Kicked to the curb, small auto makers struggle

In early 2010, General Motors kicked its Saab brand to the curb as part of its post-bankruptcy reorganization.

And that was, literally, where Saab showed up at this week’s Detroit auto show, showing off a half dozen models outside the convention hall on a concrete terrace across the street.

The display was sprinkled first with artificial snow, before getting a solid coating of the real thing when a storm blew in Tuesday afternoon.

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Saab, now owned by a Dutch car maker, was among a cadre of brands conspicuously absent from the Cobo Center after being discarded during the shakeout of the American auto industry. Some, including Pontiac, Saturn, Hummer and Mercury, were nowhere to be found, having been sent to the scrap heap as General Motors and Ford streamlined operations.

Several others – Volvo, Jaguar and Land Rover, all of which were sold off by Ford – remained but without the protective cover of their former parent’s exhibit. Mazda, too, was on its own after Ford divested most of its stake in the Japanese brand.

Much of the North American International Auto Show here has been focused on big companies trying to become even bigger. Chrysler’s chief executive, Sergio Marchionne, said 6 million in annual sales was the ideal size for an auto maker, and Volkswagen made no secret of its ambition to become the largest car company in the world.

But at the same time, the small brands seeking rejuvenation under new owners were also trying to not be overlooked – even when relegated to the sidelines.

“Saab was perceived to have died with old GM,” Victor Muller, the chairman of Saab’s new Dutch parent, Spyker Cars, said. “People mentioned Saab in the same breath as Hummer, Pontiac and Saturn. But in fact we were the company that got away.”

Saab survived, but its position is the most tenuous of the orphaned brands, particularly in comparison to its fellow Swede, Volvo. Volvo’s sales in the United States were down 12 per cent, to 53,948, but Saab’s were down 37 per cent, to just 5,445.

At Volvo, now owned by the Chinese car maker Geely, it was “so far so good,” said Jesse Toprak, vice president for industry trends and insight at TrueCar.com, a website that tracks industry sales and pricing. Toprak said Saab’s future is cloudier but holds promise.

“It’s got a cult following,” he said. “There’s good potential for them to build the volume back with a couple of new products.”

Saab has several new models coming soon, including a redesigned 9-3 sedan that Muller calls the first “Saab Saab” in many years. It also plans to begin an advertising campaign next month aimed at convincing consumers that it is still alive and plans to stay that way.

“The buyer needs this confirmation that he’s not an insensible person if he actually buys a Saab,” Muller said.

Muller said Saab had a rough go in 2010 because GM had shut down its factory; restarting production and in some cases reopening dealers took months. But he said the brand can become profitable in 2012, by increasing global sales to 80,000 this year and 120,000 next year -- ambitious goals from last year’s total of 31,696.

Volvo, which swung to profitability in the first quarter of 2010, also revealed plans for a big marketing splash. Its chief executive, Stefan Jacoby – a German in charge of a Swedish brand owned by the Chinese – said the company would spend more money on advertising in the first quarter than it did in all of 2010. Ford sharply cut back on its promotion of Volvo before completing the sale to Geely last August.

On Tuesday, Volvo made the unusual move of unveiling a crumpled C30 electric hatchback to demonstrate its crashworthiness. Jacoby said Volvo intended to capitalize on its reputation for building safe vehicles by focusing on that aspect of the C30 as it brings a test fleet to the United States later this year.

Jacoby said Geely has given Volvo more autonomy and is not taking an active role in the company’s operations to avoid squandering its positive attributes.

“They are very much aware they need to maintain Volvo as a premium brand,” Jacoby said.

To be sure, executives at the brands that were cut loose say they have benefited from being able to make their own decisions rather than being constrained by an often distant parent. But the flip side is less ability to weather lengthy unprofitable periods.

“You control your own destiny, but you’re also more accountable for yourself,” said Stuart Schorr, a spokesman for Jaguar and Land Rover, which Ford sold to an Indian company, Tata Motors, in 2008. “It’s emboldened the whole organization.”

Together, Jaguar and Land Rover, which lost money for years under Ford, have been profitable for three consecutive quarters.

GM and Ford have said they had little choice but to unload brands that were not central to their business. Those that were affected are often missed for nostalgic reasons, but not when it comes to the bottom line.

“I think we’re down to a size that’s much more manageable,” Stephen J. Girsky, a GM vice chairman, said. “I think it’s the evolution of the company to lose some of these brands.