Swedish Report: Koegnigsegg Wants to Sell Fewer Saabs for More Money

[FenwickHockey65]

Swedish report says Koenigsegg wants to sell fewer Saabs for more money
Link to article

By Jonathon Ramsey
October 27, 2009

According to Swedish newspaper Dagens Industri, Koenigsegg wants to make more money selling fewer Saabs, which it can only do by taking Saab upmarket. And the numbers being reported indicate not just medium luxury, but top shelf, Cadillac Margarita luxury. Straight from the paper, this is allegedly Koenigsegg's ambitious three-step plan:

2010-2011: The current phase
- 115,000 cars sold gives zero in operating profit
- Average price per car: 189.000 SEK ($27,546 U.S.)

2012-2015: Transition
- 80,000 cars sold gives zero in operating profit
- Average Price per car: 208.000 SEK ($30,311 U.S.)
- New models including 9-5 Koenigsegg Edition

2016 - : premium
- 65,000 cars sold gives zero in operating profit
- Average Price per car: 280.000 SEK ($40,804 U.S.)
- New models include New 900

There's a bit of confusion over average prices mentioned. The current base price of a 9-3 in the U.S. is $30,360, and it wouldn't make sense to have the average price for the entire model line in the current phase be less than the base price of the cheapest car in the cheapest country, even at a higher volume. (The base Saab 9-3 starts at 301,990 SEK, which is $44,008 U.S.)

If the devotees at Saabs United have it right, a commenter in the original Swedish article who also claims to be a Saab dealer said the average prices are missing region-specific taxes, so they should be 55-60% higher. That would make the transaction price in the current phase about $43,000, and in the final, premium phase about $63,000 with a 55% markup.

While the numbers are fuzzy, what is pretty clear is that Saabs are going to cost a lot more in seven years if Christian K. gets his way.

[91fairladyZ]

Good luck with that. And I really mean it. Saab should have been able to keep up with Audi's rise to top tier luxury, but failed to do so.

[Rocket 88]

Where is this going? In 2020 they only need to sell 1 car at $ 2,652,260,000... or of course 2 cars at $ 1,326,130,000 each.

What could possibly go wrong... other then the collapse of the dealership network and buying public that doesn't care at all what Saab does.

[Bravada]

More cars for less sounds like a fair plan to me, building quirky cars in Sweden is not a volume business. Currently Saab gives cars away just to move them if you factor in all the rebates and extra stuff, and the MSRPs are still below Audi or BMW level, so essentially they have to do the same that GM did with their mainstream brands.

Do note the article mentions where the BREAKEVEN POINT would be, not that Saab would build 80,000 cars. They'd just sell them for more, so 80,000 would be enough to break even. The average transaction price will rise by itself as the mix shifts towards the 9-5 (the old Dame Edna was a garnish to 9-3 sales lately), and the rest is cutting loss-leaders and discounts.

[LONGHORN]

I fear even with this plan of less is more SAAB is not longed for this world. At least when SAAB goes under it will not be on GM's watch.

[CamaroCrazy]

I think moving upmarket isn't a bad move for Saab, but they have to justify that price. The current 9-5 is no way worth its sticker price.

Build a car worth $40,000+ and I could see the next generation of Saabs gaining traction in the market. I could see Saab becoming a true alternative to BMW, Audi, and Mercedes. Around here, its like everybody and their brother has a 3 Series, A4, or C-Class. Saab could be the answer for those looking for something different!

[Bravada]

And there you go - until 2015 Saab is expected to grow the average price by $3K only (~10%), this is entirely possible by better marketing and shifting the sales mix towards more expensive models while cutting on rebates.

[the question here is how far away is the $27K for 2010-2011 from today's figures]

The sudden surge past 2016 is both a pipe dream from the current perspective (2016 is SO far away) and the responsibility of a new crop of models, which might just as well be much more than desperately tarted-up Opels.

[rsbaker]

Trying to go too far up market almost always fails. Rich people who buy luxury cars will stick with the names they know and the not so rich people wanting to impress the Jones' will too. Volkswagen tried this with there luxury Phaeton of a few years ago. It doesn't matter how good or how luxurious that car was it was still a Volkswagen. And why buy a Volkswagen when you could buy and Audi at the same price or less. Pheaton prices ran between $66,700 - $101,300 . $100K for the same people that made the Beetle?!? VW Pheaton was a major flop.


2006 Volkswagen Phaeton
Base MSRP: $66,700 - $101,300
Invoice: $61,194 - $92,801
Fuel Economy: 22 (Est) mpg Hwy, 16 (Est) mpg City

For Saab trying to go up market will probably fail as well, especially given what Saab has been historically? There was absolutely nothing luxurious about Saab in the 1970s & '80s. It wasn't until the 1990s that SAAB was pushed into mid-lux to justify the made in Europe prices on its cars. European niche brands are just expensive to make especially in boutique factories like Saab's factory in Trollhattan Sweden. It seems to me that they should instead work on a Coupe/Sedan to slot in under 9-3 that can be sold for less than $30K with turbo motor and good European handling and all of the other characteristic SAAB quirkiness. If they do that and sell those in volume in Europe and the US while keeping manufacturing costs down they would be better off. They'll still need to find a way to cut costs for its 9-3 and upcoming 9-5 and its entire operation.

[Bravada]

Rich people who buy luxury cars will stick with the names they know and the not so rich people wanting to impress the Jones' will too.

This is why Lexus failed so massively and Nissan is basically winding down Infiniti all around the globe.

[msitter]

I had a Saab, the most disreputable pile of crap on the market. My neighbor had a Saab, it sat in his garage on jack stands constantly in need of parts. The only reason I bought it was because my wife wanted it and thought it was cute. Free service for 50000 miles kept it in the household for 7 years. Towed in many times. When it was time to be replaced my wife wanted another. I asked her "do you also want cancer?". It was replaced with a completely trouble free BMW. Dealer could not even sell it at auction.

[smithb]

I didn't think it was possible to sell fewer SAABs. Ambitious goal.

[1.21 giggawatts]

at what point does Koenigsegg have a line up not sharing anything with GM platforms? also does will they continue to update platforms throughout a decade like the now outgoing 9-5 or will the product lifecycle change?

[msitter]

Lexus and Infiniti built their reputation off of the goodwill Toyota and Nissan had. They started by offering German class luxury at Japanese prices. The same as with Acura and Honda. Most Americans don't even know what a Koegnigegg is. Could be a beer, those pickled eggs on bar tops, some kind of art deco statue? There are probably 10 of their cars here and no one will ever mistake a Saab for a high end supercar.

[mgescuro]

Fine.

Give me a Saab that AUDI-level in interior quality and in performance, and I wouldn't have a problem spending $48,000 on a fully loaded 9-5.

But, given the nature of the fickle automotive market, Saab really needs to define itself.

If Saab wants to become premium, that's fine by me. But they need to realize who defines the market. The Germans.

[GMusa]

I think a move up market might just work. could produce better cars.