Will GM 'Saturnize' Saab?

Will the ultimate Saturn move-up car be a Saab?

Not if you're suggesting a combination of their very different dealership networks, says Joel K. Manby, the recently named president and CEO of Saab Cars USA Inc., who was one of the marketing whiz kids behind Saturn's customer-coddling retail formula.

"That would be dangerous considering the extreme difference between the two divisions' brand identities," says the 37-year-old Harvard MBA. After all, Saab was different before being different was cool.

But nonconformity has its limits. Saab has a new game plan, and there's a clear Saturn influence in it.

First, General Motors Corp. promotes Mr. Manby to Saab's top spot in the U.S. Then it taps fellow Saturn veteran John Orth as vice president for sales and marketing.

Then it names Vice President Robert W. Hendry of the North American Operations Business Support Group as president and CEO of Saab Automobile AB. Rounding out the new commitment to its six-year-old investment, Adam Opel AG, along with the Swedish industrial holding company, Investor AB, agree to pump $524 million of new capital into the quirky Scandinavian automaker. And if it all pans out, GM can buy the remaining 50% of Saab by the turn of the century.

Since GM paid $600 million for half of Saab in 1990 and invested another $700 million, the company has lost a cumulative $1.7 billion. But there is good news.

Saab has made small profits in each of the last two years. Its productivity has zoomed from a dreadful 98 hours per car in 1991 to a respectable 35 hours per car last year, Mr. Manby says.

"We need to reach 150,000 units worldwide to be a viable organization," says Mr. Manby. "In the U.S. that would equate to about 40,000 cars per year." Last year Saab sold 98,000 cars worldwide and 25,592 in the U.S.

It's no coincidence that GM strategists turned to a pair of Saturn hands for this mission. But only time will tell how effectively the Saturn retailing culture transfers to a low-volume niche marque where all but 60 of its 285 U.S. dealers are dualed with anyone from Volvo to Oldsmobile to Jaguar.

Look for more frequent and consistent advertising and a deeper involvement from dealers.

"They have to get into some improved styling," says Jerome Glassman, who runs a Saab store in Southfield, MI, that is dualed with Oldsmobile and Hyundai franchises. "And more aggressive financing and leasing programs would help."

Accelerating a 15-year product cycle is also a must. Mr. Manby says the target is to replace each model every six years, but probably not this decade.

The toughest challenge will be to generate Saturn's evangelical enthusiasm among dealers who depend on other nameplates to meet the payroll and finance their summer vacation homes.

"Saab has done a good job with the customers it has," Mr. manby says. "But the communication of what the brand means to the broader market tends to break down. There's not enough of what gives the customer an understanding of what the Saab brand is."

That's because you've had to own one to understand Saab's cult-like contrarianism.

From an engineering perspective Saab's identity has been quite clear. Such product features as mounting the ignition in the center console, a religious devotion to turbo-charged engines and a fixation with a hatchback design seen nowhere else in the entry-luxury segment define Saab quite distinctly.

It's only been in recent years, thanks to GM technology, that Saab has offered a V-6 engine. If you needed performance, certainly a spunky Swedish turbocharged 4-cyl. power plant would be sufficient.

Unfortunately, the customer base has only reached critical mass in certain regions of the U.S., most notably New England, the Middle Atlantic seaboard and parts of the Pacific Northwest. In Florida and parts of the southwest, Saab in barely on the radar screen.

New product is on the way, but don't expect a Saab sport/utility vehicle.

Next year, the 9000 coupe and 5-door hatchback will be augmented by a new sedan code numbered 640. A station wagon based on the 9000 platform is planned by the year 2000. Preliminary research reportedly has begun on an entry-level model that would be priced below the 900.

Hmmm. Could that be the same Opel Vectra platform Saturn has studied for its Project Innovate car that would be built in Wilmington, DE? Stay tuned.