Struggling Saab Desperately Needs New Cars

SAAB OF NORTH OLMSTED OUTSIDE OF Cleveland opened a newly renovated showroom last month alongside owner Collection Auto Group's Mercedes-Benz, Porsche, Lotus and Fisker stores.

The 21,000 sq.-ft. ( 1,951 sq-m) facility captures the Scandinavian brand'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.

Across the country at Saab of Bellevue outside of Seattle, the Park Place group of luxury-vehicle stores added a Saab franchise three months ago. “There is a huge Saab clientele here, a market left untouched,” says Sales Manager Brian Pratt.

But with as much gusto as Muller has imbued Saab with since rescuing it from liquidation under longtime owner General Motors, sales in the brand'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 Muller's Spyker bought Saab in a deal valued at $400 million, sales in the month still amounted to just 546 units, according to Ward's data. That's roughly two cars for each of Saab's 200 dealers in the U.S.

Back in the U.S. industry'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 brand's best U.S. performance came in 2003, when it contributed 47,914 sales to the U.S. parent.

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 Muller'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 Saab's weak 2010 results could be blamed in part on a lack of product on dealer lots.

With the Trollhattan assembly plant's 7-week shutdown during Saab'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.