Tuesday, October 18, 2011

Saab - Managing the Ridiculous

(Originally aired Sept 1, 2011)

From Saab’s web site today … quoted “Swade”...

“Saab’s problem right now comes down to one thing and one thing only – a cash shortage. We didn’t have enough cash to meet obligations at one stage earlier this year and key suppliers made a decision that it was too big a risk for them to allow us to trade our way out of that situation. To win them back, we need to find the cash. Our fault. Our task to fix. We are working on it flat-out.”

It’s unbelievable, the propaganda Saab expenses on what is truly nothing but their own fault.

“Saab’s problem right now comes down to one thing and one thing only – a cash shortage."

Let’s explore Swade's comment. In the US, I estimate Saab has been burning around $35 Million per month since February 2010. In it's arrogance Muller’s team took the position “if we build - they will come.”

From a base line 250 sales per month, Saab began pushing unrealistic sales objectives to its dealers at the “burning gas” pace of 1500 per month. Targets not achieved, Saab's leadership team encouraged dealers report “service loaner” sales each quarter end.

Note: Service loaners are nothing but phony sales to the manufacturer (and press). Dealer takes a car in stock, reports the car to the factory as a service loaner sale, then parks the car in his back lot. Because the car was reported to the factory as a delivery the car's warranty begins. Its estimated that in CY2010 Saab reported more than 40% service loaner sales and the press reported these sales as +++% over last year.

What makes these actions so ridiculous is that factory executives forget about these phony sales and start telling dealers “we are gaining sales momentum over last year.”

Even more ridiculous ...Sweden doesn’t have a clue…they believe “wow US sales are kicking ass so lets build and ship more cars” when in fact dealers are parking the cars in back lots unsold.

The public, and most of the press, have no clue how sales are manipulated.

In any regard, Saab was reporting sales but NOT finding end users to drive them. This nonsense goes on most of CY2010. Inventories build at dealers and ports (bi-products sit unsold to this day).

Some other significant achievements during CY2010 and early 2011 …

The 2010 9-3 Convertibles built in CY2009 (missing trim items) are delivered to dealers in March 2010 (without proper marketing support most sit unsold for almost a year).

The 9-3 XWD Combi (wagon) is launched unsold with no ad support or promotions.

The first 2010 9-5 Aeros are delivered to dealers with no sunroof and are basically "tryout" models without proper finishing and options (missing remote start, plastic trim has no grain, priced over $53,000). You can find these service loaner cars on Ebay tonight for $39,000 - unsold.

The first 2011 9-5 2.0 Liter FWD cars land, $10,000 higher than the car it replaced. And as of today is a complete failure.

And this nonsense is just related to car sales.

Let’s not discuss:

Lack of brand awareness
Lack of brand positioning
Lack of any logic in product offers
Lack of any showroom dynamics
Lack of Tier 1, 2 and 3 advertising
Lack of anyone knowing what “bi fuel” stands for
Lack of promotions and competitive position
Lack of corporate communications to owners
Lack of profitable dealers

But according to Swade ….Saab’s “only” problem is a lack of cash. In the early months Saab indeed had tons of CASH.

Saab executives failed to ask the most significant question..

What is it we are doing and why?

Saab never had an honest business plan, and no one had the ambition to tell Victor Muller.. “the plan you have.. well sir it’s not a very good one and here is why.”

Note: There was one very bright exception.. however he only lasted a few months and moved on to a German brand.

More CASH Swade? How ridiculous.

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