Saab not long for the U.S. market, GM unsure of other brands' futures
Let's go ahead and get it out there: General Motors doesn't have a plan for Saab, Saturn, or HUMMER – it has a bunch of hopes, ideas and proposals. The best that GM can do with Saab is try to extricate the brand from its entangled web, which might make it more attractive to a buyer. That includes moving 9-3 and 9-5 production to Sweden and being "engaged with the Swedish government" on a plan for Saab's future. But GM has admitted that "Saab is not a U.S. strategy," and the code behind that statement is probably, "We get rid of or kill it."
GM's focus is on Chevrolet, Cadillac, Buick and GMC, and Pontiac "will shrink substantially." The other brands appear to be waiting out their death row sentences on appeal. Saturn, like Saab, is so entrenched in GM that an outside buyer is a remarkably dim prospect. Saturn production is funded until 2012 (for now), but unless GM finds a partner or folds it into the mothership, it would appear to have no future beyond then. HUMMER is living like a medieval leper, locked up in a shed outside the castle walls.
But let's also get this out there: there are two ways out of this impasse. One of them is to spend a lot of money assisting GM. The other is to let GM fail and spend a lot of money cleaning up after GM. (Remember our perspective on "a lot of money:" Citibank got $45 billion after a couple of phone calls and recently had to be asked by the Obama administration not to spend $50 million on a French corporate jet.)
In two weeks GM is supposed to "show that it is likely to achieve long-term profitability and has a positive net present value." Let's be honest: there is no way GM (nor Chrysler) can prove long term viability in the next 15 days. (Neither could many companies if they had to.) If GM's viability plan is rejected, the government could ask for its $13.4 billion dollars back, which would be the equivalent of taking GM out back and shooting it. And that would be the equivalent of emptying another ammo clip into the economy's slowly-beating heart. All of which is to say that we have no idea how this will play out, but we're pretty sure that this is only the beginning of the beginning.
[Source: Automotive News, sub req'd]
Reader Comments (Page 1 of 3)
Avinash machado 10:38AM (2/02/2009)
It must be very scary to be in Rick Wagoner's shoes right now. Maybe he is wishing that the ground would open up and swallow him.
Reply
Sea Urchin 10:43AM (2/02/2009)
"It must be very scary to be in Rick Wagoner's shoes right now. Maybe he is wishing that the ground would open up and swallow him."---------17+ Mill a year make it worth it.
Having said that, Saturn sells around 200K units a year, Pontiac sells a little more. I would say kill Pontiac, because it should be easier on the dealers, because most Pontiac dealers are part of Pontiac-Buick-GM family, Saturns are stand alone.
Farmboy 11:01AM (2/02/2009)
The problem is that ever since Saturn's launch, their sales have declined. They started around 300K sales but now are down to 200K sales.
Tim 11:38AM (2/02/2009)
Obviously they are trying to leverage their "heritage" by keeping Pontiac instead of Saturn. Even if that Heritage is Mullet's and Firebirds. Pontiac will eventually follow Saturn to automotive Valhalla .
Sea Urchin 11:41AM (2/02/2009)
Farmboy, i personally do not see Saturn as an issue, i see the fact that GM will have to BUYOUT their dealers a huge issue. How much will they have to pay each dealer to close the door? Probably millions to each and everyone. Also Saturn has one of the freshest lineups in the industry..................which basically means GM flushed all that money down the toilet.
Jared 11:59AM (2/02/2009)
Sea Urchin:
There are far fewer Saturn dealerships (about 400) than Pontiac dealerships (1300). GM can't simply shut down a brand, because that requires buying out the dealerships. GM spent more than $2B to buy out Oldsmobile dealerships. GM might be able to buy out the Saturn dealerships. It can't buy out the Pontiac dealerships.
Tagg 1:24PM (2/02/2009)
Saturn has a different dealer structure than other GM brands. Saturn dealers have to sign a Federal Trade Commission Franchise Disclosure document which basically says the dealer is subject to losing everything they invest. That means no compensation for killing the brand. Saturn is set up as its own company in a way so the rules are completely different. GM could actually bankrupt the Saturn company and liquidate any threat of lawsuits since it is techinally a seperate company owned by GM.
Thats why GM has the Saturn brand on the chopping block.
Eric77TA 2:10PM (2/02/2009)
Tagg, Saturn hasn't been "its own company" since 2001. It's a GM division like any other.
Beat-it-nerd 3:08PM (2/02/2009)
There are at least twice as many Pontiac Dealers than Saturn Dealers and It would cost GM quite a bit more to kill it off. Instead, GM can essentially eliminate the pontiac brand without paying a dimes by scaling it down to 2 models.
Unfortunately, Saturn has never made GM a dime and they can't exactly scale back a single point brand to a couple modes.
http://www.chesrown.com
Dude 10:43AM (2/02/2009)
Awesome pic!
Reply
JZeke 10:46AM (2/02/2009)
Damn way to use some vivid and violent metaphor... Someone has been reading a lot of Clarkson!
Shame that Saab is being forced to die, but it was a foregone conclusion years ago to all the loyalists of the brand. GM simply doesn't understand quirky, their corporate culture doesn't have space for oddball or funky.
Perversely, Saab has become one of the best GM cars you can buy. Even the awful 9-7x has been regarded by the press as a terrible Saab - but the best Trailblazer ever.
Reply
British_Rover 10:55AM (2/02/2009)
'That includes moving 9-3 and 9-5 production to Sweden'
9-3 and 9-5 production never left Sweden. I am looking at a 9-3 and 9-5 window sticker right here.
Final assembly is in Trollhattan Sweden for both the 9-3 and the 9-5. For the 9-3 the engine is from Austraila, trans from Japan and 33% of the parts content is from Germany but final assembly is in Sweden.
The 9-5 engine is Sweden, trans is Germany and 31% of the parts content is Germany as well.
Reply
Yago Bal 11:33AM (2/02/2009)
They are talking about the new 9-5, which was planned to be build in Opel's Russelsheim plant, Germany.
TKE 11:04AM (2/02/2009)
relative to their competition, Saabs suck. and since relative to the opposition is all that matters, Saabs really suck. Winning DISawards isn't a healthy place to be (http://goodcarbadcar.blogspot.com/2009/01/bad-8-v20-part-viii.html). It makes an awful lot of sense for Saab to die or be completely revitalized with new product NOW, which can't happen. I'd like to see Pontiac as a three-to-five car brand as a genuine sub-BMW. Rear-wheel drive powerful sport sedans x2, maybe a rear wheel drive coupe and a car like the Solstice. A 3-Series and 5-Series for the masses, a 3-Series coupe competitor at $25K in the vein of the old Acura Integra (with drive to the other end) and an improved Solstice. Just a thought. It'd make for a wonderful showroom. Who knows how much money they'd make....
Reply
ChopperDave 11:28AM (2/02/2009)
"relative to their competition, Saabs suck. and since relative to the opposition is all that matters, Saabs really suck."
So sad, so true ... I was just thinking about that the other day. If the main competitors for the 9-3, say, are the S40, Passat, TSX, and Legacy, then the 9-3 loses. The S40 has better seats and a more solid-feeling construction (I know after driving both back-to-back ... my 9-3 and a test drive in the S40 T5 AWD), the VW has more room and a stellar interior. The Acura has the interior and resale value + reliabilty (or at least the reputation), if not, currently, the looks. I don't know much about the Legacy, but their owners seem have little complaint.
What advantage does the Saab have? The interior is chinzy, the resale value is crap, the electrical/computer problems are a nuisance, and the seats aren't nearly as comfortable as the Volvo's and, as I've experienced in other models, the VW's. The only advantage I can think of is that Saab is more or less giving the cars away, which is good in the short-term, but not very helpful with resale. And the MPGs are extremely impressive .... Other than that, I don't know ...
jamie 11:44AM (2/02/2009)
"relative to their competition, Saabs suck. and since relative to the opposition is all that matters, Saabs really suck."
Saab only sucks because GM has mismanaged the brand. Rather, GM has raped Saab of all its technologies, like VVT, turbocharging and Haldex XWD, without incorporating any of it in Saab itself. Very short sighted on GM's part.
"It makes an awful lot of sense for Saab to die or be completely revitalized with new product NOW, which can't happen."
The Swedish government has offered Volvo and Saab $2-3 billion to revitalize the industry. Are you saying that GM can't use $2-3 billion to make Saab a profitable proposition? Heck, a blind man on the street could recharge Saab's batteries with that kind of loot!
Take a look a Saab's concept page and you will see where GM is getting all of it's ideas for the Volt and the Converj. Hmmm
Jared 12:09PM (2/02/2009)
Sorry Jamie, but $2-3B won't save Saab. Both the 9-3 and 9-5 need to be replaced, and replacing a single model can cost $1-2B. Furthermore, the planned replacements are on GM platforms. Saab will no longer get access to those platforms and that engineering.
Saab sells so few cars that the cost of design and engineering is much higher on a per car basis than that for competing companies. And finally, Saab simply can't survive until it has new cars to sell -- it is loosing too much money too quickly. $2-3B more would just be good money after bad.
tommygrindin 1:53PM (2/02/2009)
@ Jared
A good portion of that engineering is from Saab anyways.
Jared 2:24PM (2/02/2009)
Sorry, Tommy, but that is not correct. The platforms for the new Saabs are from Opel. The V6 is from Opel as well. The bulk of the engineering for the 9-3 and 9-5 replacements is not being done by Saab -- it is being done by Opel.
Saab simply can't afford on its own to engineer the replacements -- the cost would be amortized over such a low production run that they would never make any money. Saab sells less than 130,000 (9-3 and 9-5) cars per year. When VW spends $1B to design a new Passat, it can amortize that cost over 300,000 cars per year. If Saab spends $1B to design a new 9-5, it can only amortize that cost over 50,000 or less cars per year. The extra cost per car for Saab is simply too great.
Niche brands like Porsche can afford to amortize development costs over a small production run, because they are upscale brands that sell at very high prices. Saab can't do that. Saab doesn't command a premium over its competition, so it can't support the extra cost. Add to that the very high cost of production in Sweden and Saab just has nowhere to go.
Stumpy 11:06AM (2/02/2009)
I say play Russian Roulette, with three bullets.
Reply