Saab of North Olmsted outside of Cleveland will open a newly renovated showroom this month alongside owner Collection Auto Groupâ€™s Mercedes-Benz, Porsche, Lotus andstores.
The 21,000 sq.-ft. ( 1,951 sq-m) facility captures the Scandinavian brandâ€™s unique character through its modern design featuring aluminum-framed, opaque frosted-glass cladding meant to look like blocks of ice.
The store also is a $4 million bet Saab and its new owner, millionaire Victor Muller, will deliver on a promise to rebuild the brand on its core principles of progressive design, safety, environmentalism and turbocharged driving dynamics.
â€śYou could say weâ€™re confident about the future,â€ť Sales Manager Jim Levine says wryly.
Across the country at Saab of Bellevue outside of Seattle, the Park Place group of luxury-vehicle stores added a Saab franchise two months ago. â€śThere is a huge Saab clientele here, a market left untouched,â€ť says Sales Manager Brian Pratt.
Saab estimates 1.5 million people in the U.S. own one of its products and more than 4.5 million have had the brand in their garage, giving the auto maker a big list of customers to retain and regain.
â€śWe also think sincehas taken over, and since Victor Muller sold Spyker Cars, theyâ€™ll be able to focus even more on Saab and manage it better,â€ť Pratt says.
But with as much gusto as Muller has imbued Saab with since rescuing it from liquidation under longtime owner, sales in the brandâ€™s most important North American market continue to languish.
While the auto maker delivered more than five times the number of cars in the U.S. in February than year-ago, when Mullerâ€™sbought Saab in a deal valued at $400 million, sales in the month still amounted to just 546 units, according to Wardâ€™s data. Thatâ€™s roughly two cars for each of Saabâ€™s 200 dealers in the U.S.
Back in the U.S. industryâ€™s heady days of 17 million-unit annual sales, Saab deliveries in a typical month would reach 3,000 units, although the larger lineup at the time included the infamous 9-2X compact and 9-7X SUV rebadged Subaru and GM models that did so much damage to the brand.
Under GM, easy credit also helped push Saab sales to as many as 32,000 units in 2007. But the brandâ€™s best U.S. performance came in 2003, when it contributed 47,914 sales to the U.S. parent. But GM never found a way to make the unit profitable as it struggled to feed its eight brands with engineering and marketing resources.
So far this year, Saab dealers have delivered a combined 1,239 9-3 and 9-5 sedans, convertibles and wagons, putting the auto maker behind the 8-ball in Mullerâ€™s goal to sell 80,000 units worldwide in 2011. The brand finished 2010 with 5,446 sales in the U.S., or about 27 units per dealer.
The tepid sales environment is creating bloated inventories, an interesting irony considering Saabâ€™s weak 2010 results could be blamed in part on a lack of product on dealer lots.
With the Trollhattan assembly plantâ€™s 7-week shutdown during Saabâ€™s sale to Spyker and ensuing restructuring, months went by without new cars hitting U.S. ports. Now the plant runs on one shift, making the 9-3 and 9-5 models on a single line.
Company officials say Saab regularly reviews its production planning to remain in line with marketplace demand.
Saab finished February with 4,515 vehicles on the ground in the U.S. for a market-leading 198 daysâ€™ supply, Wardâ€™s data shows, whereas a year ago some lots stood void of new cars with a network-wide inventory of 606 units.
â€śThe most pressing issue right now is getting the pipeline filled up,â€ť former Saab sales chief Mike Colleran told Wardâ€™s almost exactly one year ago. â€śWeâ€™re just starting to see some products come in.â€ť
A key product in that pipeline was the new 9-5, redesigned for the first time in more than a decade, at most Saab dealers now for almost eight months. Its reception has been lukewarm, with 52 deliveries last month against a stock of 1,621 units, and 1,239 sales so far this year. The new 9-5â€™s best month since arriving was 259 sales in December.
The car faces two major obstacles: sparse marketing on a national scale and an uncompetitive lease offer hindered by poor residual values.
The national marketing Saab has been able to muster for the 9-5 also has drawn criticism because it fails to position the car against the German luxury nameplates it was meant to battle. The current 9-5 stickers for as much as $50,000, almost $10,000 more than the model it replaces.
â€śThe new 9-5 missed the boat,â€ť says George Glassman, owner of Glassman Saab in Southfield, MI, traditionally one of the brandâ€™s biggest-volume stores in North America.
â€śThe car has potential, but (Saab) lacks funds to correctly market it, and that has been problematic,â€ť he says, asking for television advertising calling out the competition instead of just showing the 9-5â€™s sleek design. â€śIâ€™m not trying to put current 9-5 owners in one of these, itâ€™s meant for new customers.â€ť
Pratt at Park Place estimates about 30% of his 9-5 shoppers are new to the Saab brand. â€śSome old, some new; itâ€™s a good mix.â€ť
Saab spokesman Chris Wiseman tells Wardâ€™s a market-specific plan for promoting the auto makerâ€™s products in the U.S. is taking shape, closely involving dealers and a variety of mediums.
â€śWeâ€™re working on a plan of attack,â€ť Wiseman says.
Poor residual values have made Saabâ€™s lease deals, which are conducted mostly throughBank (the former GMAC), too expensive vs. the Germans. It takes years to rebuild those values, unless Saab chooses to use its own capital to make the offers more competitive. Given its financial constraints that does not appear to be a viable route.
â€śTheyâ€™re either going to have to earn it or buy into it,â€ť Glassman says.
The 9-5 rollout would seem a sharp lesson for Saabâ€™s new owners as they prepare to launch two of the most critical products in the auto makerâ€™s recent history â€“ the 9-4X cross/utility vehicle in the spring and the redesigned 9-3 sedan next year.
Levine likes what he has seen recently from Saab on the national marketing front and senses the marketing pedal will hit the metal in coming weeks. The effort includes the 9-5 TV spot and a heritage commercial documenting the auto makerâ€™s history.
â€śIn my 26 years with the brand, we havenâ€™t seen any national advertising,â€ť says Levine, who will get a visit from Muller for the grand opening. â€śThese guys definitely get it. Youâ€™ve got to bring the cash to make it happen, and we think they will.â€ť
The product looks good, Pratt says, especially the 5-passenger 9-4X CUV. Saab has desperately lacked an entry in that segment. â€śThe people in charge at Saab are doing a wonderful job.â€ť