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I just read some of this interview on autoweek.com. I have included information pertaining to Saab. It sounds like Wagoner is going to stand behind Saab.
excerpt from autoweek interview:
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>>Saab, after all these years, seems like Saab in the bad sense.
You mean nice product, no money?
>>And not growing. Why not say, this is not going to work?
The reason not to say that is we just invested in a new product, which will spawn a product family that we can make money on. So it would be a silly time to stop. More fundamentally, we think the market is growing relatively more at the top than at the bottom. Saab is a brand which plays in the upper ranges, and if you talk to people who play in that range, the Saab brand is attractive to a lot of people who are otherwise not GM intenders. So, from that angle, if we can provide them with a broad enough range of products, the distribution level that I think we've been lacking and the right cost so they can get to the right price point, we think the business is a good business for us to be in.
>>You haven't been able to get volume up and pricing is tough, too.
We seem to be stuck in a volume range in the United States, let's say 35,000 to 40,000. It's a mix of products, but you bring in the new 9-5 and, lo and behold, it grows, it tends to eat in the 9-3. And then you bring in the new 9-3 and it eats into the 9-5. So that suggests the distribution network isn't set up to handle higher volume or the product range isn't broad enough to bring in people who might like to buy a Saab, but the kind of product isn't being offered.
It's like the Saturn issue, it is competing in a part of the market that is shrinking. They've been trying to hang onto old segments that are shrinking. That's what we need to address with Saab.
The other thing is it's hard for a company at their volume to develop reasonably independently the range of products they need to compete in that category. They need to leverage the system so they can get more product offerings. Otherwise your engineering costs as a percent of sales are at an unsustainable level. Their earnings are bad because they're doing a product startup that represents 60 percent of the volume of the company. If we did that at GM, guess what? Our earnings would not be very good either.
>>How do you break out of that? I think that brand could easily have a couple of sport-utilities or crossovers, but it would cost a lot.
We have to find ways to broaden their product range on time frames and cost budgets that aren't what we've been doing in the last 10 years. We need to be craftier at leveraging the GM family. I would say that is in all parts of the business - distribution to product development to lean manufacturing ideas. We've done a lot of stuff with Saab, but I don't think I could present to you that we've put the full muscle of GM in support of driving Saab.
>>Were you too sensitive about letting the Swedes be Swedes?
We tried to be reasonably sensitive, but we're also pragmatic business people. What happens if you're that small of a company, one of a million things can go wrong in this business. At GM, nine times out of 10, you can absorb eight or 10 of them. If you're a small guy and you're exporting for example, if the exchange rate moves 5 or 10 percent, the profit margin (goes way down).
The problem with being small in this business is that it becomes very fragile. If things are running well you make profit like crazy, but it's not robust to the things that inevitably happen to you. Either because of yourself - you miss on a product, you have a quality problem or you get a reputation hit like Audi here a couple of years ago - or you get exchange rate movement. Some things you can control, some you can't.
>>Are you looking at to add Saab dealers?
Over time, for Saab to get to their stated objective of doubling their volume here, that would be a logical consequence. The current Saab dealers would say, "We'd like to fill up your current capacity." So we need to expand the product lineup in a way that is consistent with making some money. We're going to grow the network, but I wouldn't say that's the first priority. The product has to lead it.
posted by 142.176.1...
, Mon, 2 Dec 2002 15:12:24
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