Saab Proves GM Doesn't Get Consumers

So my theory about Detroit is that they have struggled because they are not consumer focused companies. And probably haven't been in decades. Saab is a perfect example.

GM went looking for growth in the late 1990's like all the other car makers. With Saab they saw an opportunity. Unfortunately, what they saw was an opportunity for themselves. Here is what I mean.


Saab has been a quirky, little brand for years with lots of loyal Saab owners. (Disclosure: I owned three Saabs in the 90's.) The Saab loyalists loved the outsider personality of the brand. They loved the unusual, even odd, designs. They loved that their cars were quirky and considered it personality, part of the charm.

The big publicly known problem with Saabs was that they were mechanically challenged. To own a Saab was to know a mechanic on a first name basis. GM looked at Saab and said, hey we can solve their biggest problem. We can put in GM engines and share the chassis across different brands such as Subaru. It will create efficiency and reliability. We can also make the designs a little more mainstream and attract a broader consumer base once the mechanical reliability is improved. With Saab, they saw the opportunity to solve their own problem, excess manufacturing capacity.

But there was a problem with this approach. It isn't what the Saab owners wanted. The Saab consumers would not take mechanical perfection if it meant giving up the personality of their Saabs. And this is exactly what GM did.

GM put in GM engines and "redesigned" the 9-3, their base model to try and attract new, young buyers who have never purchased a Saab before. They were successful at first, but here is what has happened since then. Saab is now selling less than half the units they did in the first year of GM ownership. Saab loyalists have all but abandoned the brand and those new 9-3 buyers don't seem to be buying a second Saab.

So by creating an efficient (read as less costly to produce) product that appeals to a broader market, they managed to completely change the brand and misread the loyal customers that they inherited. Ford, in a rare example of consumer focus, understood that Volvo = safety and practicality. They have not changed the core brand values. (It still may not save them from being sold, but at least the brand is intact.) Saab used to equal interesting design and fun driving. Not so much any more.

GM made its initial investment in Saab in 1990 and took full control in 2000. US sales climbed to a record 47,914 in 2003. In 2008, they were down 31% through October. Last year, GM sold 9.55 million vehicles globally, making Saab a small, distracting brand with 125k units sold. Now it seems that Saab is on the block. Too bad. It didn't have to be like this. If Detroit understood brands and consumers, this might have been avoided.