TROLLHATTAN, Sweden - Peter Augustsson, CEO of Saab Automobile AB, believes his company needs to take a more radical approach if it's serious about selling 250,000 vehicles per year - about double last year's total.
Augustsson, a 45-year-old, soft-spoken Swede, says Saab needs to change the way it markets and distributes its products. It needs to find unique ways to power its vehicles. And, most important, Saab needs radical vehicle designs.
Although the Saab 9-5 has been a strong seller for the company, Augustsson says the car is too conventional. 'Saab should never be conservative,' he said.
General Motors, Saab's parent company, hired Augustsson, a former Volvo engineer and executive, as a Saab vice president two years ago. In March, he replaced Robert Hendry as Saab's CEO. Since joining Saab, Augustsson has implemented changes to support a new lineup of vehicles Saab will launch during the next five years. Those changes include:
Expanding its design studio under new chief designer Michael Mauer
Upgrading its marketing and distribution strategy through a new program called 'Saab Unlimited'
Developing engine technologies that improve fuel efficiency without reducing performance.
During the next five years, Saab says it will expand its lineup from two vehicles, the 9-3 and 9-5, to at least four. Those are expected to be the next-generation 9-3 and 9-5, a sport-utility variant of one of those two, and a sport-utility that will be a sibling vehicle to GM's Pontiac Aztek and Buick Rendezvous.
Augustsson says the new vehicles will give Saab the potential to sell 250,000 units per year worldwide, up from about 131,200 cars in 1999.
But Augustsson knows Saab won't reach 250,000 if it doesn't stay true to its unconventional brand image. Saab defines its image as 'postmodern exclusivity.'
So in May, Augustsson recruited Mauer to revitalize Saab styling. Mauer, a German, was chief designer for DaimlerChrysler's Smart car program.
Mauer says he joined Saab because Augustsson promised him he would have more say than previous Saab design directors and just one boss: Augustsson.
Although Mauer joined Saab too late to work on the next 9-3, due out in 2002, he will have a major influence on the rest of the lineup.
'In the future regarding Saab, everything is possible,' Mauer said.
Mauer is also expanding Saab's design studio with more creative talent. 'It's not more expensive to make good cars from a styling perspective,' Augustsson said. 'It's about competence.'
On the marketing and distribution side, Saab is testing new direct marketing concepts using the Internet and new ownership options.
Augustsson says upgrading Saab's marketing and distribution alone, even without new product, could boost annual sales to 160,000 units.
Saab is using key markets in Europe as test beds for most of the new programs. In the end, it hopes to bring the concepts that work to North America, its biggest market and the market with the most growth potential for Saab, Augustsson says. Saab sold 39,541 units in the USA in 1999.
In Sweden, Saab is experimenting with a lease program called Saab Variations. Through the program, a customer can drive two vehicles a year. For example, a customer can get a sedan for the first half of the year and a convertible for the second half.
In the UK, where Saab has a smaller, more homogenous dealer network, it is experimenting with Internet marketing and other new technologies. Augustsson, however, is keeping quiet about the details.
'We really have only one market where we can use traditional mass marketing, and that's in Sweden, where we have 10 percent market share,' he said. 'But if you have 0.5-percent market share, you can't afford to do mass marketing. You need to find other ways to get your potential customers' attention.'
Saab also is relying on unique powertrain technologies to attract customers.
At the Paris auto show in September, Saab unveiled plans to use a combustion control system in a Saab vehicle within the next three to four years. The system reduces engine fuel consumption and emissions by mixing exhaust gases into the combustion process. It will also try and sell the technology to other upmarket car manufacturers.
Earlier this year, Saab introduced another concept that varies an engine's compression ratio based on the load on the engine.
Both technologies allow Saab to reduce emissions and fuel consumption without taking away from engine performance.