A single EnG snippet that just won’t wait
Update — this hyped headline hid a story that wasn’t as sensational as expected. Read on.
We’ve all looked for signs from within GM’s inner management circle for any future changes in Saab and it’s position within the General Motors framework. This has been debated, mostly by Saab enthusiasts, I will say, for years. The answers from the General have always come back with “Saab has a purpose” for GM. Today, we may have a chink in that armor.
Unfortunately, the article is available via supscription only, but the UK’s just-auto.com has posted an interview with the Chief Operation Officer for General Motors, Fritz Henderson. The article’s initial “teaser” paragraph paraphrases Mr. Henderson as saying that “while the brand [Saab] is strategically important to GM, it is no sacred cow and has to perform”.
I don’t think that this attititude is really news; after all, I’m sure that we could dig up some other parallel quotes that show the same “Saab must perform” mantra. However, to my knowledge, this is the first open acknowledgement that Saab is expendable. Don’t get me wrong — there’s huge difference between “Saab’s no sacred cow” and “Saab’s got to go”, but I think that where there are small outward moves there are likely strong under currents within the organization.
I truly wish that I had a subscription to the site to read the whole column in context, but I don’t. If any of you can supply the whole column, please provide to Swade or me and we’ll expand this post.
UPDATE——————
Thanks to the contributions of both Dan9-1 and Örjan in comments, we get the larger story, which is always less sensational than the headlines (note to self: study the context, study the context…). Please have a look at their comments below for the full article, I’ll add these comments:
1. I think that it’s healthy and perhaps necessary for GM to recognize that they can’t keep putting Saab off until tomorrow. Saab has to produce, and they’ve got to produce quickly.
2. Fritz Henderson is on track, of course, when he says:
“Where are our customers going? They are looking at smaller packages and four-cylinder engines, turbocharging. Saab meets those requirements - that’s its DNA.
“We’ll have to see if the next generation of Saab vehicles is successful, but this is a brand that doesn’t cross-sell with other GM brands, the customers are highest income, highest level of education, the vehicles are highly fuel-efficient, turbocharged four-cylinder engines…I think it’s worthwhile for us at GM to try to make it a success.”
3. And then, Fritz dons his “Captain Obvious” hat:
“On the brand issues, the product range was too narrow, we didn’t have sufficient scale and so it’s about broadening the brand and making it more relevant with a bigger product portfolio.”
On the whole, really what you’d sort of expect a CFO to say when questioned by a reporter: we’re doing everything possible to make the company healthy.
So, this wasn’t the bombshell that I thought it to be based upon the headlines. Carry on.
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here’s a bit of it, i’ve cut out the bit about hummer
hope this is the right place to put it….
“No, it’s not a sacred cow and we want all of our brands to perform. But if I think of the global premium market, what’s one of the fastest growing segments? Entry premium. It is still large and growing.
“Where are our customers going? They are looking at smaller packages and four-cylinder engines, turbocharging. Saab meets those requirements - that’s its DNA.
“We’ll have to see if the next generation of Saab vehicles is successful, but this is a brand that doesn’t cross-sell with other GM brands, the customers are highest income, highest level of education, the vehicles are highly fuel-efficient, turbocharged four-cylinder engines…I think it’s worthwhile for us at GM to try to make it a success.”
And Saab is now heavily integrated into GM now, Henderson says, with the idea of a standalone 100,000-unit auto manufacturer in Sweden disassembled over time.
Henderson acknowledges that Saab’s financial results haven’t been satisfactory.
“Historically, Saab has not been a source of profitability for us.”
But he believes a strategy is coming together with two elements - the brand and manufacturing economics - to address that.
“On the brand issues, the product range was too narrow, we didn’t have sufficient scale and so it’s about broadening the brand and making it more relevant with a bigger product portfolio.
“And on the economic issues, concentrating production 100% in Sweden for a global manufacturer, with exposure on exchange rates, wasn’t the right thing to do. So what we’ve done is take steps to integrate Saab into GM. We’ll build a Saab crossover vehicle in Mexico, we’ll build a Saab mid-size sedan in Russelsheim and we will build Saabs in Sweden too.
“All of that addresses a currency footprint which, over time, was posing unacceptable risk.
“What we want to do is make the Saab brand successful and that’s our objective.”
At the 2007 (North American) Saab Owners’ Convention in Troy, Michigan the guest speaker at dinner was Fritz Henderson, who according to this Fortune magazine article is a “renowned chopper”, rumored to have been standing-in for alleged original invitee to speak at the dinner Bob Lutz. At the time of the SOC Henderson was GM’s Vice President and CFO. He has since been promoted (this past March) to President of General Motors. He’s rumored to be Wagoner’s hand-picked replacement when he steps-down as CEO.
I remember Henderson coming-off like he really didn’t know all that much about Saab at all but retelling a story about how his wife wanted to buy a Saab and he tried to change her mind and convince her to buy a Cadillac (or was it a HUMMER? I don’t remember). It seemed very awkward to me at the time. Why would you tell a group of Saab enthusiasts that you tried to steer your wife’s purchase away from Saab but she stuck to her guns (to her credit) and insisted on the Saab?
Anyone else reading this who was at SOC in 2007 and remember it differently?
It’s frustrating on so many fronts, but the line I was given last year that GM has been telling Saab officials is that they need to just wait in the wings for their “turn” while Cadillac gets the current spotlight. When the money starts rolling-in to GM with Cadillac sales that money can then be used to develop Saab. Yeah, great plan…
The whole stuff!
INTERVIEW: Saab is key to GM but has to perform – GM’s Henderson
6 October 2008 | Source: just-auto.com editorial team
Saab will stay in the GM fold only if it meets expectations. This 9-4X crossover concept was shown at the Detroit show last January
view image
As GM looks to offload its Hummer brand, how does the company feel about perennial financial underachiever Saab? GM COO Fritz Henderson tells Dave Leggett that while the brand is strategically important to GM, it is no sacred cow and has to perform.
Like Ford, GM’s management has taken a decision to offload any assets or brands that is does not see as vital to its long-term survival. Cashing in is part of a restructuring process to rebalance the company, get better use of capital and focus efforts on making the commercially viable parts of the company as profitable as possible.
And these are tough times demanding that some tough decisions need to be taken. In GM’s case, Hummer is well and truly on the block with rumours of initial expressions of interest from Russia and India.
Is it worth the effort (management time) and expense (investment bank fees) to sell something like Hummer? Is it a distraction with the integration issues and didn’t Ford end up spending a lot of management time on the Jaguar Land Rover sale to Tata?
“I’d do a little work for $2.3bn, actually,” says Henderson.
And Hummer, he believes, was at a crossroads that demanded a decision as part of GM’s strategic planning.
“In the end, we have to decide what we want to do with the Hummer brand. Do we want to reinvest, grow it, what do you want to do with it? You’ve got to make some decisions…”
While he sees Hummer as a strong and iconic brand, the problem is that it doesn’t fit GM’s plans going forward.
“With all the things GM needs to do, I’m not sure it lands in our priority list any more. Therefore we have to look at alternatives.”
There is interest in Hummer, he maintains, but it’s too early to say how concrete that is.
” Information memorandums will be made available this month to interested parties and then we’ll see. My objective would be reach some decisions on this no later than the end of the year. That doesn’t mean that we will necessarily close by the end of the year, but we’d like to reach decisions and I think that’s a reasonable timetable.”
So, if GM wants rid of Hummer, what about putting Saab in the shop window? The unit has long been a loss-maker and, while GM has upped product development plans for the Swedish minnow in recent years after a period of protracted neglect in which the maker eked out a meagre existence on just two models, how committed to Saab is it? Desperate times require desperate measures?
Or is Saab a kind of sacred cow?
“No, it’s not a sacred cow and we want all of our brands to perform. But if I think of the global premium market, what’s one of the fastest growing segments? Entry premium. It is still large and growing.
“Where are our customers going? They are looking at smaller packages and four-cylinder engines, turbocharging. Saab meets those requirements - that’s its DNA.
“We’ll have to see if the next generation of Saab vehicles is successful, but this is a brand that doesn’t cross-sell with other GM brands, the customers are highest income, highest level of education, the vehicles are highly fuel-efficient, turbocharged four-cylinder engines…I think it’s worthwhile for us at GM to try to make it a success.”
And Saab is now heavily integrated into GM now, Henderson says, with the idea of a standalone 100,000-unit auto manufacturer in Sweden disassembled over time.
Henderson acknowledges that Saab’s financial results haven’t been satisfactory.
“Historically, Saab has not been a source of profitability for us.”
But he believes a strategy is coming together with two elements - the brand and manufacturing economics - to address that.
“On the brand issues, the product range was too narrow, we didn’t have sufficient scale and so it’s about broadening the brand and making it more relevant with a bigger product portfolio.
“And on the economic issues, concentrating production 100% in Sweden for a global manufacturer, with exposure on exchange rates, wasn’t the right thing to do. So what we’ve done is take steps to integrate Saab into GM. We’ll build a Saab crossover vehicle in Mexico, we’ll build a Saab mid-size sedan in Russelsheim and we will build Saabs in Sweden too.
“All of that addresses a currency footprint which, over time, was posing unacceptable risk.
“What we want to do is make the Saab brand successful and that’s our objective.”
Dave Leggett
Thanks for posting the link, Dan9-1. While Fritz is telling how Saab cars have highly-efficient four-cylinder turbocharged engines, the latest vehicle to come out of Saab (the Turbo-X) is has a thirsty V6 engine and the upcoming 9-4X won’t be available in North America with anything smaller than a normally-aspirated V6. Is he even educated on what Saab’s currently up to? This is the President of GM. He should be better informed than we Saab enthusiasts.
“…the product range was too narrow, we didn’t have sufficient scale and so it’s about broadening the brand and making it more relevant with a bigger product portfolio.”
Aren’t we on like YEAR 15 of hearing this? Yet come 2010 Saab will still have THREE models on offer, exactly the same number they’ve been selling in North America the past few years.
“…We’ll build a Saab crossover vehicle in Mexico, we’ll build a Saab mid-size sedan in Russelsheim and we will build Saabs in Sweden too.
“All of that addresses a currency footprint which, over time, was posing unacceptable risk.”
So they’re diversifying across different currencies, which is a good plan, and the move of producing the 9-4X in Mexico is probably a sound one, but I hardly see how moving production of the 9-5 (from Kronor to Euro) helps matters. The Euro to USD exchange rate is just as bad as the Kronor to USD exchange rate, methinks…
The solution to the problem, Fritz, is MORE INVESTMENT in Saab. Saab needs to fast-track new models, not plan for 2014 product introductions while putting out more and more concepts at auto shows which will never be built and are starting to make even the automotive press grow weary.
The elaborated article with the discussion of turbo 4’s and the appeal of small luxury cars made me feel a bit better, but I’m still waiting on the new products to make a judgement. So far the 9-4X has pleasantly surprised me with a very Saab-like shape that’s easily 100x better looking than the 9-7x abortion was. If they can give it an interior with the material quality of the new CTS and the button feel/dash layout of an Audi then it will sell well.
The “make or break” car for me however will be the new 9-5. If it looks as good and distinctive for a sedan as the 9-4X looks for a CUV, then it should be OK. The key is going to be whether GM learns from the mistakes they made with the 9-3SS and decides to give the NG9-5 as much of a Saab-like flavor as possible. The 9-4X will be a great “conquest” product, bringing new blood to the brand in much the same way that the Touareg, XC90, and Enclave did for VW, Volvo, and Buick respectively, and because of this it will be less important for the 9-4X to appeal to the loyalists.
The NG9-5 on the other hand, as a sedan/wagon/hatch(?) will have to be a much more traditionally Saab-like car, both inside and out. It will need to have as much Saab flavoring as the NG900/OG9-3 did, with a distinctive driver-focused dash and funky door panels that are unlike anything else on the market. Not in a flashy way mind you, but in a wonderfully scandinavian way that just screams “form follows function”, with the typically wonderful Saab seats completing the picture. Execute it in CTS/Audi-grade materials and it should be a winner. Outside should be no different, and the Aero-X nose and tail design language forms a great basis for a truly distinctive looking car. In between it should have the wraparound windscreen, upward-sloping beltline and wedge-shaped fender creases that we love so much about the 80’s and 90’s cars, along with that compulsory clamshell hood. It should be immediately recognizable as a Saab, while at the same time being one of the most eye-catching and distinctive cars on the road.
The NG9-3SS needs to take those same design ideas, and simply execute them in a smaller, more fuel efficient package with more body options. I can’t stress how badly Saab needs to hit it out of the park with these cars, they need to be to the brand what the C900 was in the 80’s, what the A4 was to Audi in the 90’s, and what the G35 was to Infiniti in the 00’s.
If GM can’t or won’t let Saab do this, then all I can say is “help us Carlos Ghosn, you’re our only hope”
Sorry for multiple comments, but reading over my last comment I want to amend my 2010 contention thusly, “come 2013 Saab will have THREE models on offer…”. The 9-X or 9-1 or whatever you want to call the proposed smaller-than-9-3 vehicle has still not received the green-light and with the 9-3 now moving to the smaller Delta II platform, I’m not sure there’s room for a smaller-than-9-3 vehicle anymore anyway.
We know Saab’s plans out to around 2013 (being the proposed production date for the next-gen 9-3) so it appears that it takes Saab at least 5 years to go from drawing board to production. If that’s the case if there are any other vehicles Saab’s secretly planning on building (why wouldn’t they have shown them as a concept at an auto show?) we wouldn’t see them until at least 2014. What are Fritz and GM doing to help Saab’s problem of not having enough product in their portfolio? I remember this problem being identified as early as 2000 or so, maybe sooner. So it was recognized by GM as a genuine problem, why has it gone un-addressed for so long (not counting the lame badge-engineering fiasco of the 9-2X and 9-7X)? Fifteen years is a long time, and I still don’t see concrete signs that a remedy to the problem is even in the planning stages.
Oh and I’m so thrilled to se GM FINALLY acknowledge that Saab’s buyer base is far and away the wealthiest and most educated of their brands. Even Cadillac, Hummer, and GMC have been reduced to little more than working-class aspiration brands, something for the Wal-Mart crowd that’s currently buying cobalts, malibus, and equinoxes to oneday dream of owning.
Saab on the other hand has buyer demographics that are closer to those of the high-end BMW and Mercedes products, these are often doctors, lawyers, architects, trust-funders and urban professionals who could buy most anything but valued Saabs because of their practicality, everyday luxury (AKA no stupid gimmicks for the sake of stupid gimmicks; I’m looking at you, Turbo X welcome message…) and most importantly, a low profile and an image that’s anything but flashy. It’s very much the “I could afford to buy more but I don’t because if you have to flaunt your wealth and class, then you clearly have neither” ethic.
What this means for Saab is that they’re selling cars to what is far and away the most educated and discriminating demographic that buys GM vehicles. While a typical Cadillac or Hummer buyer might be able to look past cheap interior materials and poor driver feedback because it’s covered in shiny flashy bits that will be the envy of everyone in your subdivision, the typical Saab buyer will see those same things and up and leave the brand. I’ve seen it way, way too often and there are too many former Saab owners around here who now drive around in XC70’s and BMW/Audi/Merc wagons, not to mention the college professor market that Saab’s totally lost to the (5-door hatch!) toyota prius.
“We’ll have to see if the next generation of Saab vehicles is successful, but this is a brand that doesn’t cross-sell with other GM brands, the customers are highest income, highest level of education, the vehicles are highly fuel-efficient, turbocharged four-cylinder engines…I think it’s worthwhile for us at GM to try to make it a success.”
This quote would have been equally apt back in 1990 when the first 50% of SAAB was sold to GM. 18 years on and they still play the same tune.
SaabKen: hear, hear! But this is a “new” crew heading-up GM. “Meet the new boss, same as the old boss…” You know when the executives at GM totally screw up and drive the corporation into bankruptcy they’re going to be rewarded with their golden parachutes. Maybe we the U.S. taxpayers will bail them out…
Henderson must know at least something if he talks about turbocharged fours being in Saab’s DNA (although one could argue it is Volvo jet engines and Triumph two strokers - separate story).
Of course Saab has to perform. How is this news? Did you really expect him to come out and say “It’s okay for Saab to keep losing $400 mil. a year - it’s special”?
Even Saab’s mother (Saab Aerospace) ditched the car company because it wasn’t making any money. So yeah, Saab has to perform. Welcome to the business world.
Kroum.. I´ve said it before, and hopefuly never again…
The Jet engines in Saab fighters are adapted to the aircraft by Volvo and Volvo has the service bit of things regarding engines.. But the origin of the engines is the US. I´d say Saabs DNA= Aircrafts and Turbo.
The article states that Fritz Henderson is GM’s COO (Chief Operating Officer), but I remember he was promoted to President of General Motors last March.
I just looked it up and learned that Fritz “The Cat” Henderson is General Motors’ President and Chief Operating Officer, having been promoted from Vice President and Chief Financial Officer in March 2008.
From reading that article, it seem’s Saab is like a third world athlete, devoid of all the best resources and training but still expected to win medals. All we ever get is the same old line from GM, just different variations on a theme.
Alex, the next gen 9-3 needs to lose the “SS” tag and be offered in more bodystyles.
It’s taken along time to make the 9-3SS a resonably good car and it still doesn’t gel with many of us.
The last thing Saab needs is another 9-3SS. The new 9-5 and the next 9-3 have to be right from the start and not take 3, 4 or 5 years to get right. If you read between the lines, it’s like GM is saying that Saab is running out of second chances.
Oh I agree, I’ll be highly disappointed if the 9-3SS is a “SS” at all, it’s just that NG9-3 is a bit confusing. It had better be offered as a coupe/3-door fastback, 5-door hatch with a skoda-style twin rear gate, a convertible, and possibly as a wagon as well.
Personally I’d love to see Saab go back to the old number system which would be a great symbolic gesture to signal a return to the ways of old, let the 9-1/9-2 become the 90, the 9-3 goes back to being the 900, and the NG9-5 would be the 9000 and give the 9-4X some sort of “sonett”-like non-numeric name but that would make too much sense for GM)
Well folks, Saab’s presented us with some outstanding concepts since 2001 (the best of which, IMHO happened to be the 9-X and 9-3X…you know, the first ones). From that standpoint they’ve stepped up to the plate. GM is at fault for making a pig’s breakfast of it all from there. They killed off the hatch just when the rest of the world finally embraced more unconventional body styles, and introduced Saab’s first gas-sucking SUV (okay, not including the Trollblazer) just as fuel prices reached an all-time high. GM has it all wrong with regard to Saab. Saab does not need a broad product line, it needs to get back to being Saab (you know the virtues I’m talking about) and to get the message out to customers.
The 9-3 SS isn’t a bad car. Yes, I’m biased, I own one, but just look at the sales numbers. It’s Saab’s best seller and it trounced sales of the old 9-3. There’s certainly room for improvment, but the 9-3 SS was a huge step in the right direction for Saab (except they should have offered a hatch variant, not exclusivley, a variant). Now what Saab needs is another step in that direction, since the release of the SS in late 2002 they’ve been buying time with facelifts, interior makeovers, new engines, etc. XWD is nice but it’s not gonna make or break the brand.
Alex: I agree, the curent Saab numbering system is supposed to relate Saabs to BMW models, but it has never really worked and it never will. As MarkS said, let Saab go back to being Saab including the model designations.
Rogan: It’s debatable if the 9-3SS has sold better than the NG900/OG9-3. Everyone seems to agree that the 9-3SS would be a better seller if it had a hatch option and with the benefit of hindsight, I think the older model might have sold somewhat better with a 4 door sedan option too. It’s just that both cars were quite average until their major makeovers. Saab can’t afford to do that again. The new 9-5 and the next 9-3 have to be good from the very start and only get better. As I said before, GM seem to be implying that there won’t be any second chances this time. Unfortunately as always, Saab have to make a silk purse out of a proverbial sow’s ear of generic GM bits with minimal money and resources.
Alex wrote: “Oh I agree, I’ll be highly disappointed if the 9-3SS is a “SS” at all, it’s just that NG9-3 is a bit confusing. It had better be offered as a coupe/3-door fastback, 5-door hatch with a skoda-style twin rear gate, a convertible, and possibly as a wagon as well.”
Eeh? Alex.. Most 9-3´s sold in the nordic countries are wagons. Without it, Saab would flip over and die. So rest asure that the Next 9-3 will also be a wagon. And i guess the SS is needed in some markets. A coupe is a must. It surprises (overstatement) me that GM never invested in making the 9-3 coupe in 2002. They worked on it but caned it. The C900/NG900/OG9-3 all sold very well in coupe form. Looking out my window right now I can see one C900s-lpt 3d and one OG9-3 2,0T 3d… The latter being my baby
Cheers/Tom
I received a correction to one of my comments above. At the 2007 (N.A.) Saab Owners’ Convention in Troy, Michigan it was actually General Motors CEO Rick Wagoner who was originally invited to speak at dinner whom Fritz Henderson cleared his schedule to replace, not “Maximum Bob” as I’d stated earlier.
Sorry for the error.
Also, I’m assured how familiar with Saab Mr. Henderson is as his wife is a dedicated Saab ‘vert owner and in his former capacity at GME Mr. Henderson visited Saab on several occasions.
In this article he was merely stating the obvious that all brands are expected to make money. He wasn’t threatening the imminent demise of Saab or anything.
I explained to the person who corrected me while I appreciate this, but it seems a little unfair to me to claim that Saab needs to start making money when GM’s under-investment in the brand is the direct cause of sales being so low and long product cycles are the cause of poor 9-5 sales.
1985 Grip: Not sure if this was where your comments were aimed, but I did mention at the end of the post that Fritz Henderson answered as you’d expect a CFO to answer. I wrote that on purpose pointing out that the comments were pretty much aimed at the numbers, not at the direction of the company as a whole. In other words, he answered as you would expect a CFO to answer even though he now holds the title of COO.