Saab foresees Weak Sales in the Future

21 Sep 07

Author: Evander Klum

General Motors' effort to boost Saab sales seem to have failed, despite dedicated work sales have not budged.

Last year Saab was only able to sell 133,000 cars, in stark contrast to Volvo's 600,000 sales. This figure is also dismal compared to what rival automakers like Audi, BMW and Mercedes -- which all produce a million or more car sales per year. Saab chief executive Jan-Ake Jonsson said, "We at Saab have been very inconsistent in our approach."

The company's goal has been set at 250,000 cars sold annually. Perhaps the auto maker's efforts in creating car models that are distinct compared to their much larger rivals. According to Jonsson, the carmaker will no longer be eager to become "better BMW than BMW".

Jonsson said, "During the last couple of years, we've been really trying to focus the brand." Apparently the company has come to terms with the fact that their sales may not see a growth anytime soon. What the automaker wants now is for the brand to continue making money, despite the low sales.

"We've created a structure where we can get returns at 150, 000," Jonsson was quoted saying in a recent BBC news article, "If we can get 175,000 units, I'll be very happy."

At present, the factory and parts-sharing with GM is helping in keeping Saab afloat. This strategy will not help much if Saab wants to create a distinct image of its own. Enter the new Saab Turbo X.

Turbo X is well equipped with 2.8 L 280 bhp engine, including top of the line parts like the Saab master cylinder. This time, the Saab model comes with four-wheel-drive. Jonsson said, "This is a newly developed all-wheel-drive system... It gives you the option of having more performance. We will se it also in future vehicles" this, he adds, is "a bit of a qualifier in the premium segment, even if it is an option with a penetration of just
10-15%". The newest Saab creation he says, intends to make a statement about Saab's heritage and to communicate the importance of the turbo for Saab.

Saab is famed in the world for its support of biofuels. Saab's biopower models have been observed and reported to be more powerful when they run on E85 - a mixture of 85% ethanol made from plants and 15% petrol - than when they run on conventional petrol. According to Jonsson, "The turbo can utilize the higher octane rate of E85 in a better way, so it adds 25-30 bhp." With this concept, Saab was able to offer cars that deliver 150 bhp, basically from a small one liter engine. "It really shows the potential to downsize the engine," Jonsson said.

By fact, bioethanol contributes in reducing emissions, making a lot of difference from fossil fuels. But the displacement of petrol and diesel is set required in plants to produce a large volume of ethanol. As consequence in the production of ethanol, corn prices hiked in the US. This has been another issue greatly
affecting the priority of ethanol supply rather than for food, since the world is at large contained with starving people, according to critics.

However, Jonsson said, "Bioethanol to me is not an issue of starvation versus cars."

"If you look at the availability of bioethanol today, that is not an issue. There is enough land and crop available today to supply current demand," he explained.

"We're at the first generation of using ethanol," he added. "You can say using corn to produce ethanol in the US is very inefficient".

That is when the second-generation biofuels come on its way, with making from celluloid (wood or waste from crops). All being said, Jonsson believes that bioethanol will be one piece of the solution for Saab.

About the author:

Evander Klum is a Business Administration graduate who hails from Alabama. He enjoys extreme sports and he is also a car racing fanatic. At present, he works as a marketing manager at an advertising agency in Cleveland.