Innovation & Design

Engineering a Saab Turnaround


After a series of design missteps and dwindling sales, the Swedish icon owned by GM is showing off sleek new models

Saab, General Motors' (GM) iconoclastic Swedish auto brand, is getting a makeover. At this month's New York International Auto Show, the company unveiled two new models that executives hope will anchor a turnaround for the long-neglected premium carmaker.

Saab, founded in the 1940s as a subsidiary of a Swedish airplane manufacturer, has a rich tradition of designing quirky but innovative vehicles. Over the years, it garnered a loyal constituency of passionate, well-to-do nonconformists. (Jerry Seinfeld famously typified the average customer.) But GM's dream of turning the brand into a major competitor to European carmakers such as BMW (BMW) and Mercedes-Benz never materialized. Instead, the brand lost its way, in part because of a string of lackluster designs.

Instead of helping GM to compete with European manufacturers, some Saab models came to epitomize "badge engineering"—selling similar designs under different nameplates. This tactic of sharing resources across departments and marques made sense in theory but did not wash with consumers, especially Saab's design-savvy audience, which widely lampooned earlier efforts to introduce new models. The 9-7X, a midsize SUV introduced in 2005, was panned for being a Chevrolet TrailBlazer with a Saab front end tacked on. And the 9-2X hatch, sold briefly between 2005 and 2006, was derisively nicknamed the "Saabaru" because it was closely based on the Subaru Impreza.

Overall sales since then have been anemic, never reaching the levels expected by GM executives. So far this year, sales in the U.S. are off 23.5% from the same period last year, according to Automotive News. Each year Saab sells about 30,000 vehicles in the U.S., a sliver of the market compared with BMW, Mercedes-Benz, or Cadillac, GM's other luxury division, which sell between 150,000 and 300,000 vehicles annually. To stop losses and begin reversing its course, Saab needs fresh vehicles—and for that, it's turning to its designers.

From Concept to Reality

In particular, Saab is pinning its hopes on the new 9-4X, a small crossover SUV that will be available late next year, and a green concept vehicle, the 9-X BioHybrid hatchback. The former will compete in a rapidly growing segment that the likes of Mercedes-Benz and Audi are just entering, while the latter would become a much-needed entry-level vehicle. Both models would substantially broaden the company's lineup.

Both vehicles also draw heavily on the Saab Aero-X, a 2006 concept vehicle that signaled the beginning of executives' intention to salvage the strongest elements of the company's heritage. The 9-4X and 9-X feature the Aero-X's taut, sculpted front end and smooth airplane-like body sides. "Until [the Aero-X appeared], Saab design had become somewhat invisible," says Bryan Nesbitt, GM's vice-president for North American design, referring to the badge engineering of years past.

Reinvigoration by Design

The design-driven comeback is a favored tactic of GM management these days. Ed Welburn, GM's vice-president for design, argues that the company has more or less mastered the strategy, pointing to impressive turnarounds under way at Saturn and Cadillac. So far this year sales at both brands have been flat, as the industry braces for harder times. But the company has been winning coveted industry awards for its new designs—including the North American Car of the Year Award for last year's Saturn Aura and Motor Trend magazine's 2008 Car of the Year award for the Cadillac CTS—honors that would have been unheard of just a few years ago.

"They've already refurbished Saturn and Cadillac with rather bold designs and are on their way there now with Pontiac and Chevrolet," agrees Wes Brown, a partner at Los Angeles marketing firm Iceology. "Logically, Saab is next."

The 9-4X and 9-X vehicles may be more modest than the extra-large and overpowered vehicles that anchored turnarounds at Saturn and Cadillac, but executives say they were specifically chosen to appeal to traditionally reserved Saab buyers. "Saab customers tend to be upper income but not overly showy," says Nesbitt. "We think these body styles are elegant but unpretentious."

Leisurely Rollout

Still, the company faces an uphill battle. Economic malaise in the U.S. is only likely to continue shrinking a tightening automobile market. If the designs are a hit, the company will still have to strike a delicate balance between gaining back the trust and enthusiasm of loyalists while also expanding the nameplate with new models—something it failed to do with the 9-7X and 9-2X. And the company's rollout plans will still leave dealers waiting for new product until the end of 2009.

What's more, it is not clear whether the 9-X will make it to production at all. Executives and analysts agree the company desperately needs an entry-level car to capture younger customers, but similar vehicles from Audi and Volvo have sold poorly in the U.S. Premium compact vehicles "have struggled, so the 9-X is really a test of the waters for us," admits Nesbitt. The company could nix the car in the next year, but not launching the car would surely deprive it of a less costly entry point into the brand, a key to attracting affluent younger buyers.

Still, for the first time in recent years Saab's booth at the New York show displayed new designs consumers could probably one day buy. If GM's designers can reinvigorate the brand in the way they have revived Cadillac and Saturn, long-gone loyalists may finally have a reason to return to Saab.

Matt Vella is a writer for BusinessWeek.com in New York.

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