Why GM Should Keep Saab

Breaking View’s Anthony Currie argues that GM should resist the temptation to keep Saab, the Swedish brand it bought a decade ago and recently failed to sell to a supercar maker, also Swedish. Currie takes the macro view: that GM has too much on its plate right now to worry about rehabilitating a niche brand that it basically tried to convert into a sort of offbeat, less expensive version of BMW.

However, Currie isn’t keeping up with his bailout capitalism. For the uninitiated, bailout funding, provided by national governments, is the new venture capital. Bailout money, courtesy of the U.S. Treasury, enabled Fiat to take over Chrysler. German loans were the catnip that convinced GM to keep Opel, its main European brand, rather than sell it to a consortium made up of Magna, Russian lender Sbrebank, and Russian automaker GAZ. Why should they get the Germans’ money when we could? the GM board was thinking.

Now Saab. Bloomberg reports that financing for the GM deal to sell Saab was “likely weeks away.” It wasn’t a huge sum, by today’s bailout capitalism standards: just a little over $600 million, provided by the European Investment Bank and backed by the Swedes. Still, given how few vehicles Saab has been selling lately, that kind of funding could have enabled at least a modest restructuring. Here’s the LA Times on Saab’s plight:

“Saab, which employs about 3,500 people and has a single factory in Trollhattan, Sweden, has been a drain on GM's finances. Saab's sales are down 61% in the U.S. this year. The unit sold only 513 vehicles in the United States last month and two weeks ago said it would slash its U.S. dealer network by 37%.”

Nowhere to go but up, right? Plus, there’s the Opel factor: Saab’s are effectively now Ameri-Swedified versions of Opel cars. Some Chevys and Buicks are also built on Opel platforms, as were many Saturns, but Saab has that intrinsic Euro-ness that means an Opel can be converted into a Saab without too much much fuss, for American consumers. If GM wants to continue to bring Opels to the U.S., it has to sell them as something, barring the creation of an entire (Yikes!) Opel dealer channel.

Then there are the intangibles, such as the loyalty that many Saab owners have toward the brand (despite the widespread notion that GM destroyed the Saab-ness of Saab). This kind of brand equity is incredibly difficult to build and was doubtless an element in the Chinese at one point showing an interest in Saab. Besides, Saabs, with their quirky design elements (such as the famous ignition in the center floor console) and robust, turbocharged, yet relatively small engines, represent a kind of sheathed-sword riposte to flashier luxe rides from BMW, Mercedes, and Audi. They aren’t as reliable as Japanese luxury and near-luxury sedans and coupes, but then again, they also aren’t Japanese luxury and near-luxury sedans and coupes [Ed.—So what you’re saying is the Japanese are making some boring cars these days? THAT’S original.]

Frankly, if you think about how small Saab is relative to the impact it’s had as a brand, it’s really just a marketing genius or two away from a potentially profitable comeback.

Finally, Saabs are just cool. Kurt Vonnegut was a Saab dealer for a while (he blamed his lackluster salesmanship for the Swedes never awarding him a Noble Prize). Older versions of the cars, namely the hatchback, are extremely roomy, very comfortable, versatile—and fast. Newer versions are flashier, but still comfy, quite safe—and fast. Better, Saabs are pleasant all-around cars: they respond when you want to zip along a freeway at 90 mph, but also when you want to mosey along at 40 mph or hit some curvy roads and pretend you have a car that’s not designed to tote around two adults, two kids, and a fair amount of gear (and don’t forget the one almost obligatory Saab accessory, the rooftop ski-rack, which of course reminds us that a simple front-wheel-drive layout can manage snow just as easily as an SUV or some complex, gas-chugging all-wheel-drive setup).

GM actually does have a problem with the near-luxury segment. It would like Buick to fill that gap, but despite its desire to convince Lexus buyers to go for a Buick, it should really be trying to get Toyota Camry and Avalon owners to consider the Tri-Shield. Cadillac is an exotic brand that captures the imagination of a person who, at some level, despises German cars and perhaps has some unresolved issues related to...the war. Chevy is mass-market. So what’s GM to do? It could make sense to take the Swedes’ $600 million and continues to sell a German car, Opel, in the U.S., to people who wouldn’t mind a German car if it just weren’t, you know, German. And perhaps more importantly didn’t cost as much as a BMW or Mercedes and make you come off like a real estate developer in Orange County, a junior-grade entertainment lawyer, or an aspiring plutocrat.

Obviously, there’s both a bailout-capitalism business case and a kind of meta-branding case to be made for GM keeping Saab. Save Saab to get the Swedes’ money! But also save Saab to save...Saab-ness. Would not All Sweden potentially get behind both these ideas? And even, perhaps, give thanks?