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Saab is definitely competing -- not only on product but aggressively on price.
2002 9-5 Arc
MSRP $39,750 (incl. metallic paint and destination)
Invoice $37,320
Dealer is offering invoice price, then subtracting $4k dealer cash, for a net price of $33,320 + ttl.
That's pretty hard to resist, isn't it?
I think this is sound strategy.
- The $4k dealer cash helps to address the depreciation issues that are well known. It also is very much a part of pushing enough units to hit the JD Powers sales minimums, I bet. The $4k will be written off to "advertising expense", not entirely to "sales incentives", perhaps.
- Pricing at Invoice signals the current priority -- introduce Saab to new prospects and gain trial and acceptance of the brand. They have large goals, and with GM's financial backing, "Profit-margin-per-car" isn't the overriding goal. Loading and brand building market share are more important for the foreseeable future until Saab moves up in customer consideration and acceptance.
- Saab's well known ultra-loyal customer base will ultimately benefit from this if the franchise puts more cars into more garages, it will make for a larger resale audience. Familiarity will generate more bids, moving the brand beyond its current status.
- Of course, the product and the service have to hold up to the competition. Goes without saying I suppose. Hence the "1,000 improvements and features at the same or better price (like Audi and MB), free maintenance (like Audi/MB), and the "fully loaded" single price feature content (like Acura).
- The key will ultimately be resale. These 2002's have to improve the residuals vs prior years or else Saab will never be able to get the net pricing where they want it to be, close to $40k, at the volumes they are planning for.
Saab's trump cards, in my opinion:
- Safety (enhanced with OnStar)
- Reputation for technology & Engineering
- Non-mainstream (ie, "it's not a BMW/Audi/Acura/Lexus")
- Beautiful, spacious, comfortable interiors
Problems to overcome:
- Resale, as above, and ultimately, finding the right price-value
- Greater brand building consideration and marketing
- Dealer breadth and strength (don't know if this is a problem, really, but availability is sparse.
- Product diversity. The SUV and AWD paths are well trod by the competition, but Saab will have to go there to generate more show room traffic. Unavoidable with their growth mandates from GM.
Volvo shocked and dismayed their core franchise when they stopped making square cars, but I think it is/will pay off for them, their product line is diverse and strong, but Saab can do better, in my opinion.
Enough already, right?
Now I gotta decide whether to take this nice deal.
posted by 66.100.23...
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