I don’t think writing this is going to make me any more popular in Detroit, but I do want to acknowledge something I saw – and was really happy about – this morning over at Autoblog.

AB have a post there titled Saab responds to oblivion comment for the 9-4x. In that post, they cover a response from SaabUSA’s Jan-Willem Vester to an earlier post they wrote on the 9-3x and 9-5, where they opined that due to the 9-4x not being mentioned as a 2009 release, they thought that Saab might slowly slide off into oblivion.

Jan-Willem responded as follows:

The word ‘oblivion’ is certainly not in Saab’s vocabulary anytime soon, especially since the Swedish government has proven be to be very supportive of the brand as one of its best known products around the world and a main source of jobs for the region.

I’d just like to take this opportunity to thank Jan-Willem for responding in support of the Saab brand.

I firmly believe that this is a by-product of recent moves to make Saab more independent from GM. For the last couple of years, SaabUSA have been pretty silent in responding to the various comments made by the media. It’s been up to sites like this one and others like it on the web to carry the torch in this regard and Saab have been increasingly mocked by the automotive pundits as a result.

Saab don’t need huge shows of bravado or posturing, but they do need to grow a pair, stand up for themselves and demand the respect they deserve as a brand. This was a decided step in that direction and I think the comments section of that post at Autoblog bears this out.

Saab make some really fantastic cars and I’m convinced the ones we’re going to see later this year are going to extend that tradition. More than any other year, 2009 needs to be a year where Saab stand up for themselves.

I hope the Saab people in a few more jurisdictions follow this lead. A letter from the Saab people here in Australia to that joker from The Australian newspaper wouldn’t go astray, for starters.

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The philosophy I’ve adopted in the last few years whilst writing stuff here at Trollhattan Saab is that I’d go with whatever I considered best for the Saab brand.

During that time, I’ve been unhappy with a lot of things GM have done with Saab but I’ve always paid respect to the fact that without GM’s purchase of Saab, there’s a reasonable chance that the brand would have folded. I’ve tried to hold on to the belief that good things were around the corner for Saab under GM’s management and it’s somewhat ironic that I’m writing this post at a time when I believe that good things are, quite literally, just around the corner for Saab.

BUT….

The events of the last week or so have forced me to re-think this point of view. Having done so, I can’t come up with any conclusion other than wishing and hoping that the outcome of General Motors’ “strategic review” of Saab results in them successfully finding a buyer for my favourite car company.

I’m proud of Saab. I’m proud of their products, their history and their philosophy on how a car should be designed to perform. I truly believe that the way Saab would build a car is the way that most cars should be built. I believe that properly resourced, Saab cars would be the jewel in the crown of GM’s range, but I don’t think that will ever happen. Saab are Swedish, a fact that GM just doesn’t seem to understand or want to accept.

What’s more, the events of the last week in the US congress have gone a long way in showing me just how precarious Saab’s future is; held to ransom by a bunch of people at GM for whom Saab’s existence is secondary and by a bunch of ‘decision makers’ in congress who probably wouldn’t know a Saab if they saw one.

That a company with so much heritage and so much to offer is existing at the whim of such individuals is pretty much unbearable to me.

Better the devil you know?

There’s an old saying – “Better the devil you know than the devil you don’t”. In many instances, that’s got some merit. I don’t believe it has merit in Saab’s case anymore.

We know that General Motors has elected to invest in Cadillac over Saab for the global market.

We know that Saab won’t see a full model range for many years to come under General Motors.

We know from past experience that that full model range will very likely by compromised by parts sharing and cost cutting the very areas where it shouldn’t be such as interior switchgear and fittings.

We know that GM have stated in the past that they place value on Saab’s market segment, they’ve said that Saab’s customers are people who won’t shop for any other GM brand. Despite this, they’ve done more and more over the years to make Saab just like every other GM brand, thereby killing off the appeal that Saab might have had for those buyers.

Or maybe the devil you don’t?

What we don’t know is who a new buyer might be and what assets GM would be willing to include in a sale. Executives and analysts have said recently that Saab is too integrated into GM to separate them now, but I don’t believe it. Saab has a good brand with a global presence. Saab has real estate and a factory in Sweden, they have employees in Sweden and a basic range of cars. Where you’ve got all that, you’ve got something to sell and I’m sure arrangements can be made to source parts from GM Europe or even continue 9-5 manufacturing in Russelshiem on a contract basis, a-la the Magna Steyr arrangement with the convertible.

What you could assume about life under a new buyer is that that buyer would be focussed on Saab’s success, and that the recipe for that success would involve capitalising on Saab’s good reputation for turbocharging, safety, innovation, utility and character.

My aspiration is to have a Saab that I fully believe in once again, not one that I believe could be all that I want it to be when and if a parent company makes it a priority.

It’s all about the Saabs.

I want to stress that this isn’t a GM-bashing enterprise. I don’t like the predicament that GM are in and I really do hope they can make their way out of it.

My focus is all about Saab. And I just don’t believe that Saab will have the outlook it could have with GM in control. Even if GM do get through their current troubles, how long will it be before developing Saab becomes a priority? I don’t think it’ll come soon enough, especially for those of you who are already teetring on the brink of Audi ownership.

I hope GM can get back on their feet and for the sake of their workers and the people who depend on them, I hope that they have some degree of success.

But I also hope that they pass Saab into some safe hands that will be willing to build the brand into what it can be.

I no longer have faith that General Motors will do that.

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First things, first.

I’ve been living on 4 or 5 hours sleep a night for the last few weeks and tonight I’ve just crashed. I’m beat. So I’m getting an early night.

I started writing a post that I was going to call The Case Against GM where I was going to list and elaborate on all the theoretical corporate crimes committed against Saab in the last 8 years. But I’m too tired to concentrate.

Instead, I figured a little user-generated content was in order, so it’s up to you. Your assignment is as follows:

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Imagine that instead of General Motors conducting a strategic review of Saab, what if Saab had the power to make the decision and were conducting a review of their continued association with General Motors?

What factors, historical or current, would they weigh up in making that decision? Would they stay or would they go?

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You can argue in favour of staying with GM or you can argue in favour of severing ties with GM. Assume there’s a reasonably suitable new owner out there somewhere with an interest, but do not assume that Saab would have total independance with regard to its own future.

Why would they stay? Why would they go?

If addressing the arguments of a fellow commenter, keep it respectful. Keep all of your arguments respectful.

Bombs away!

I’m off to catch some Z’s.

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According to CNN and other news sources, the CEOs of the Big Two and a half have agreed to salaries of $1 for 2009 if the government hands over the $25 billion in aid that they seek. As Swade and others have said, this won’t be a difference maker in the long run, although it’s nice of them to make the gesture.

Rick Waggoner made $15.7 million in salary in the last complete GM fiscal year.
Alan Mulally made $22.8 million in salary in the last complete Ford fiscal year.
Robert Nardelli’s salary isn’t publicly known since Chrysler is, ostensibly, private.

Even if Mr. Wagoner forgoes his salary, and Maximum Bob Lutz and all of their cronies over at GM took $1 million pay cuts in 2008, how much would that help? For argument’s sake, let’s assume that about 20 or so executives at GM (other than Mr. Wagoner) make enough money each year that they could pony up a $1 million pay cut in 2009. That would be $35.7 million returned to the coffers next year. For the 74,000 UAW employees in GM’s employ, that amount would buy another 6.3 hours of pay for each UAW worker at the current rate of $77 per hour. It doesn’t even buy another day of operating cash!!

Even if we expand the executive pay cuts and reduction in executive privileges to $100 million in savings for 2009 (a number that likely exceeds reality), that only buys 17.6 hours of employment for all UAW workers employed by the General. Just over two additional days of operation.

On the other hand, if the UAW cuts to the same pay structure that Toyota workers in Georgetown, Kentucky or Honda workers in Marysville, Ohio enjoy, that’s a $30 per UAW employee per hour savings. Multiply that by a standard 40-hour work week year (2080 hours), you’ll derive over $4.6 Billion in additional cash for the corporation. As a point of reference, I estimate that Saab’s annual sales are just below that amount (about 125,000 vehicles at $35,000 per car*). The delta in UAW vs. Toyota pay is, for GM, larger than Saab’s entire budget.

Do I agree with exhorbitant executive pay and privilege? No, I don’t. I don’t think that Rick Wagoner or Alan Mulally are worth anywhere near the amounts that they get paid. For that matter, I hope that the GM board gets their come uppance for steering this company into the rocks in the first place, and those rocks include this inflated executive pay and lifestyle.

However, my point is this: the cost of the UAW is so huge that other cutbacks pale in comparison to the reductions needed there. Yes, cuts are needed across the board, but unless the UAW cuts to a competitive wage, everything else is for naught.

* – Remember that you have to consider that Saab only makes money on dealer cost, not selling price, so I feel that $35,000 per vehicle is about right.

For reasons which will soon be revealed, I’ve been become acutely aware of the margins on auto options as mentioned in a previous post. The prodigious markups are obvious on some items — after all, who really believes that floor mats cost anything near the charge? How about the stereo upgrades that can be bested in aftermarket gear for less than half the price? In some cases the upgrades are worth the price because they look or feel better, but in others the value vs. the cost is debatable. In this post, I explore this question: is metallic paint really worth the price?

Most car makers still charge a premium for certain colors of paint. Saab is no different. Buy a Fusion Blue Metallic 2009 9-3 and the car will set you back US$550 over the same model with Polar White paint. On a 9-5, the same privilege will lighten your wallet by the same amount. In fact, only three colors, white, red and black, are offered at the “base” price.

Is this additional cost justified, or is the option up sell for metallic paint simply additional margin for the automaker?

First of all, let’s explore the roots of metallic paint and why automakers charged a premium in the first place.

The obvious question: does metallic paint and it’s close cousin pearlescent paint cost more than solid color paint? The answer: not much if any. Metallic paint simply has a very small amount of aluminum flake added to the formulation while pearlescent paint has an equally small amount of mica flake added. Certainly these raw materials are very inexpensive, and the remainder of the mixture doesn’t vary to any great degree. If you want to test this theory, call an automotive paint supplier and request pricing for any color in both metallic and solid. There will be no difference.

The next question: does metallic paint cost more to apply? Well, that’s debatable.

In the 1960’s, metallic paint really was something special. Without the automated paint booths that create today’s perfect finish, paint was either applied with hand-held sprayers or with full-component paint baths, neither of which guaranteed even coverage and therefore even distribution of metal flake. Therefore, paint rework was more common and more difficult with metallic colors and thus metal flake was more expensive overall.

By the late 1970’s, the environmental regulations and workforce protection laws changed paint formulations dramatically to reduce airborne pollutants released in the paint manufacturing and application processes. Faced with the differences, automotive finish experts were forced to change many established practices to make the new paint work. Because I can find almost no data on the comparative costs, I’ll give the car makers the benefit of the doubt here — let’s assume that some difference in cost existed during this period.

Therefore, there was likely some historic precedent of increased production cost for metallic paint.

Today, however, I believe that most of the cost differences for application of metallic versus solid paint are miniscule if any real difference exists. Certainly, automation is a huge advantage overall for auto builders, but no place more so than in the modern paint booths employed in all current auto assembly plants. Once the correct procedures are dialed in, all cars are produced with similar results. Sure, certain paints my need slightly different procedures, but those changes easily happen on the fly with the manufacturing computers remembering the “recipe” for each configuration.

Certainly there are many that agree with me.

From drive.com.au, Mr. Tim Colquhoun finds that auto OEM’s are keen to defend their position that metallic and “special” paint colors cost more, but paint experts differ:

Darren Kenney, owner of Kenney’s Automotive Paints in Carramar, says that there is little justification for car makers charging a premium for metallic paint.
“It’s a bit of a rip-off really,” he says. “The only difference between standard and metallic paint is that metal flakes are added to the tinter in metallic paint.”

Wikipedia has this quote, which is, in my experience, true:

Manufacturers almost always charge a premium for the “option” of metallic paint on a new vehicle, although metallics usually account for all but one or two of the colours from the palette available (only red and white are available as solid colours from many makers).

The same article goes on to say:

…many consider the price premium for metallic paint as a way to boost the base price of a new vehicle.

In the end, I find these sorts of games with numbers annoying. You can view the inflated cost of the metallic paint “option” in two directions: either the auto OEM is attempting to raise the profit of the car with a low-cost, high-priced up sell, or the maker wants to advertise an artificially low starting price. Either way it’s attempting to obscure the truth. When the consumer doesn’t have a firm grasp of the truth, the relationship deteriorates. It’s really that easy in my view.

Does it have to be this way? I think not. In fact, consider the Saab 9-7x. For the Saab 9-7x, your choice of available colors adds nothing to the price of the vehicle. That’s right: for the 9-7x, easily the largest vehicle in Saab’s line up, the additional cost for metallic paint is zero.

So, tell me this — how can this be? Does Swedish metallic paint cost more than American metallic paint? Does Saab simply think that they can get an extra $550 per car, but not on the SUV?

Your opinion, as always, is welcome.

If the guys at Saab USA thought I was just going to cover this once and then forget about it, they’ve got another thing coming.

See, I’m ticked off at the fact that in a time of financial crisis, they went and spent X-thousand dollars on a company that put together a Build Your Own Saab website that is a really poor reflection on the brand, one that pales in comparison to the one that existed previously.

My original rant about this website is here. Read that article for the full details.

I’ve just been over there and checked it out, thinking that it might have been upgraded or finished off, but here’s my Fusion Blue sport sedan:

As you can see, it looks pretty much the same as my Titan Gray 9-3 sedan from a week or so ago:

In chatting with Eric Geers from Saab Sweden last week, he conceded that whilst Saab would ideally like consistency in their websites around the globe, some countries like to put together their website in a way that speaks to their market.

The SaabUSA website does feature some pretty good graphics and whilst not looking as sophisticated as the global site, it’s not bad by any means.

But that BYO site – it’s got to go!!

It’s plain to look at. It doesn’t match the flashier main SaabUSA site. And of course, most of all, it just plain doesn’t work like it should.

SaabUSA: please, please, please – demand that the people who put this thing together finish it off properly. Or get your money back and get someone else to do it properly.

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I think it’s time for another email to SaabUSA, if they still exist. The recent movement of Cadillac General Manager Jim Taylor to become CEO of the brand formerly known as Hummer was reported with Steve Shannon’s future looking like a mere footnote (ouch!).

The backstory: In April 2008, General Motors appointed Mark McNabb as the head of their Premium Brands operation in the US. Eggs n Grits raised the legitimate question back then: what does that mean for Steve Shannon?

So, if there’s a new man in town to market Saabs, does that mean that Steve Shannon has a new boss? My guess is that the leadership of the brand and the leadership of the sales channel can be seperate, however, Mr. Shannon previously said grace over the Saab dealership network, and now may not.

SaabUSA’s PR guru chimed in via comments to that post to say the following:

Steve Shannon stays on in his current role as general manager for Saab Automobile U.S.A. For us, this means business as usual, keeping our focus on the launch of the Turbo X, Cross-Wheel Drive in the 9-3 and even more exciting all-new Saab products quickly growing bigger on the horizon…

Well, as S.E. Hinton wrote when I was a kid: That was then, this is now.

The press articles about Jim Taylor’s being passed over for McNabb move to Hummer also include the following:

The three general manager positions reporting to McNabb are being eliminated, spokeswoman Joanne Krell said in an interview…..

….GM plans to appoint Hummer’s Walsh to a new job, Krell said. Steve Shannon, 50, Saab’s general manager, will become executive director of product and marketing for the premium channel, reporting to McNabb

And that’s it.

So it looks like we’re now in a position where Saab’s largest market division has a guy at the helm who’s also dealing with Cadillac (the company darling) and Hummer (find a way to sell it), so how much attention is he going to give the-little-brand-that-could (if it just had a chance)?

It also raises the larger question as to whether SaabUSA will continue to exist or whether it will be folded into a larger entity called GM Premium Brands as has been done here in Australia and in the UK.

If so, who’s at the helm? Who’s sitting in a chair in an office somewhere in the United States saying “I’m the one who gives a rat’s about Saab?”. Who’s making the decisions? Who’s having input as to what the US market needs from Saab? Who’s the go-to guy? Who’s talking with the ad people? Are there ad people?

McNabb’s been in de-facto leadership of Saab since his appointment in April. Back then we thought Steve Shannon was reporting to him. Now it looks like Shannon’s been set aside and McNabb’s the man.

So why haven’t we heard a solitary word about Saab from the man who’s supposedly been responsible for them for the last six months?

I’ll email Jan-Willem Vester at SaabUSA and invite a response, either from himself or McNabb.

And I’d like to take this opportunity to wish Steve Shannon well for what’s sure to be an interesting future. I’m not sure that he ever really “got” Saab and I’ve been critical at times (as scribes are wont to do), but he’s a good guy and I hope his personal and vocational experience has been adequately broadened by his association with Saab.

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A light went on today. It’s like one of those bits of knowledge that you already have, but it just hasn’t been made apparent to you yet.

Today I figured out why Saab (and Volvo) are so important to the North American market. Why GM can’t let Saab fall into a generic design haze. Why they HAVE to retain their Swedish identity if they’re going to remain viable as a brand.

I spent a lot of time on the road today and the subconsciously obvious took front and center in my conscious mind – around 98% of the vehicles on Canadian roads are either from the domestic North American market, Japan/Korea (which I deliberately lump together) or Germany.

Around 85 of the 98% is North American or Asian, and almost all of it is either totally uninspiring or derivative, with a small proportion of the vehicles warranting a second glance.

I knew with my head that this would be the case before I got here, but there’s something about actually seeing the situation for yourself that brings it home. In my home market, in Australia, we also have a large proportion of domestic and Asian cars, but we also have a faithful and pretty interesting French and Italian presence as well. They may not sell a LOT of cars, but they certainly add color and interest to the automotive landscape.

GM have to make Saab more distinctive if they’re going to have a presence in the North American market. “Distinctive” is what brought a great number of us to Saab in the first place. There was nothing else like a 99, or a 900 or a 9000. Saab needs a presence in the sports sedan market, but the fact is that they aren’t doing 3-box sedans well enough to survive here, and I don’t think I’d really want them to. If all I wanted was a basic sedan as adequate transport then I’d buy a Honda.

But that’s not what I want, and I don’t think it’s what many Saab buyers want, either.

I’ve seen a lot of new Mustangs on the road since I’ve been here, and I’ve got to congratulate Ford on the design job they did with that car. It looks exactly as a modern interpretation of the old Mustang should. I’m yet to drive one, but hopefully the opportunity might arise.

I’m not suggesting that Saab should do a modern take on the 900, though I’d love it if they did. But like Ford did with the Mustang, Saab need to do something that captures the essence, the spirit of what made them great.

Unfortunately, North America is too important a market to let go of. Saab have to stand out if they’re to make an impression here and the best way to do that is outstanding value and superb Saab design.

Right now, and contrary to what we might think and what we know is historical fact, Saab are rated lowest in terms of customer retention by JD Power. The all-sedan lineup hasn’t worked and the addition of the SportCombi was too little, too late.

Saab needs it’s mojo back, and quick. Seeing GM have committed themselves to Saab for the long haul, it’s in their best interests to let the designers off the leash a little and let Saabs be Saabs. They’ll drown in a true sea of mediocrity if they don’t.

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