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Ailing Saab Seeks Turnaround
By Touting Aviation Roots
By GINA CHON
Staff Reporter of THE WALL STREET JOURNAL
October 21, 2005; Page B1
To boost lagging sales, General Motors Corp.'s Saab brand is looking backward -- to its aviation roots.
Founded as an airplane maker in Sweden in 1937 by 16 aircraft engineers, Saab in a new advertising campaign claims "their spirit lives on." The campaign, to begin Sunday, will use television, print media and the Internet and will introduce a new tagline, "Born From Jets."
Crafting a stronger brand image is critical for Saab, which has posted losses in 12 of the past 14 years. Its most recent turnaround effort suffered a setback this month when GM ended a partnership with Japan's Fuji Heavy Industries Ltd., whose Subaru brand has been building a small car that Saab sells under its own badge as the 9-2X. Subaru also was supposed to develop a luxury sport-utility vehicle for Saab.
Now, the 9-2X will be phased out and the Subaru-made SUV has been canceled. That leaves Saab back where it was a few years ago -- with too few models to generate the volume it needs to be profitable.
[Scene from a new Saab TV ad; will it boost the brand's image?]
Scene from a new Saab TV ad; will it boost the brand's image?
GM bought 50% of Saab in 1990 but didn't really invest in the car maker until 2000, when it took full control. Some analysts have urged GM to shut Saab down, and its future could be threatened further if investor Kirk Kerkorian, who now owns 9.9% of GM stock, obtains a board seat for his lieutenant, Jerry York. Mr. York has made clear he thinks GM should focus on fixing its core assets, not spending time and money on "nits and gnats" such as unprofitable divisions.
Jay Spenchian, Saab's new general manager, hopes the emphasis on the brand's heritage in aviation and advanced technology will help sales take off and put the unit on course for profitability. As of now, Mr. Spenchian says, "even people who are aware of Saab are not necessarily sure of what it stands for and what it's about."
Saab long was known as an offbeat maker of quirky, sporty hatchbacks. One of its claims to fame is its placement of the ignition -- Saab keys don't go into a slot near the steering wheel but instead are inserted in the center console between the front seats, a layout taken from airplanes. A few years ago, Saab redesigned its top-selling model, the 9-3, dropping its hatchback and turning it into just another upscale sedan. Since then, Saab's image has faded as sales stagnated, while sales of other luxury and performance brands such as Lexus and BMW soared.
Mr. Spenchian, who moved from a marketing post at GM's Cadillac division to Saab this summer, aims to double sales by 2010. After losing Subaru as a partner, Saab is considering three to four options to get a carlike SUV, known as a "crossover," into the market in the first half of 2007. Later, Mr. Spenchian hopes to add a gas-electric hybrid vehicle.
Even if Saab manages to find partners within GM or elsewhere to help produce these vehicles, Mr. Spenchian faces a tough job. Jaguar, another struggling premium brand from Europe, also tried to reach profitability by adding models and ramping up volume. But the British car maker, which is owned by Ford Motor Co., only racked up wider losses and now is retrenching; it aims to be a smaller but profitable niche player.
On the other hand, Saab's Swedish rival, Volvo -- part of Ford's Premier Automotive Group, which includes Jaguar, Land Rover and Aston Martin -- has had the largest profit in the group, bringing in $700 million last year.
Before Mr. Spenchian can launch any Saab models, he hopes to pump up awareness of the brand as a creator of refined engineering. For that he is counting on the new ad campaign.
In the testosterone-charged commercials of the new campaign, Saabs are seen in airplane hangars and on runways, or with jets flying overhead. As with aircraft, Saab says its vehicles focus on performance, design and safety. Many of Saab's features, such as heated seats, first came from the inside of a cockpit.
Mr. Spenchian declines to reveal the campaign's budget but says Saab is "getting more than our fair share" considering its small size in the GM lineup.
Saab's previous campaigns focused more on the independent personality of its customers. In February, it launched ads that featured phrases like, "For those who consider conformity a serious road hazard." Two years ago, Saab developed a campaign titled, "Welcome to the state of independence."
"The marketing team felt that Saab is a much more broadly appealing brand and an excellent piece of engineering than our previous campaign had communicated," says Mark Wnek, chief creative officer of Interpublic Group's Lowe & Partners Worldwide in the U.S., which developed the campaign. He adds: "So when you've got some kind of concrete point of difference, it would be crazy not to leverage it."
The commercials will appear on such prime-time programs as "Crossing Jordan" and "Las Vegas" and cable channels such as Bravo and the Food Network. Print ads will appear in national newspapers including The Wall Street Journal and the New York Times.
Online, Saab's Web site will feature a link to information about its jet heritage. Dealers will receive T-shirts, mugs, postcards and other items featuring the campaign.
Mr. Spenchian says he hopes Saab reaches a point where it is introducing a new vehicle every year. "We want to constantly be in the news and constantly creating buzz," he says.
Saab isn't the only car maker that has called upon its nonautomotive past. Subaru, Saab's erstwhile partner, also has aircraft roots and has been highlighting them in recent models such as the 2006 B9 Tribeca, an SUV. Subaru says the car's unusual front end -- one reviewer said the grille looks like whiskers -- is supposed to recall the history of Subaru's parent, Fuji Heavy Industries, as an aircraft maker.
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