Swedish report says Koenigsegg wants to sell fewer Saabs for more money
Just because Koenigsegg is working to by Saab doesn't mean that the maker of million dollar coupes plans to spend time in the mass-market end of the buying pool. In fact, according to Swedish newspaper Dagens Industri, Koenigsegg wants to make more money selling fewer Saabs, which it can only do by taking Saab upmarket. And the numbers being reported indicate not just medium luxury, but top shelf, Cadillac Margarita luxury. Straight from the paper, this is allegedly Koenigsegg's ambitious three-step plan:
2010-2011: The current phase
- 115,000 cars sold gives zero in operating profit
- Average price per car: 189.000 SEK ($27,546 U.S.)
2012-2015: Transition
- 80,000 cars sold gives zero in operating profit
- Average Price per car: 208.000 SEK ($30,311 U.S.)
- New models including 9-5 Koenigsegg Edition
2016 - : premium
- 65,000 cars sold gives zero in operating profit
- Average Price per car: 280.000 SEK ($40,804 U.S.)
- New models include New 900
There's a bit of confusion over average prices mentioned. The current base price of a 9-3 in the U.S. is $30,360, and it wouldn't make sense to have the average price for the entire model line in the current phase be less than the base price of the cheapest car in the cheapest country, even at a higher volume. (The base Saab 9-3 starts at 301,990 SEK, which is $44,008 U.S.)
If the devotees at Saabs United have it right, a commenter in the original Swedish article who also claims to be a Saab dealer said the average prices are missing region-specific taxes, so they should be 55-60% higher. That would make the transaction price in the current phase about $43,000, and in the final, premium phase about $63,000 with a 55% markup.
While the numbers are fuzzy, what is pretty clear is that Saabs are going to cost a lot more in seven years if Christian K. gets his way. And they'll have to be, if he wants the company to break even on 65,000 cars sold annually, which would be a 27,000 unit decline from last year's (unprofitable) numbers. Saabs United also has a well reasoned look at the various sides, but still, for Saab lovers and watchers, this must all sound a bit crazy. But, hey... so is a Koenigsegg.
[Source: Dagens Industri via Saabs United]
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Reader Comments (Page 1 of 2)
Luis 10:24AM (10/27/2009)
Perhaps they could also 500 of those beasts in the picture as a Saab and bring the average up while keeping the 9-3/900 price relatively stable. Just sayin'.
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Chad Upton 12:12PM (11/02/2009)
I hope that's what happens. Love my 2009 9-3, what a great deal. For $27K: 37mpg/hwy (practical, not epa), heated seats, cornering HID headlights, leather power memory seats. It looks great, it's fun to drive, it's powerful and cheap to operate. It's nearly a perfect car for the money and I'd buy another one in an instant.
Yaroukh 10:29AM (10/27/2009)
Fewer? Like... two?
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casualreader 10:31AM (10/27/2009)
The price is likely shown in regards to Dealer invoice, not final transaction price.
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Alex 10:40AM (10/27/2009)
Saab has always had the potential to be an upmarket luxury marque like BMW, Jaguar, Lexus. This is actually very refreshing to hear as far as I am concerned. Koenigsegg is out to make a great car, not a great profit. He is pushing the reset button on Saab, bring their cars back to relevance; make them desirable, make them exclusive, make them reliable. Make the car everything it should be and you will get make a profit, albeit long term. Too many companies are too focused on massive profits and massive sales numbers in the immediate future.
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Glock23 10:47AM (10/27/2009)
"Koenigsegg is out to make a great car, not a great profit. "
I agree with you that he will improve the Saab brand, however, who in businees is not out to maximize profit? I'm sure his investors will tell you otherwise.
Most Luxury OEM's are reaching down in the market, not up.
Given an economic recovery is still very shaky, at best, this is not a good strategy. They need to build a better product AND keep price to consumers in check. It's very difficult but that's the world today.
sw 10:54AM (10/27/2009)
Sell fewer cars for more money? That sounds pretty stupid. But you don't have to listen to me, just read up on how Hyundai is doing financially, even during the downturn but adopting the EXACT OPPOSITE strategy.
Luis 11:10AM (10/27/2009)
Few luxury marques are really trying to "reach down"... BMW refuses to bring their cheaper products here, MB, Cadillac and Lexus ($375k supercar is not reaching down) are all in that boat. Even Jag has taken a hiatus from "reaching down". Hyundai had no where to "reach down" from - they were already at the very bottom. They are grasping up.
Anyway, Saab and Volvo are middle-brands, and it's a tough market for them now. In this economic climate where the rich get richer (see how fast all LF-As are spoken for) and the poor get poorer (Hyundai/Kia +++) while the middle get squeezed (bye bye Volvo and Saab). At least in the US, these companies are mimicking the middle class squeeze.
Yaroukh 11:13AM (10/27/2009)
@sw: I guess they don't expect the economic downturn to last till 2016. I don't know how Porsche is doing now* but before the recession they were insanely profitable company.
*) The potential VAG-merger/overtake has nothing to do with their cars-operations, but rather with their ambitions being too high...
Glock23 11:15AM (10/27/2009)
"Few luxury marques are really trying to "reach down"... "
Oh really??? Ever heard of 1 Series? How about A3? Or TSX? Or the countless others currently in the pipeline?
Tool 11:50AM (10/27/2009)
SAAB does not have the potential to be a luxury marquee like BMW, Jaguar, Lexus. Never had it, never will.
It is a niche upmarket/near-luxury brand that once had a faithful following. But after GM's stewardship of the brand, it sullied those chances to cater to that subset of the population.
The only hope for SAAB is to pull back big time. Go back it is roots. And the re-build from there. The one good thing is that Koenigsegg is Swedish and probably gets the brand better than some douchebag GM exec sitting in Detroit.
zamafir 12:23PM (10/27/2009)
@sw - stupid? no. stupid is comparing hyundai's current business model to anyone attempting to compete at the Audi/Merc/BMW level.
Thankfully a variety of business models work effectively in the car business. Porsche's high profit with low volume. VW's high volume with less profit. Or Hyundai's high volume higher profit (than vw). There's no reasonable excuse to confuse a hyundai model with a porsche model.
audi_arena 12:49PM (10/27/2009)
^ Exactly. We've been seeing a trend in the luxury markets in the past 5 years of the brands reaching downmarket (in terms of profit margins) in exchange for huge volume: see BMW, Merc, Lexus. The problem with this strategy is that it flies directly in the face of what a "luxury" car is supposed to be; exclusive. It also leaves the companies extremely vulnerable to fluctuations in market demand as we saw with bimmer last year being brought to its knees.
I for one, think that in general, the pendulum needs to swing WAY far back towards profits on luxury cars. We make a measly 5.5% markup selling Audi's at full sticker, the real number is more like 2%. It's rediculous for a business to only make $1000 gross profit on a $50,000 car, when people are buying Fendi bags at 3000% markups.
Mike7 10:42AM (10/27/2009)
"9-5 Koenigsegg Edition"
Does it spew fire out of the exhaust? If it doesn't, it has no right to a Koenigsegg badge.
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MachinaDC5 10:56AM (10/27/2009)
This is fantastic news, and a great decision. Saab's going to be a very respectable brand after this. What's surprising is the small amount of time to complete the final stage. 2016? Only 7 years to move a brand very rapidly upscale? I wish them all the luck in the world.
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Monkaroo 11:20AM (10/27/2009)
They'd better come up with more interesting designs than the new 9-5 if they are to accomplish that. People like to feel special as it relates to the car they drive. Saabs of late are not anything special from a buying public perspective.
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sap_all 11:22AM (10/27/2009)
The base model sold in US is way, way more equipped then the base model in Sweden where 2.0T is the top of the range engine and sold exclusively with XWD.
The 1,9TiD, 1,8t and 2,0t are not even offered in the US.
Saab 9-3 2.0T XWD cost about 36,400 USD in the US and 304,000 SEK (43,692.54 USD) in Sweden.
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Steve_S 11:23AM (10/27/2009)
I wish them luck but Saab stopped being relevant a longtime ago.
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Alex Hobbs 11:40AM (10/27/2009)
So did Mini Cooper and look at them now. Quality names with an iconic pasts can come back with the right leadership.
Luso 1:39PM (10/27/2009)
The market is crying out loud for a premium brand that is able to compete with the German options (D and E Volume Segmentation) with something brilliant and exclusive.
Brands that might one day be able to achieve this:
- Alfa Romeo
- Jaguar
- Volvo
- Saab (maybe?!?!?!)
- ?
Then a few top premium brands that deal with niche volumes and sportcars. But they would have to come downmarket. Not always a good strategy in automotive sales.
http://www.carnorama.com