Automotive News Europe - January 5, 2009 - 4

PAGE 4 · www.autonewseurope.com News analysis January 5, 2009 Americans neglected their Swedish brands GM did not provide Saab with enough product; Ford gave Volvo to many cars to manage John Revill Automotive News Europe Ford Motor and General Motors failed with their Swedish brands because they never got the full attention of their US owners. Saab has rarely achieved a profit for GM. In 2007, the brand lost 2.2 billion kronor (¤360 million), according to Swedish financial daily Dagens Industri. Volvo, which Ford bought in 1999, was profitable at first, but its last year in the black was 2005, when it earned $377 million. Hit hard by a new-car sales slump in the US and the global economic downturn, both Ford and GM are now considering the sale of their Swedish units. Analysts agree premium brands such as Saab and Volvo need attention. Something they didn’t get in sufficient quantities as their American owners focused on their core volume brands. “The person in charge of [GM’s European volume brand] Opel is probably number 30 in the GM hierarchy; if you are the person in charge of Saab, you’re probably in 80th place of farther down,” said Jürgen Pieper, an analyst at Metzler Bank in Germany. The Saab 9-4X, to be launched in 2010, will be only the third model in the range. The S60 concept to be shown in Detroit – one of 10 models in Volvo’s range. Saab’s sorrows Narrow product range Old models Diesels came late Too niche US market dependent Volvo’s troubles Not good enough to challenge German luxury brands Product range too broad Other carmakers caught up in the area of safety US market dependent Hands-off approach Some industry watchers question why GM and Ford bought the brands in the first place. GM’s purchase of a 50 percent stake in Saab in 1990 is widely thought to have been a response to its failure to buy British luxury sports car maker Jaguar. GM took full ownership of Saab in 2000. “GM was quite hands off at first,” said Colin Couchman, IHS Global Insight’s senior market analyst for western Europe. “Perhaps they were worried about Swedish sensibilities and did not do anything.” Despite showing many concept cars at auto shows in recent years, GM has not expanded Saab’s product range beyond the 9-3 and 9-5. The 9-3 dates back to 2002 and the 9-5 to 1997. “The legacy of GM at Saab is not very impressive,” Couchman said. “They missed out on the diesel boom and did not reduce the lead times for products.” There was also a question of Saab’s position in the market. The brand is not a premium rival to BMW or Mercedes-Benz, not a performance brand like Jaguar. And it is not a volume brand. Lost individuality Critics says Saab cars have lost much of their individuality and there are too many similarities with Opels. Volvo’s troubles relate to its reliance on large cars and its late entry into the diesel market. Volvo cars have relatively poor fuel efficiency and high CO2 emissions, which hurts sales. While Saab had too few models, Volvo has perhaps spread itself too thin. It 10-model range is difficult to sustain for a carmaker that made a mere 450,000 cars last year. In addition, Volvo’s reputation is based on safety – but many brands, including mass-market ones, have greatly improved in this area. Achieving the top five-star rating in the EuroNCAP car safety tests is now common and is less of a selling point. Most industry watchers agree that Ford has done better with Volvo than GM has with Saab. But some still question whether Ford really understands the brand. Upmarket move stalls It tried to move Volvo upmarket, but analysts think the Swedish brand lacks the quality to compete with Mercedes, BMW or Audi. Volvo’s image also suffered be- cause Volvo used many Ford technologies. Some customers realized they were paying premium prices for their Volvos, but were getting nonpremium Ford technology. Ultimately, both Swedish brands lost some of their uniqueness and some of their Swedishness after being taken over by the American giants. They were also too dependent on the US, which made them vulnerable to currency changes. Said Svenake Berglie, head of the Scandinavian Automotive Suppliers Association: “Both would be better ANE with new owners.” 3 Time to free the Swedes, Page 10 3 Opel could rescue Saturn, Page 12 For and against: Should GM Europe dump the Vauxhall name As Opel battles for survival, Vauxhall will play crucial role Changing Vauxhalls into Opels would be a pointless gamble A reorganized General Motors can live without Vauxhall But GM Europe is not in that position. Opels As GM streamlines its operations, nameplate, and a luxury marque. All three and Vauxhalls do not compete with each other. Vauxhall is one brand too many should have a global presence. They should be So the question is: Why would GM spend milcalled Chevrolet, Opel and Cadillac. Some observers in continental Europe think lions trying to re-establish a brand to replace Restructuring General Motors is crucial for the Abandoning US brands Pontiac, Saturn and the British Vauxhall brand is a pointless irrele- one that is already operating successfully? survival of the world’s second largest carmaker. Hummer - and Saab in Europe - are the obvious vance that should be subsumed into The cost implications would be, So it should be done thoroughly and choices and they have already been General Motors’ German unit Opel. “horrendous,” says a GM spokesman. not in a half-hearted manner. made. But GM should now also review After all, they say, Vauxhalls are And that means Vauxhall will have Everything from stationery to dealer its policy of having regional brands. merely rebadged Opels and getting rid signage and more would need to be to go. It should drop Buick, which is only of the brand would lead to major costOne area that needs urgent attention scrapped and replaced. sold in America and China. It should savings at a time when GM needs every More importantly, it would be a is GM’s large number of brands. consider dropping Holden in Auspenny. It’s a view that is simplistic and The success of Honda, Toyota and huge - and pointless - gamble to extralia. And forget about Vauxhall, ignores a few inconvenient truths. change a known brand for one that Nissan is based on their clear presence which is nothing more than another has little recognition in the UK. The in all markets with one single mainnameplate for German-made Opels. Opel has tried and failed to sell cars move would potentially drive cus- stream brand, each backed up by an Vauxhall admittedly sells more cars in Britain. tomers into the hands of other Ger- upmarket nameplate: Acura, Lexus in the UK than Opel does in Germany. Wim Oude Mark Appleton Britons have been happily buying and Infiniti. man brands or arch-rival Ford. But that does not justify keeping the Weernink Vauxhalls in GM Europe’s most imMercedes-Benz (with Smart), BMW So Opel needs Vauxhall’s local marnameplate for one single national marportant market for more than a 100 ket expertise, brand recognition and, yes, even (with Mini) and Volkswagen (with ket. It doesn’t make sense to restrict the years. In fact, they buy many more Vauxhalls its engineering input if it is to remain a strong Audi) have the same strategy. generally successful Opel brand to sell its cars than Germans buy Opels. Even Ford Motor, though it is also suffering only in continental Europe. It costs extra money car and commercial vehicle builder in Europe. Nearly 45 percent of GM’s important new Anything that jeopardizes Vauxhall sales in today, is known as a global brand, backed up by to market Vauxhall, it requires different local Insignia model will be built as Vauxhalls. the luxury Lincoln la- dealer standards and confuses the market. Britain could see Opel bel in the US. It can do losing critical mass at a Instead, GM should make Opel, which offers the Realistically, Vauxhall is not about to beWhat do you think? without Mercury and highest quality of all GM products, a world brand. time when size may mean come an Opel division. Companies with marVolvo. the difference between It should also be sold in the UK and Australia. keting sense know that you do not just jettiWe would like to hear from you. So GM’s restructursurvival and an uncertain Opel has the potential to grow globally as son a known and trusted brand name. ing scenario must be GM’s main sub-premium brand And it can do future. Just ask Saab. Send a letter to the editor via e-mail “But GM killed Oldsmobile,” some will say. clear: it needs just so bearing a ‘made in Germany’ badge with E-mail Copy Editor Of course, when a single market cannot susto aneletters@craincom.de. one mainstream val- pride and justification. Mark Appleton at mappletain one company’s diverse brands something ue brand, one slightly ton@craincom.de. E-mail Staff Reporter Wim Oude Weernink You can write to us in any language. inevitably has to give. more upmarket at aneletters@craincom.de.

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