the crankcase ventilation update for the B23X engines introduced for 2004.

PLEASE know what you are talking about before you spout off about Saab, and may we PLEASE close this thread to further comments already!

goofy
Member

I want to make it clear that “B2XX” in my reply above refers to the cast-iron block 2.0l and 2.3l Södertälje engine series used in the 9-3 through MY2002 (2003 for convertible) and in the 9-5 through MY2009, not the aluminum block Ecotec engines in Saab applications, aka LDK & B207/B208/LK9.

davidgmills
Member

In rereading his comment, I clearly misunderstood what he said. In checking the engines of the old 9-3 (1999-2002) and the old 9-5 (1999-2009) all have iron blocks, as you say. I had interpreted his comment to mean that they didn’t and that prior years had had iron blocks and that was the reason for these being less robust than there predecessors. He was clearly talking about the internals not the blocks. Thinking he was complaining that these 9-3s and 9-5s had aluminum blocks I then assumed that he was complaining about all aluminum blocks. So you are correct that… Read more »

goofy
Member

davidgmills: Regarding your not being aware of the PCV redesign that was introduced on the 2004 B235 9-5, It was simply a matter of concern to me that you were judging all MY2004-09 B235 9-5s according to the problems that some 2003 and older models experienced, but now you know. I realize that this isn’t a DIY board like Saab Central, nor am I specifically endorsing a particular vendor, but for your 2003 and older B2X5 9-5 or 9-3, remove the oil pan (search Saab Central for some excellent methods for doing this and many other other things), check for… Read more »

mike saunders
Member

Even so, I bought a 9-5 with 100,000 miles on it that had a complete engine failure at 150,000 miles. The car is in perfect condition otherwise as I had meticulously maintained it. But it will cost at least $3,000 to install a used engine and the car is not worth that. it has been sitting at my mechanics for a year waiting for an engine. I guess I have given up trying to fix it.[/quote] Use the B234 block from a 9000. I bought a 99 9-5 with a blown engine and had a B234 dropped in. That was… Read more »

davidgmills
Member

“Use the B234 block from a 9000.”

How much are they?

mike saunders
Member

I’ve bought three over the past three years for various projects and the most I paid was $700, delivered. If you want to be assured of a completely bulletproof engine, have it refreshed with new bearings, piston rings, timing chain, chain guides, oil pump gears and various seals and gaskets. That’s another $300 in parts. Labor to install is probably 10 hours or so but it’s worth it. The B234 is incredibly robust and will last for many hundreds of thousands of miles.

RS
Member

Great post Atomicauto! This should go stareight to Trollhättan (which it does) to see what they could do to help fixing up these older engines in US. Sorry guys, I had no idea you’re having this much trouble. How about this: Instead of giving discounts left and right which does nothing for consumer confidence, dealers would give out vouchers (worth i.e. $3000) to buyers of a new Saab which would be used to repair the old car. The campaign could be called; two Saabs for the price of one or something on the lines. It’s hard to imagine anything worse… Read more »

davidgmills
Member

“Instead of giving discounts left and right which does nothing for consumer confidence, dealers would give out vouchers (worth i.e. $3000) to buyers of a new Saab which would be used to repair the old car. The campaign could be called; two Saabs for the price of one or something on the lines.”

Great idea.

Toby K
Member

Is a Buick Regal (US) a Vauxhall Insignia (UK)?
They look virtually identical and if your comparing that to the new Saab 9-5 then damn right it should be cheaper because that “German Engineering” comment means that a German sitting on the Opel engineering panel took a bold step and decided this car should not have leaf springs and rear drums.

I would happily pay at least $15k more for the Saab. But I am a bit biased since I’m european and on SU.

davidgmills
Member

Haven’t personally checked the car but here is what I found on the net regarding the Regal suspension and brakes:

# MacPherson strut front suspension and four-link independent rear suspension
# All-new Interactive Drive Control System (IDCS) available with the 2.0L turbo, offering driver-selectable suspension settings and automatic driver suspension setting adaptability
# Four-wheel disc brakes with four-channel anti-lock braking system, brake assist and electronic parking brake

I also believe that hy-per strut suspension is an option.

davidgmills
Member

One more comment about American roads. Years ago I had a client that was a German company that had a rebar (rebar is construction grade steel bar for concrete for those of you in Europe who may not know the term) manufacturing plant in the US and the US manager of the plant was a good friend of mine. He had been to Germany many times and understood the difference between the way German and American roads were built. He told me that in Germany the roads were built with far more concrete and far less steel than those in… Read more »

Atomicauto
Member

After thinking a little more, I did want to add a few things. Perhaps absurd, but food for thought. Jak Stoll, tuner of Saabs from NC USA came to work at Atomicauto two years ago. He brought passion for the product, and a knack for tuning that is usually not found in technicians. Jak often said that the reason he took his car to Carlisle was that he wanted to make people at GM realize how strong the basic B234 engine structure was. At the time I thought “noble thought but….” So Saab had test B202 cars with early test… Read more »

RS
Member

Amen.

davidgmills
Member

You are absolutely right that Saab should push the notion that has made and still makes the best four cylinder engines in the world. I think you are probably correct that the four cylinders in the 9-5 and 9-3 are not as robust and durable as the fours in the 9000 and 900. I am not a mechanic so I am not competent to say. But I think I can say that Saab’s fours pack a much better punch than most sixes and many eights while putting out the great mpg’s of a four. I say Saab should concentrate on… Read more »

davidgmills
Member

According to Wikipedia seems like Saab sold the rights to these engines to BAIC: The Saab H engine is a redesign of the Saab B engine. Despite the name it is not an H engine, but a slanted inline-4. The H engine was introduced in 1981 in the Saab 900 and was also used in the Saab 99 from 1982 onwards and the Saab 90. It continued in use in the 900/9-3, 9000, and 9-5. The 2003 GM Epsilon-based 9-3 switched to the GM Ecotec base, leaving the 9-5 as the sole user of the H engine. The last model… Read more »

Khrisdk
Member

Correct.
But since Saab have only ever used their own developments and improvements of other manufacturers engines, I am sure they can work that same magic on any engine.
And yes, it should be 4-cyl 😉

Mr. Negative
Member

I vaguely remember that the B234 had roots in Mitsubishi. It was a great engine, unfortunately it was attached to BorgWarner automatic transmission- which was a piece of crap.

davidgmills
Member

My recollection was that it was a GF transmission, but yes indeed it was a horrible automatic transmission.

The Aisen Warner on the 9-5, on the other hand, really is a nice tranny.

davidgmills
Member

Make that ZF not GF and I have checked and they were ZF not Borg Warner.

Mr. Negative
Member

You’re right. I should drink less.

davidgmills
Member

I wasn’t drinking when I came up with GF. Probably should have been. Knew it sounded wrong. Had to wait for some cobwebs to clear.

RS
Member

Maybe it’s time to give the guys at Valmet a call and ask them to look for the drawings and start casting blocks for this beast? (4-cylinder 2.0L x 2 🙂 ) As GM killed the project immediately after they bough the majority in Saab (I believe because the 9000 would have been too competitive against their own stuff?). Wouldn’t it be nice to finally have a flagship engine that has Saab written all over it. Who cares if it weighs 100 lbs more when you can get what ever hp you want out of the thing and it wont… Read more »

Khrisdk
Member

I know that there are a lot of people wanting the Halo Big Power car.
I also think that the car that makes the sales in Europe/UK is the 9-3 119g/km diesel.

I am normally not a purist, but I still think that a Saab should have a 4-cyl engine, not V6 or V8

JH
Member

The B234 engine (and all other Saab H engines) had its roots in the Saab B engine which in turn had its roots in the Triumph Slant 4 engine. However, I think the B234R engine used a turbocharger from Mitsubishi Heavy Industries. I think that the main reason for Saab to stop using the H engines was that they were made out of cast iron which made it very heavy. When they tried to lighten it with the B2x5 they got the oil sludge problems. They were eventually solved but the engine had gotten a somewhat bad reputation and the… Read more »

davidgmills
Member

So they make an engine lightweight reducing its robustness, and then they make the car heavier.

davidgmills
Member

Wikipedia has a good rundown on the GM “Family II” engines, of which both the present 9-3 and 9-5 use: http://en.wikipedia.org/wiki/GM_Family_II_engine It is interesting to note that this engine was originally cast iron block, with an aluminum head before it went all aluminum. It is also interesting that it comes in 2.0 liter, 2.2 liter and 2.4 liter versions, and even a version for trucks. So clearly Saab could go back to an iron block and increase engine size with this line of engines. I can’t find any stats on the difference in weight between an iron block and an… Read more »

davidgmills
Member

According to this article Holden is still making these engines (now called Ecotec) in Melbourne with an iron block; so if Saab wanted to go back to a robust iron block it certainly could.

Khrisdk
Member

The problems with the B205/B235 is mainly due to poor maintenance and lack of oil change. The GT17 is not as robust as the Mitsus, but they still last about 200.000 km, just like a DI cassette and the fuel pump. Also the T7 uses a different way of controlling the engine, making it more sensitive to leakages, bad back valves in the PCV, and wrong fuel/air mixture. Most problems can be brought back to inferior oil or lack of proper oil change. The B204/B234 was overengineered and is perfect for tuning purposes. For normal people it doesn’t matter. It… Read more »

davidgmills
Member

Overengineerd? What the hell is wrong with that? And since a lot of people like to tune their engines, overengineering makes sense to me. If the 205’s and 235’s had been overengineered, maybe they would not have had the sludge problems they did. Maybe a lot of these cars that are sitting idle would still be on the road.

Khrisdk
Member

We have a lot of these in Denmark. We also like to import cars with broken engines from Sweden and Germany. We do not have the same problems with Oil Sludge in Denmark as most other countries because a car is a huge investment, which means that we take good care of our cars. The overengineering part is what killed the B204/B234. It was to heavy internally They could not live up to the consumption demands and exhaust demands. So you adjust the engine to perform better on those demands. Everybody did. And had Sludge problems. There is nothing wrong… Read more »

Khrisdk
Member

Oh, and from 2004 they changed the engine block and eliminated Oil Sludge

davidgmills
Member

Since I have a couple of 2004 9-5 Arcs, are you telling me the engine block has been changed to eliminate sludge? If so, what did they do?

Khrisdk
Member

They changed the whole design of the PCV system, changing the routing of the entire system, and let some of the connections run through a redesigned valve cover and redesigned engine block and also introduces a redesigned throttle housing.

I would still change the oil at 10.000km, and use full-synthetic.
No Turbo engine should run on less, no matter what anyone says.

Khrisdk
Member

Just for fun:

The US list of cars that are affected by Oil Sludge:

* Toyota Camry 4 cyl. 1997-2001
* Toyota Camry 6 cyl. 1997-2002
* Toyota Solara 4 cyl. 1999-2001
* Toyota Solara 6 cyl. 1999-2002
* Toyota Sienna 6 cyl. 1998-2002
* Toyota Avalon 6 cyl. 1997-2002
* Toyota Celica 4 cyl. 1997-1999
* Toyota Highlander 6 cyl. 2001-2002
* Lexus ES300 1997-2002
* Lexus RX300 1999-2002

* Chrysler Concorde 1998-2002
* Chrysler Sebring 1998-2002
* Dodge Stratus 1998-2002
* Dodge Intrepid 1998-2002

* Passat 1.8L Turbo 1998-2004
* Passat 1.8L Turbo/Wagon 1998-2004

* Audi A4 1.8L Turbo 1998-2004

These are the ones where the producers have actually admitted that there might be problems 🙂

davidgmills
Member

Good to know about the 2004 model year changes. Hadn’t heard that before. Means that I won’t be considering buying 9-5s and 9-3’s built before 2004. My two blown engines were on a 1999 9-5 and 2002 9-3.

Khrisdk
Member

No Problems with NG9-3. They are all using B207 GM engines
The newest PCV kit for the pre 2004 cars seem to fix the problems.
I you should fall for one, just ask them to drop the oil Pan and have a look 🙂
Did that on mine, and despite it being an old company car it was clean.

RS
Member

Here’s definitely one thing Saab world should note. A small brand with a premium price tag should have premium Customer service. Info bulletins and service recommendations to better the cars that reaches the customer should be a given. Road assistance should be best in business and old customers must be treated like royalty. I have a feeling there was some kind of -screw it, we’ll bill GM attitude for 20 years- that needs to go. Saab is now independent an must start behave accordingly. If there’s info about engines owners need to know put them out asap. Inside Saab could… Read more »

Khrisdk
Member

Agree

I still think there is a lot of “GM disease” in the system.
I would never touch our own official authorized dealer for repairs and mods.
They overcharge and are not interested in older models.
I use an independant that has been working with Saab for 25 years, is trained at Saab, has a Tech II and knows ALL Saabs from Two-stroke to 9-5 in detail
Leasing killed service in my opinion

Börjesson
Member

Going back to the topic of a tagline on the theme of “the best allround car”. How about this? A car for all seasons Now English is not my first language, so please correct me if I’m wrong, but I think the “for all seasons” expression is used to signify someone who is able to cope with any situation, rise to any challenge – or possibly someone who stays true to himself whatever life throws at him. In our context, the word “season” also gives a pointer to the fact that Saab is a car capable of handling rough winters.… Read more »

davidgmills
Member

Or maybe you could do a play on the term, such as a “car for all reasons.”

davidgmills
Member

Oops. Google tells me Range Rover beat me to it.

Mr. Negative
Member

About 500 comments ago, rallyho stated that “SAAB driver’s can handle the hard road”. I like it for a couple of reasons.
1. It sounds like a tribute to current SAAB owners.
2. It can be interpreted as SAAB(with the support of it’s faithful following) can overcoming it’s current financial difficulties.
3. It provides a platform to talk about the new Haldex system.

davidgmills
Member

Except that we have had this discussion above thread about how Saab suspensions, especially sport suspensions can beat you up on America’s less than stellar roads.

I can see a lot of people complaining about how Saab’s can’t handle American roads at all.

The 9-3 Viggens bent so many wheels on American roads, that Viggen wheels became a real problem for Saab in the US.

davidgmills
Member

In truth, it Saab were to be frank about it’s history, it should call itself the car company that constantly sends mixed messages to the buying public. On the one hand, it makes these very robust car bodies that have been proven time and again to be extraordinarily crashworthy and have been known to outlast just about any other car body. When Saabs finally get to the car crusher, twenty or thirty years after manufacture, they still give a car crusher all it can handle. Apparently Saab has been quite capable on occasion of making some equally robust engines that… Read more »

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