The following has appeared in today’s Automotive News.
As it’ll probably go to archive in about 15 minutes, never to be seen again unless you’re a subscriber, I’m going to buck my normal trend and reproduce it here due to the special interest it’ll have to we Saab nuts.
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Howard Drake, chairman of the Saab National Dealer Council, said that the high value of the euro relative to the U.S. dollar is forcing higher prices than Saab dealers would like to see or consumers are willing to pay.
Drake said pricing has been a handicap for the entry-level Saab 9-3, which was reskinned for the 2008 model year.
The 2008 9-3 starts at $28,825, including $745 shipping. That’s almost $2,000 more than the least expensive 2007 9-3. Drake said the 2008 9-3 wasn’t widely available until December. Sales of the 9-3 were down in December and for the full year. Saab’s overall U.S. sales fell 10.0 percent in 2007, to 32,711.
Special Correspondent Jim Henry interviewed Drake.
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Howard Drake
Age: 48
Dealer since: 2001
Dealership: Casa Automotive Group (Cadillac-Saab-Hummer-Subaru), Sherman Oaks, Calif.
Average monthly Saab sales:
30 new, 8 used
Dealer council’s top concern: Pricing
“There’s a pricing issue, which is slowing down the brand. The euro has appreciated 30 percent against the dollar in four years or something; that’s put the business model of making something in Europe and selling it in the U.S. under a lot of pressure.”
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What are the dealer council’s top concerns? How is the factory responding to those concerns?
In short, in 2007 obviously the big story was the pressure of the euro versus dollar, particularly for the 9-3. While we had a good launch for ’08, the pricing pressure has kind of mitigated the success.
There’s a pricing issue, which is slowing down the brand. The euro has appreciated 30 percent against the dollar in four years or something; that’s put the business model of making something in Europe and selling it in the U.S. under a lot of pressure.
What does Saab need to do to help you sell more vehicles?
We’re in kind of a low point right now in terms of new product. Saab needs to kind of gut it out the next couple of years and get to that.
The Turbo X (a limited-edition, high-performance 9-3) and Cross-Wheel Drive (Saab’s name for a new all-wheel-drive system) will help this year.
They’ve got to keep the brand healthy and get to late 2009, for fresh ground-up product.
We were supposed to get a (vehicle off the GM) Sigma platform, and it didn’t go.
We had a partnership on the new Tribeca with Subaru, but what happened was GM sold (its share of Subaru parent) Fuji (Heavy Industries), and the thing got killed. We’ve had a series almost of bad luck that has delayed things about three years. But GM has drawn a line in the sand; they have said they are going to support the Saab brand.
What are those new-from-the-ground-up products?
A brand-new crossover (shown) at the Detroit auto show and the new 9-5 in Geneva. Both of those are a couple years away (from production). It shows everybody they’re legit; they’re real.
We also have Cross-Wheel Drive coming later in the year, and the Black Turbo X, but only a few hundred of those.
Explain Cross-Wheel Drive.
Cross-Wheel Drive is a supersophisticated all-wheel-drive system. I’m not saying I understand all the science behind it, but the wheels move independently; it’s not just front-wheel or all-wheel.
In the Northeast, which is where Saab has most of its sales, not having all-wheel drive is a killer. The German brands, Mercedes and BMW, offer all-wheel drive, especially in sedans, and that will help us compete.
Are Saab dealers making money on new-car sales?
Saab stores have been healthy. Saab’s principal problem (high prices because of the euro) isn’t really its fault. But the reality is: It really, really strains profitability.
What’s missing in the Saab lineup?
The two glaring market segments we’re not in are all-wheel drive and a mid-sized crossover that’s going to really compete with the (Lexus) RX 330s and the (Mercedes-Benz) ML. There are tons and tons of those; if we get an entry-luxury crossover, that’s going to really, really help the brand.
Young professionals, single people, couples with no kids — they sort of outgrow our brand.
its all about the usa dollar fading versus other currencies. the sooner SAAB gets production facilities in NA the better. SAABs biggest market is in jeopardy.
the 9-5 for geneva? i thought it was to be the 9-1. (as long as i see something new, it probably doesn’t matter.)
What are those new-from-the-ground-up products?
A brand-new crossover (shown) at the Detroit auto show and the new 9-5 in Geneva. Both of those are a couple years away (from production). It shows everybody they’re legit; they’re real.
i think that’s a bit of an overstatement, at this point.
Well at least this guy recognizes what people have been saying here about the MY08 9-3 — That it’s too expensive (and the incentives don’t justify buying one over a 2007 model).
Now do something about it!
I’m wondering about that, too, 9x. The 9-1 info has come through multiple sources now, so I’m pretty happy on that. And this wouldn’t be the first time a dealer hasn’t quite known what’s going on, but I’m curious to check things out a little more….
Hey, that’s my local Saab dealer! Every time I’m in there the place is empty (no customers). Not a good sign…
Don’t worry I’ll be in Geneva to check out what happens for saab.
Anyway , the good news is taht Subaru and Saab won’t go further
If it’s a couple of years before the new 9-5 and the 9-4x are released, I feel very sorry for Saab. By then the current 9-5 will be almost as old as the 9000 was when it was replaced and I doubt if it can soldier on that long.
I don’t think the Euro has increased in value, it’s just that the US dollar has decreased against just about every other currency. I’m sure all importers will also feel that affect.
other importers, such as BMW VW etc, have production in the USA and in Mexico so they are insulated from the effect of the low USD.
Why does the value of the Euro have anything to do with the price of Saabs in the U.S.? I might understand if it is the Swedish Kronor we’re talking about, but the Euro?
So is the gist of it that the approximately USD2K the cars have been marked-up in price is hurting sales? How about the fact that they’re still not moving 2007 models fast enough even though they’re discounted as much as USD10K?
I suspect that the monetary conversion is a small part of the problem and is being used as a cop-out.
We have to wait until “late 2009″ until receiving fresh from-the-ground-up product? Was the 9-4X delayed? Last month Saab was saying it’s 18-months away, which would put it around mid-year calendar-year 2009.
Are these things further evidence that Saab USA and the dealer network needs better communications? We’ve heard this claim from several dealers already…
And how is it the lead Saab dealer can’t explain the basics of XWD? I mean, I don’t even sell Saabs and I understand and can explain the basics of how it works…
I am not I sure I buy into the “euro vs. dollar” argument for poor sales. There probably is no other market in the world where you can buy a SAAB as cheap as in the US. Still the horrible, horrible sales….Also, if it is correct that the 9-4 and the next gen 9-5 will not be available until 2010 (!!!), then that is truly bad news for SAAB.
1985 Gripen I agree with you abut the Kronor, but perhaps Saabs are now supplied to the US via GM Germany making the Euro take the blame? But you’re right it is a cop out. There are too many other factors involved. If Saab can’t have the 9-4x, the new 9-5 and the 9-1 all on sale by close of 2009, they will have big problems. The 9-3 even with it’s recent facelift will be past it’s prime by then. We can only wait with hope, anticipation and an open mind!
I really, really hope that we get to see the new 9-5 at Geneva, just because I can’t stand waiting any longer for it.
Could it be that Saab is playing up the “9-1 debut at Geneva” angle to draw attention to the brand at the show, while hiding the fact that they also plan to debut the 9-5.
It would make sense to pull such an attention-grabbing publicity stunt to bring attention to the 9-5 which will be a pivotal car for Saab.
Truth be told, the price of a new 2008 Saab 9-3 (or 9-5) SportCombi is what’s keeping me from pulling the trigger. The other car I’m cross-shopping is a 2008 VW Passat wagon, which is significantly less expensive (irrespective of the fact that it may be a lesser car in some respects). I assume that the explanation is that to cover the high costs of new model R&D, Saab has to charge more per car since they sell at a lower volume — a higher-volume brand like VW can sell their Passat at lower price and recoup the model development R&D costs sooner. That’s too bad — Saab is still in my “top 3″ brands of choice when it comes to eventually buying a new car, and I really want them to succeed, but price is certainly going to factor in to my decision!
Certainly exchange rates and the high content of German parts are problems…but they affect all Euro production. Sourceing more of the expensive parts from lower-cost/weaker money looks like a plan for the next few years.
Get a new 9-5 up to near 5 series turf and many converts will be waiting. The competition is formidable, not insurmountable.
I drove in the 09 50state VW Jetta TDieseII last week at bioD expo. Very impressive. This car will hit the floors starting around $25K, about $2K more than the petrol engine. Saab/GM need to get a similar motor certified and into their models that sell for over $30K. Saab drivers that love to drive, and drive alot will pull these things out of showrooms big time.
Scott, the passat wagon *may* not be a lesser vehicle. It is a lesser vehicle. Bias aside, VWs (not including older VWs or GTis) are NOT fun to drive. I’m also sternly against any vehicle with a timing belt.
As I write this it’s been just over eight months since the post above was written and things have actually gotten drastically worse.
I just got word from the salesman who sold us our CPO 9-5 Arc SportWagon about a month ago that he’s been laid-off, along with all the rest of the salespeople at Saab of Sherman Oaks (which is the dealer the chairman of the Saab National Dealers’ Council, referenced in the post above, works out of) save for one. This dealership is now down to a solitary salesperson in the Saab building.
I was told by my now ex-salesperson that they only sold FOUR Saabs in the entire month and mine was the last one he personally sold. He described Saab sales as “murder”.
The problems Mr. Drake points-out in the Automotive News article referenced above have only gotten worse and the global “credit crunch” and resulting economic meltdown have only added to the problems. Car dealers can’t sell cars if financial institutions refuse to offer loans, which is what has been occurring.
Furthermore, the U.S. Dollar has strengthened against the Euro recently, I believe, but you have to consider that according to Mr. Drake Saabs were already overpriced in 2007, this was made worse when the MY2008 models received a nearly $2000 price increase, and now we’re hearing the 2009 models got yet another $1500 price increase. If they were having a problem selling 9-3s for $27K in 2007 because they were perceived as overpriced, how do they think they’re going to sell them for $30K+ in 2009? Not to mention the 9-5 or 9-7X.
I have no idea how Saab expects to survive until 2010. And even if they do somehow they had better have a huge sales hit with the 9-5 and/or 9-4X. A critical hit means nothing. That has to translate into sales.