GM has owned Saab since 1989. For all its efforts, including new models, shared technology platforms and access to GM’s international dealer network, GM’s experiment with Saab has failed. It hasn’t been profitable since 2001 and they can’t afford to continue. GM had been winding down the business and has been open to just about any real offer. In the words of Ed Whitacre, GM’s Chairman and now permanent CEO, “It’s real easy - just show up with the money and you can have it.”
Spyker appears to have done just that. But what exactly is Spyker buying and why?
Thinking of tangible assets, the deal makes little sense. It’s not a technology play, as its 9-3 and 9-5 platforms as well as other power train technologies are going to BAIC in China. Spyker isn’t buying distribution. Saab is closing dealers and Spyker super cars are not the sorts of thing one shops for at the Auto Mall. And it’s clearly not about cash flow. Saab doesn’t make money and Spyker lost over 8 million Euros on the 21 cars it made in the first half of 2009. What could Spyker possibly see in Saab? Is this automotive madness?
Probably. Saab has always had that effect on people. Almost immediately after entering the U.S. market in the late 1950’s, for instance, Saab attracted an educated, affluent, liberal, and zealous niche following. That passion continues today. A recent study by German psychologist Rüdiger Hossiep notes that Saab owners are 10 times more passionate that VW owners.
That is the point: Spyker isn’t buying a business, it’s betting on a brand. In today’s economy, consumers no longer want more brands than they can afford to use. There are so many products with so much marketing support that consumers simply fail to attach to the brand. And in a world accelerating sameness, the Saab brand possesses a valuable yet illusive competitive advantage: emotional bonds with a high-value consumer targets.
If the deal goes through, Spyker will need help from many sides: capital, automotive know-how and patient partners. It might not make it. Its one chance lies in the strength of the Saab brand. Saab’s new owners must recognize that the brand has performed poorly as part of a large conglomerate for a number of reasons; namely the product compromises that have diluted the clarity of Saab’s independent character and technical capability. It then needs to attach a re-sharpened Saab brand to a solvent business model, with products (maybe not just cars) that deliver the promise.
The world is full of meaningless brands. Saab is clearly not one of them. Spyker is betting on the strength of the Saab brand to fix what has unfortunately become a very bad business.