Motor Trend blogger agrees with TS on US dealer strategy
As we’ve said in a previous post on this topic, the trend toward combined Cadillac, Hummer and Saab dealerships has it’s challenges.
Motor Trend’s Andrew Schrieber agrees.
Mr. Schrieber puts the total number of US Saab dealerships at a mere 238 stores. That’s even lower than I expected, and certainly too low to be a real force in the marketplace. Contrast that with Cadillac’s 1,400+ dealers and you’ll see my point. That’s the upside for Saab in this whole thing — if just one-third of the Cadillac stores take on the Saab line, the number of Saab dealerships in the United States trebles overnight. Oh, and these aren’t start-ups, either — Caddy dealers are typically successful, profitable businesses. That’s the good.
In my view, Mr. Schrieber’s right about the bad, too: that Cadillac, Saab and Hummer have little in common, and generally don’t appeal to the same buyer. In his words:
Hummer, Cadillac, and Saab all have very distinct identities — about the only thing they have in common are their prices. Though it may be practical to put the brands under a single roof, these new mega-dealers might have trouble appealing to three very different types of customer.
In my opinion, he’s right. I will admit that the efficiencies are there. The three brands are in a similar price range, so it follows that customers would come from similar residential areas. The combined dealerships can pool resources for lower infrastructure costs, and diversity of offerings helps to smooth out the revenue ups and downs of a single-brand dealership. My concern is the effectiveness of these combined dealerships to market three very distinct automobile lines to three very distinct set of buyers. I simply can’t see a selling proposition besides financing that will work month after month for all three brands.
I’ll challenge you with this excercise: try to come up with a single phrase that discribes design, philosophy or technology that works for all three brands and isn’t trivial. It’s exceedingly difficult; one that I almost deem impossible. My attempts:
Cadillac, Saab and Hummer…
…Performance Vehicles from GM — The trouble with this one: “performance” means something totally different for each brand. In Cadillac language, “performance” means muscle; in Hummer speak, “performance” means off-road capabilities; in Saab parlance, “performance” means technology to get the most from the car and resources.
…Luxury Vehicles from GM — This is a little closer to unity, but still flawed. After all, some Hummers aren’t luxurious, and some Saabs may not be easily pigeon-holed into the “luxury” category either (I’m thinking of the 9-1 here). Even if this were completely true, it’s a weak marketing position and a term that Cadillac is running away from in their marketing.
…the Best of GM — May be true, but certainly won’t make people want to come to the showroom.
…Quality cars from GM — This fits, but once again, it isn’t a compelling proposition, either. Everyone claims quality.
Got any other ideas? Comments are open….
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Well I’ll just say the Saab dealership in San Antonio, Texas is fabulous. Its grouped in with Caddy and Hummer. Its all one building but each section has its own distinct feel and I get much better service there than any stand alone Saab dealership I’ve been to.
I’ll agree that the Caddy and Hummer brands can bring the capital required to keep a Saab store open.
I’ll add this, the distinct brands CAN live under the same roof… and well.
There is a catch, however. The management of the company selling all three must be willing to invest in labor. While all personnel at the dealer must be familiar with all three brands, the store must have people in every department who *specialize* in one brand.
A Cadillac salesman cannot sell a Saab. Just like a Saab salesman cannot sell a Hummer. Their minds just don’t switch gears for those customers the way they have to in order to close the deal. The same goes for service. Hummer mechanics can’t efficiently work on Saabs and vice-versa.
IMHO, it would be ideal to sell all of your brands under one roof. This significantly reduces overhead. However, an owner must keep in mind the requirement to spend money in order to make money. In a store full of Cadillac salesman, you might as well not bother with a Saab franchise.
I think it could work. All three brands have upper income customers.
When I go to a dealership, it is more important that the salesperson knows what he’s selling than what brands are present on the lot. There’s nothing more off putting than being approached by someone who doesn’t have a clue about cars.
I do not see a problem here. Bringing all of GM’s premium brands under one roof makes economic sense. In all honesty, I’d rather see Saabs sold in a Caddy dealership than a Saturn one.
At the end of the day, market is driven by pricing. Potential buyers can be convinced and talked into buying a Saab or a Hummer - this is why we have sales people on the floor. Otherwise we’d have automated dealer kiosks.
Also, I tend to disagree with the statement that Saab performance means getting the most from the car and resources. Ironically, if Saab is to move upmarket and sell more cars, it would need a more practical approach.
And the technology just isn’t there right now - Saab are not that fuel-efficient anymore. You can’t sell a $40K car on premise of how little gas it consumes - this really is a non-issue with the potential buyers at this price-bracket.
Looking back the Saab’s heyday in the 80s, I really do not believe it was the MPG numbers that made the marquee famous. Let’s give it a think: of all the stories about Saabs, and what had us converted, the ones I seem to recall mention “turbo rush”, “mid-range acceleration”, “ergonomics”… I have yet to hear a story about anyone going bonkers over the fuel consumtion. “Whoa, we were driving for 300 miles and the tank was half-full”. Really doesn’t strike me as a modern-day Saab story.
I see the efficiencies in grouping together the Saab, Caddy, and Hummer dealers, but each needs specialists both in sales and service to help with customers. It doesn’t have to be all of them; the Saab specialist could still sell Caddys and vice versa, but when a customer asks a very specific question about a Saab, there has to be someone enthusiastic and knowledgeable about the product to answer the question available for the regular salesperson to ask.
“GM Premium” might be a nice moniker for the dealers, but I don’t know if that might turn away some import customers who wanted to look at Saab and didn’t know that GM owned them.
Charles-I was in SA recently, driving up and down whatever 10lane? monstrosity that is. Ya cant see the guys sign!! Everybody else ya can, right? But your right, once you find it…good shop.
Now the real ???? 1400?Versus238??? And how many Saturn dealers? Or all GM dealers for that matter. Pretty much Id think near every third?
Home Depot(for Saab)would be safe. Why would you not want to captivate 35+YOs, who had a mortgage, and were tired of the same ole. Not everyone aspires to Cadillac or Buick.
I think it is better to have cars that have the same spces but in different pricerange. Often you know what kind of a car you want. Then it is all about what you get for your money. It would be better if Saab was combined with someonels than Hummer…
I think there should be no inherent problem in the sharing of sites, provided, as has been stated above, there are distinct ‘zones’ for each brand and that the workforce really understand them. If I was a dealer, I would regard three disparate brands as some form of hedging against changes in consumer preference - spreads the risks. In Belfast our Saab dealer is co-located with Porche - a glamorous landlord but in my mind not a natural ’soulmate’ - other than a few ‘conquest sales’ for second cars in the Porche households, I see little synergy or benefit there and the labour rates seem to be the price of this association. Still, beggars can’t be chosers, Saab’s lucky to have such as site and profile.
I am divided on shared dealers. Audi split from VW years ago as the shared dealers idea did not work for them amd Audi wanted to be seen as “stand alone”. I would suggest that shared sites are a necessary evil until Saab has a big enough product line to go it alone ie: 9-1 4 and 5 door, 9-3 Saloon, Wagon and ‘Vert, 9-3X, 9-5 Saloon and Wagon and 9-4X.
Mark, trust me the Saab labour rate is in no way affected by Porsche and would be higher if they had to pay the full site costs on their own.
Elder Automotive Group owns 2 Saab dealerships here in Metro Detroit, Saab of Troy and Saab of Lakeside. Both are co-located with Jaguar and Land Rover. Mind you Jag/LR share a building and Saab has it’s own right next door but it’s kinda the same idea with Saab/Caddy/Hummer. Premium brands grouped together…….
I’m surprised to see the support given the negative comments les than a month ago.
Inherently, there should be no issues IF the dealer pays attention to all three brands separately. That’s my concern — how do you make a successful Caddy dealer give Saab its due? Saab will be around 5% or so of the Cadillac business which may get Saab neglected a little, especially when it comes to marketing.
Saab may get more cross-shopping with Cadillac as well. Customers looking for a CTS might never even think of going to a Saab dealer. It’s those customers that Saab needs. People who never thought of it as an option.
This is where sales can steer customers to Saab. “If the CTS is out of your price range, how about a 9-3. It has all of the same features, has sophisticated European styling, and available Bose audio (I hate Bose, but it seems to sell cars) all starting at $5K less.
If you were already interested in a Saab, you would go to whatever dealer has them and a shared dealership wouldn’t stop you so the lack of independent dealers is null from a sales standpoint.
Here’s my summary of the issue:
In theory, the idea is good. In practice, the idea could be very bad if potential problems aren’t addressed.
Like Eggs said, the tendency would be for Saab to be neglected (like the red-headed stepchild) and banished to a little corner. So how does GM overcome this?
First, train the dealerships and employees to be specialized in one brand (as has been mentioned). This is applicable to both the sales and service departments, which ensures the best customer satisfaction possible.
Second, allow the brands and dealerships to maintain separate marketing strategies. One single game plan doesn’t work here, like Swade clearly points out- at least not nationally, anyway. However, if the dealers really want to advertise all three together locally, let them- the market will show which method of the two is better.
And third, establish a company policy regarding the allotment of resources and the treatment of each brand. Ensure each company has its rightful place- like x% of the showroom floor or lot, for example. Thus all are fairly represented. Those not in compliance lose fiscal support from corporate.
Bottom line: if GM is going to merge the three brands, fine. But do it right the first time or the bottom line will continue to wither away.
I have commented in the past that I think that combining Saab, Caddilac, and Hummer is a good move, because you can get a wide variety of vehicles under the same roof. And it extends Saab to locations that they wouldn’t be on their own. I live in the sparsely populated part of the USA in the mountain west, and outside of the large metropolitan areas there are no Saab dealers at all. So even a couple of Saab models sharing a showroom with Hummer and Caddy would be a big improvement.
At least in Salt Lake where I live, most of the car dealers are huge multi brand conglomerates. My Saab dealer (Ken Garff) also sells Mercedes, Jaguar, Volvo, Mitsubishi, and Hyundai in the same location, although each has its own individual building/service area. In other locations, they sell pretty much every other car brand generally available in the US. They apparently don’t have a big problem selling multiple brands. And the other dealers are (mostly) also large multi-brand places as well. So from my experience, the small, single brand dealer is pretty much an anachronism. Every dealer seems to be going to multiple brands in one or more locations.
The key is to have the dealer and sales staff that is actively interested in selling Saabs, regardless of how many other car lines are in the building. And that is something that comes down to the individual dealer and doesn’t necessarily relate to how many car lines the dealer sells. What it comes down to is - if Saabs are compelling products then they will stand out in the showroom and they will sell.
Whatever they dream up, its all in the execution. Most things done well will succeed. Even great ideas will fail if poorly executed. What does good execution mean for a car dealer?
Product availability
Showroom space
Knowledgable, friendly and enthusiastic staff
Competent and customer-oriented service dept
Somewhere to park
Accessories & lifestyle junk
etc…..
Sum it up in one word? Commitment.
There is one simple reason why Saab/Cadillac/Hummer brands won’t work, and that is class. The US tries it’s best to ignore the issue of social class, but it exists nonetheless, and the three brands attract people from vastly different social classes.
While Cadillac was once the standard of the world, and I’m sure there are still a few old-line patriotic plutocrats who buy them, it’s largely a middle class car. Cadillacs represent the all-American idea of living large, and they appeal to average middle-class Americans. Your typical Cadillac buyer is someone from a middle or lower middle class background who has become successful enough to afford a car in that price bracket. Don’t let the money fool you though, socially they are still middle class Americans and they care more about whether the car LOOKS luxurious then they care about build quality, etc. Cadillac’s are the cars for your lower to middle management, marginally college-educated, Chevy driving American who has finally landed that raise. If we’re talking in terms of demographics, most Cadillac buyers are probably only a generation at most away from your average $40k-$60k a year American families.
Hummer buyers skew into the lower and working classes. They are cars that people aspire to to show the world that they made it, with almost no regard for how well they’re built or if they’re even luxurious. I’m sure if you ran the numbers for Hummer buyers that you’d find that many of them have only a high school education at best and are only a generation away at most from working-class $20k-50k per family backgrounds.
Saab on the other hand attracts a very different, much more educated buyer. Saab buyers skew to the upper middle and upper classes. These people routinely make $100-$150k+ a year and hold graduate-level degrees. Instead of being former Chevy drivers, these people stick with premium and luxury brands like Volvo, Jaguar, Land Rover, Volkswagen, BMW, Audi, and Mercedes.
Now why is this a problem? Because it all comes back to how the dealerships tune their sales pitches, customer service, and even how they appoint their dealerships. Cadillac and Hummer buyers, often being completely new to luxury cars are easily swayed by things like leather seats and chrome. These are people who think heated seats and headlights that shut off when you turn the car off are exotic, and the management tunes the sales pitches to reflect their desires and understanding of the luxury car market.
Potential Saab buyers on the other hand are a much more discriminating bunch. They care much less about how flashy a car looks, and much more about how luxurious it actually is. This means that playing up unusual features, interior materials, etc is much more important.
Most importantly, the salespeople need to play to the education level of the customer, and the harsh reality is that Saab owners are among the most educated car buyers.
Unfortunately this means that there are huge cultural barriers for the dealer staff to bridge between the Cadillac/Hummer side and the Saab side of the dealership. I just doubt that Saab/Cadillac/Hummer dealerships can successfully accomplish that while retaining the brand identity that Saab needs to sell cars. I don’t think any of us want to see Saab turn into the brand you buy when you want a Cadillac but can’t afford one, that would destroy everything we love about the brand.
Now Saab/Volkswagen or Saab/Jaguar/Land Rover would be a great idea, because those brands all share the same buyer demographic, and the brands are more likely to work in concert and lure prospective buyers in.
Most Buyers in the Saab demographic on the other hand will probably be turned away by the sheer sight of Hummers and Escalades alone.
Wow, lengthy, well worded comment. I must say that I disagree with several of the details, but overall, this is the kind of conflict that I forsee — Saab simply isn’t paid much attention and/or gets the “if it’s good for Cadillac, it’s good for Saab” treatment from dealers that depend upon large volumes of Cadillacs for success. EnG
I agree with Alex, I have always thought of SAAB as the Audi competition. I don’t want SAAB to become what you buy when you can’t afford a Cadillac. I think that when Audi split from VW it was a great move, because now-a-days, most people don’t even know that VW is under the same company as Audi. When SAAB is strong enough in the future, I hope one day it can stand alone, or at least be along side of other European brands. The best team up in my opinion would be SAAB/Land Rover. Maybe the firm that is buying LR from Ford, can buy SAAB and liberate them…just a thought.