Irreconcilable Differences (Part One)

Like so many ill-considered marriages, GM’s entanglement with Saab was destined to end badly. We look back over this unhappy union.

(c) petrolicious

Throughout the late 1980’s and 1990’s, GM looked on enviously as its arch-rival Ford carefully and methodically assembled the pieces of what would become its Premier Automotive Group* (PAG), a stable of European premium, sports and luxury car marques to which it would add its own Lincoln and Mercury brands.

Ford began by acquiring an interest in Aston Martin in 1987, then assuming full control in 1991. It purchased Jaguar in 1989, followed by Volvo’s car business a decade later. In 2000, Ford acquired Land-Rover from the wreckage of BMW’s failed ownership of Rover Group, which it folded into the newly formed PAG.

The latter acquisition was particularly painful for GM because, in March 1986, it had agreed the purchase of Land-Rover, then part of the nationalised British Leyland, from the UK government before a public outcry and political pressure forced Prime Minister Margaret Thatcher to renege on the deal.

GM had also held exploratory talks with Jaguar in 1989 about co-operation shortly before Ford made its successful bid for the British carmaker. Thwarted a second time, GM was desperate to grab a slice of the highly profitable European premium automotive manufacturing business for itself. However, the political and financial obstacles to acquiring BMW or Mercedes-Benz were insurmountable, even for a behemoth like GM.

Instead, GM looked north to Sweden. In 1989, Saab’s passenger car business was demerged from truck manufacturer Saab-Scania into a new company, Saab Automobile AB, and GM acquired a 50% stake in this company for $600 million. The other 50% stake was retained by Investor AB, a holding company for industrial investments controlled by the Wallenberg family. GM did, however, negotiate an option to purchase the remaining 50% of Saab within the following decade.

Saab 9000. (c)

The sale to GM was, in hindsight, a smart move on the part of the Swedes. Although it enjoyed a loyal following of owners, Saab was a marginal player in the European automotive landscape. In 1989 it had just two models in production. The 900, although well regarded, was already over a decade old and was an extensive update of the earlier 99 model, launched in 1968. The larger 9000 was five years old and one of the Type Four models developed jointly with Alfa Romeo, Fiat and Lancia.

Saab’s global sales in 1989 were just over 120,000. By way of comparison, BMW sold over 520,000 cars in the same year. Saab-Scania probably realised that this was not the basis for a sustainable, independent automotive business, so was happy to sell.

Saab was not so much a premium marque as an alternative for those who, for whatever reason, eschewed the obvious choices of Audi, BMW and Mercedes-Benz. In 2011 Bob Lutz, former Vice-Chairman of GM and never a fan of the Swedish company, described typical Saab owners in forthright terms as “leftish intellectuals who admired the failed Swedish experiment in 90% tax rates and womb-to-tomb welfare”. If Lutz’s attitude was typical of GM thinking, the relationship with Saab was never going to be a happy one.

Nevertheless, GM set about the task of transforming Saab into a true premium brand. The first order of business was a replacement for the ageing 900. It decided to base this on the GM2900 platform, which underpinned the 1988 Opel Vectra A. The New Generation 900 was launched in 1994 and was sold as a three and five-door hatchback and two-door convertible.

The design referenced the earlier Classic 900, but existing Saab owners regarded it with suspicion. Its Vectra roots were very apparent, and it didn’t have the heft or solidity of the earlier car. Saab engineers also regarded the NG900 poorly and almost immediately undertook an extensive re-engineering programme, allegedly without informing their masters at GM.

1998 Saab 9-3 three door: (c)

The NG900 lasted just four years before being replaced by the 9-3, which was based on the same body but incorporated over 1,100 improvements, including reinforced A-pillars, door frames and sills for better crashworthiness, traditionally a Saab strength and selling point.

One thing they couldn’t fix was a propensity for the front bulkhead to split. This was hard to spot, but became evident on full steering lock, when the crack would open and the pedals would deflect slightly. Even though this would lead to a UK MOT test failure, Saab never issued a recall. Affected owners had to stump up around £700 for a repair, which was pretty galling for those who bought the car based on Saab’s reputation for engineering integrity.

Saab continued to struggle. Having fallen to around 87,000 in 1991, annual sales would not exceed 100,000 for another six years and reached a low of around 71,000 in 1994, the year the NG900 was launched.

Next up was a replacement for the 9000. Again, this was based on the ageing GM2900 platform, albeit with a 98mm stretch in the wheelbase over that of the NG900 and 9-3. The new 9-5 was launched in 1997 and was available in four-door saloon and five-door estate versions. This was a rather more convincingly engineered car than the NG900.

1997 Saab 9-5. Image: cars-data

However, early four-cylinder petrol-engined 9-5 models suffered from a high incidence of engine failure due to poor oil circulation. The adverse publicity this generated forced Saab to offer a retrospective eight-year warranty on these engines, provided the recommended oil-change intervals had been observed. In fairness to GM, the affected engines were Saab’s own design, based on the unit originally purchased from Triumph for the 99 model.

Notwithstanding the engine issue, the 9-5 was well received in the market and Saab’s global sales rose to almost 125,000 in 1999. However, this was barely better than when GM bought its initial stake a decade earlier, so the effort to convert Saab into a true premium competitor for the German trio was clearly failing. Despite this, GM went ahead and exercised its option to purchase the remaining 50% of the company in 2000, for which it paid an additional $125 million.

In Part Two we’ll conclude the story of GM’s ownership and, ultimately, its forced sale of Saab and subsequent collapse of the company.

* The Premier Automotive Group, which allegedly cost Ford over $17 billion to assemble, would not come close to fulfilling the company’s ambitions for it and was progressively dismantled through disposals between 2007 and 2010.

Author: Daniel O'Callaghan

Shut-line obsessive...Hates rudeness, loves biscuits.

21 thoughts on “Irreconcilable Differences (Part One)”

  1. GM must have suffered a massive cognitive dissonance when they based the new 900 on the Opel Vectra. The Vectra was at the absolute rock bottom of the European pecking order in terms of reputation and engineering quality and this came for a reason.
    How anybody in their right mind could hope to make this into a premium product is beyond my recognition.

    The problem of splitting bulkheads is a logical result of a severe design fault in the Vectra which has its steering rack mounted to the bulkhead but the rest of the suspension is fixed to a subframe. All steering forces are transmitted to the bulkhead which in turn flexes up to a full centimetre in every direction. The result is mushy steering at best and a split bulkhead at worst. In an Opel nobody ever expected anything better but for a Saab it was unacceptable. Numerous manufacturers offered retrofit stiffening brackets that connected the steering rack to the suspension turrets and at least stiffened up the whole mess to a nearly acceptable level.

    1. 1980s Opels used to split in a number of places, not just the bulkhead.

  2. interesting the numbers 120k Saab against 500k BMW, cmq the work of Ford with European brands has been worse.
    Even at home the Americans suffered the Japanese competition, they had their own standards and failed on every continent.

  3. Now let me get this right, the first GM SAAB was based on the mk3 Vauxhall Cavalier and was a six year old platform by the time it hit the showrooms? At the time I didn’t spot how old it’s platform was. Why not hold off and keep the 900 warm until 1995 and then launch their first GM model simultaneously with the Vectra B based cars. They could have used the extra time to properly engineer the B, feeding through the benefits for the other GM marques as well and also developing the 9-5 with more “Clear blue water” between it and the 9-3, so that it could be presented as a more convincingly different car to the 9-3.

    1. The 900 had to come off the production line as quickly as possible because with seventy-three hours of work in every car (as opposed to less than ten on comparable cars) it was effectively a hand built car and accordingly expensive to make (a situation similar to the one Fiat faced with the 75 after their Alfa takeover).
      The problem was that the Vectra platform not only was old but it was plain crap – see the design fault mentioned in my first post. It was engineered down to the lowest possible price which was possible because the typical Opel buyer didn’t expect good road manners or driving pleasure from his car.

      GM quite often didn’t know what to do with their acquisitions and this shows in their handling of Saab. When Alfa Romeo started the development of the ‘premium’ platform that formed the base for the later 159 a Saab version of this platform was taken into consideration (as well as Cadillac and Buick versions, it was the time of the GM/Fiat JV). When GM recognised the cost of the intended product they quickly cancelled the two American versions and decided to again base the next Saab on an Opel platform to make it cheaper.

    2. A saab on a 159 basis would have been interesting, if I remember correctly the engineer of the 159 was the German Kalbsfeld.

    3. Karl-Heinz Kalbfell was CEO of Alfa first, of Alfa and Maserati later. Before that, he was marketing manager at BMW. Kalbfell was the one who thought Alfa produced 600,000 cars per year to find out after he signed his contract that the numbers were in the region of 100,000. He stated that one of the reasons to switch from BMW to Alfa was the 159 prototype shown to him. This probably says enough about him and his qualification as Alfa’s boss.

      A 159 based Saab surely would have been the same overweight and excessively wide disaster as the 159 itself. The ‘premium’ platform simply had to take into account far too many contradictory requirements to be anything useful. It had to provide room for four, six and eight cylinder engines mounted longitudinally or transversely with fwd, awd and rwd as possible drivetrain configurations. Small wonder it was 400 kgs too heavy and had miserable space economy.

    4. Marco, we covered the late Mr. Kalbfell’s tenure here…

      Dave: Given the short time he had in the job, it’s futile adjudging it one way or the other. The motor business doesn’t turn in such timescales. Regardless of his real or perceived failings, he was palpably (or potentially at least) a better steward of the Biscione than either the dreadful Serge, or indeed any of his acolytes.

      As to the NG900, while it’s no dynamic paragon, it was a durable, solidly wrought motor car (failing bulkhead notwithstanding). Mine has been the most dependable car I have ever owned. A patch on the original car? Not even close, in neither design nor dynamic terms. As an inexpensive and reliable ownership proposition? The GM-sourced car is probably the one to have.

  4. Interesting article. I like Saab. The troubles started long before the GM merger. Saab’s raison d’être was of course being different from the mainstream. In order to survive Saab had to stay that way, while simultaneously getting higher prices and/or benefit from economies of scales by sharing technology and knowledge with another manufacturer.

    That’s quite a challenge, but the management at Saab seemed to have been aware of this. First talks of merger, with Volvo, were back in 1977. As far as I know it failed because Saab-Scania and Volvo both produced trucks and they were afraid of cannibalizing each other. So while Saab remained independent and had a strong (but ultimately too small) following, the business was hardly viable. You can’t make a business on selling Porsche volumes for Audi prices.

    The merger with GM clearly didn’t work. While I believe it is true GM didn’t fully understand Saab as a brand, Saab also refused to give up their independency and become what Audi is to Volkswagen. It’s not that GM didn’t try. They invested in Saab for 20 years. Only when GM were busy with their own bankruptcy they got rid of Saab. Spyker’s takeover only prolonged Saab’s misery. Naturally GM didn’t want the Chinese to take over Saab. They would have gained access to GM’s technology and GM already sold over a million vehicles in China at the time. Saab’s demise was sadly inevitable.

  5. GM didn’t have anything suitable for the task at the time, did they?
    With the benefit of hindsight, maybe the best strategy would have been to develop a new “premium FWD” platform for the 900 as well as the 9000, then use it for the Vectra B and the Omega B (giving up on GME’s RWD architecture)

    1. Development a new ‘premium’ platform was exactly what happened.
      This was at the time of the joint venture between GM and Fiat where Fiat’s responsibilities were diesel engines, small cars and medium sized premium vehicles. That’s why Alfa got the job to develop the new ‘premium’ platform for the 159 and a prospective Saab. Using such a platform was out of consideration for an Opel because it would have been far too expensive for their decidedly non-premium products.

  6. I always resented that the Alfa 159 got that platform and the Saab equivalent was never released. It struck me that the criticisms made of the Alfa – weight and a rather stolid driving experience – would have fitted much better with the Saab brand values than the Alfa ones. As it was the world was disappointed by an uninspiring Alfa and subsequently a compromised Saab…

  7. Ah, time to re-revisit the whole ‘Saab wasn’t premium’ debate.
    I read that former Saab owners overwhelmingly went to so-called premium brands post-bankruptcy, Audi and Mercedes being the top two choices. So, these were premium buyers, paying premium prices, buying safe and sophisticated luxury cars, and cross-shopping them with other premium brands. Why weren’t the cars considered premium? It seems to me that the main impediment to the coveted ‘premium’ moniker was the stench of GM.

  8. A lot of Saab buyers were only interested in their cars for the novelty and exclusivity thing against the ubiquitous BMW/Merc/Audi. I owned a 9000 Aero for seven years, I bought it (used) because I liked “Saab, the car”: styling, comfort and performance. A lot of Saab owners I knew back them loved their cars because they liked “Saab, the brand”: not a lot of people drove them and you didn´t see many every day. A lot of snob appeal.
    It´s a pity that such great ´80s and ´90s Saab values, such as comfort, functionality, safety, great ergonomics (and, in the case of turbo engined cars, ample power), were wasted in the market. My 9000 was far from being perfect, though.

    1. I have to say my impression is that b234r is broadly right in his assessment of Saab owners, in the Australian context at least. Where I grew up, Saabs were a relatively popular choice, partially aided I suspect by the existence of a long-standing and prominent dealer. Saabs in general were also aided by GM-Holden export concessions which made new prices realistic against the cars they styled themselves as directly competing against – not that these were cheap cars in an absolute sense, just less of a brazen rip-off than something like a 318i or C180. But because during this period Saabs were considered effectively equivalent in driveway snob value to a BMW or Merc (bolstered by the good reputation of the OG900 and 9000), they made for an appealing choice to people who maybe couldn’t quite stretch to a bottom-of-the-line BMW or Mercedes with anything resembling an acceptable level of equipment.

      With that said, for some reason, I always had the impression that Saabs redefined monstrous depreciation – they are the only prestige Euro I ever saw that made Fiat/Alfa depreciation curves look gentle, and that is really saying something. I can’t prove this but I strongly suspect that for all the bumf about Saabs being built to last etc, the trade intrinsically understood that a used Saab would invariably be a seriously expensive proposition in terms of servicing, maintenance and parts. And at least back in the day, the kind of person who was interested in second-hand Euro metal over a newer Holden or up-spec Toyota would have taken that sort of thing into account.

  9. Wasn’t the Lancia Delta-Saab 600 project and the subsequent Type Four collaboration a dry run for a combination between the two quirky, engineering-led companies? And, if I remember correctly, Fiat was going to acquire Saab before GM snatched it out from under them. They even had plans to base a new 900 on the original Tipo, sort of a Swedish 155/Dedra.

  10. Excusez moi mais je vais écrire en Français 🙂
    Saab en France était une marque tres “exotique” , surtout dans les années 90.
    Elle avait pourtant une qualité rare, l’absence de prétention agressive du premium Allemand et jouissait d’une bonne image .
    Hélas, avec le rachat par GM, cette image allait faiblir, des pannes récurrentes salissant la réputation et les revendeurs ont préférés arrêter de vendre ces produits au profits de marques comme Kia par exemple.
    Moi je trouve que Saab a manqué le coche en ne proposant pas une voiture comme la 1er Audi A3.
    Je trouve même énormément de ressemblance entre cette Audi et l’ image de Saab !

    De toute façon, tout les rachat/fusion des Américains ont été des échecs (GM, Ford,Chrysler …)
    J’ai peur pour Peugeot/Citroen :(((

    1. Bonjour Thierry. Merci pour votre commentaire, que j’ai traduit en anglais (en utilisant Google translate) pour nos lecteurs.

      Excuse me but I will write in French 🙂 Saab in France was a very “exotic” brand, especially in the 90s. However, it had a rare quality, the lack of aggressive pretension of the German premium and enjoyed a good image. Alas, with the takeover by GM, this image was going to weaken, recurrent breakdowns tarnishing the reputation and the dealers preferred to stop selling these products in favour of brands like Kia for example. I find that Saab missed the boat by not offering a car like the 1st Audi A3. I even find a lot of resemblance between this Audi and the image of Saab! Anyway, all the American takeover / merger were failures (GM, Ford, Chrysler …) I’m afraid for Peugeot / Citroen: (((

  11. 1000 thanks 😀
    I love your site, your look on the British industry is very interesting and sometimes very severe;)
    Carry on and take care of yourself

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