Swedish ultra-supercar maker Koenigsegg has agreed to purchase what remains of SAAB, Sweden's 'other' car maker (other than Volvo).
It's really pretty difficult to see how this will help SAAB.
To survive in the car game as a so-called 'volume' car maker, you have to sell at least 200,000 units per year to amortize the fixed costs of developing and producing a car.
And you have to do that for five, six, seven years.
If you have a strong enough brand identity, like Ferrari, Maserati, Lamborghini, Rolls-Royce or Bentley, you might get away with selling in the low-single-thousands of cars per year, because you can command high enough prices that your big margins make up for the low volume.
SAAB sold less than 100,000 cars world-wide last year, and is trending 'way worse than that so far this year.
The problem with SAAB is that their cars have traditionally been a bit quirky - sometimes mondo quirky - so they don't have wide-spread appeal.
But if you make them less quirky to expand your marketing horizons, first, they lose the appeal they had to the traditional SAAB owner, and second, they begin to look too much like BMWs, Audis or Mercedes-Benzes. Why would you not just buy one of those?
When GM first bought half of SAAB (they subsequently bought it all), they had just lost out on the bidding for Jaguar (which went to Ford). It seems GM was so intent on buying a luxury European brand that they rushed into the SAAB deal without, apparently, having a clear idea of what to do with it.
They essentially tried the "less quirky" strategy, basing the cars on mid-size Opel platforms from their Germany-based subsidiary. They weren't bad cars at all, and it did give GM a way to get some of that good technology to our shores.
But they could never really establish what the brand stood for (the acronym stands for 'Svenska Aeroplan Aktiebolaget', Swedish for 'Swedish Airplane Company Limited' - it began as an aircraft manufacturing operation, and there still is an aviation division which is not part of this deal).
So, now Koenigsegg takes its shot. They are no strangers to low production volumes - the company made a grand total of 18 cars last year, among them the fastest (395 km/h) car in the world.
Now, SAAB sales may be trending in that direction, but they have a way to go.
Still, it is very difficult to see how whatever skill set Koenigsegg has can be helpful in establishing SAAB as a profitable volume car maker.
As always, time will tell.
"If you have a big enough lever..."
Wow, a car company that makes 18 cars per year "buying" SAAB. That's kind of like a canary swallowing an elephant, isn't it?
Posted by: Pete vh | June 19, 2009 at 12:57 PM