5/99

5/99 SAAB 9-7X SUV Assessment of Competitiveness

5/99 SAAB has a strong history in aerodynamics, front wheel drive technology, turbocharging, and excellent packaging. However, SAAB has been limited to a quirky niche in the Luxury marketplace. This niche is marked by a heavy reliance on: - Relatively small displacement 4-cylinder engines; - 3- and 5-door models; - Exclusively front-wheel drive platforms; - Eccentric styling; - Unusual ergonomics (such as a floor-mounted ignition switch). Some SAAB owners tend to be nearly fanatical about their cars, somewhat hindering SAAB’s entry into more mainstream Luxury segments. SAAB’s introduction of normally aspirated V6 engines was less successful than expected, as many “hard-line” SAAB owners rejected the Opel-sourced V6, preferring a SAAB-developed turbocharged 4-cylinder. SAAB has struggled within the GM of Europe hierarchy to retain it’s independence and product identity, borrowing rather heavily from Opel hardware. - On the one hand, this has resulted in dilution of SAAB’s image with previous owners, and; - Yet, SAAB has been unable to evolve the brand successfully, as it’s main Swedish competitor Volvo has managed to do.

5/99 Imagery (from Allison-Fisher Image Barometer) SAAB’s image is built most significantly on Sporty, Youthful, Value, and Safety-oriented attributes. Relative to all other Luxury Brands in Allison-Fisher’s Image Barometer, SAAB’s strengths are: - Good MPG; - For Young People; - Reasonably Priced; - Value for the Money; - Good Safety; - Sporty. Among these, the most important attributes for purchase of a SAAB are: - Sporty; - Reasonably Priced; - Good Safety; - For Young People. SAAB’s Image for Performance- and Technology- oriented attributes, such as - Excellent Handling; - Technically Advanced; - Fun To Drive; - Excellent Acceleration suffer because of the competitive set in this study (which includes other Luxury Brands such as BMW, Mercedes, etc.). GOOD MPG FOR YOUNG PEOPLE REASONABLY PRICED VALUE FOR THE MONEY GOOD SAFETY Mean Attribute Rating “How Saab Rates on Each of these Attributes (above or below all other Luxury Brands).” SPORTY DISTINCTIVE LOOKING LASTS A LONG TIME FUN TO DRIVE EXCELLENT HANDLING EXCELLENT ACCELERATION TECHNICALLY ADVANCED EXCELLENT WORKMANSHIP REPUTATION FOR CUST. SERVICE SATISFYING SALES EXPERIENCE NAME YOU CAN TRUST TREND-SETTING VEHICLES HIGH TRADE-IN VALUE COMFORTABLE RIDE ROOMY INTERIOR LUXURIOUS GOOD LOOKING PRESTIGIOUS Attribute/ Purchase Consideration Correlation “How Important Each of these Attributes is Relative to the Purchase Consideration for a Saab (above or below all other Luxury Brands).”

5/99 Some of SAAB’s Technological Inventions 1963 Diagonal Brake Circuits. If one circuit fails, braking ability is retained on one front wheel and the opposite rear wheel. 65 % of the braking capability is retained. 1969 Automatic Headlights 1971 Headlight Wipers 1972 ”Self- Repairing” Bumper. The bumper regains its shape after collisions in speeds up to 8 km/h. 1974 Combi Coupé. It combines the flexibility of a station wagon and the looks of a "normal car". 1978 Interior Ventilation Filter. 1980 Automatic Performance Control (APC) system. The APC system is based around a microcomputer connected to a special microphone in the engine block. The microphone senses the misfires caused by too high an intake air pressure or too low a grade petrol, and orders the turbo to lower the pressure. 1983 Non-Asbestos Brake Pads 1985 SAAB Direct Ignition. All spark plugs sit in a cassette and have their own ignition coil. 1992 Trionic Engine Management. A refinement of the APC system, a microprocessor makes two million calculations/sec. controlling ignition, fuel injection & turbo pressure. 1993 “Black Panel” I/P Lighting. First shown in the EV-1, this display lighting system allows the driver to select a “blacked out” I/P. During night driving only the speedometer is visible unless something happens, at which time a display lights up. 1993 Sensonic Manual Transmission. A manual transmission with a computer-controlled, hydraulically-actuated clutch. 1998 Active Head Restraint. On impact, the head restraint shifts forward and upward, minimizing “whiplash”. Ventilated Seats. Electric fans in the seat structure ventilate heat and moisture away from the seat surface, helping to keep the occupant comfortable in all weather. From SAAB- Canada’s website: “It all started in 1947, when the aircraft manufacturer SAAB introduced its first car. It looked different, with its extreme aerodynamic shape, and performed differently, with its transverse engine and front-wheel drive. This aircraft heritage has led to a strong tradition of innovative design, reflected in features like the early application of turbo technology in passenger cars, direct ignition, seat heating, side impact protection and active head restraints, to mention just a few Saab innovations.”

5/99 Corporate (Automotive) Timeline 1930 1940 1950 1960 1970 1980 1990 2000 GM buys SAAB. 1937 Swedish Government promotes development of a domestic defense industry. Svenska Aeroplan AB formed. 1969 First shown in 1967, the 99 entered series production in 1969, using an outsourced engine (British) and only in one bodystyle (2-door). 1946 With the end of WWII, SAAB diversifies in two non-Defense directions: - Commercial Aircraft - Automobiles The first SAAB automobile is the prototype for the 92, powered by a transverse two stroke, two cylinder engine driving the front wheels. 1998 The new 9-5 is introduced. With it, SAAB intros a new nomenclature system. Features introduced: - Active Head Restraint - Ventilated Seats The 9-5 series also re-introduces a station wagon version for the first time since the 96. The 900 is facelifted and re-introduced as the 9-3. 1984 The 9000 was introduced in 1984, with a more traditional 4dr. Bodystyle (9000CD) introduced in 1988. 1974 The 99 line-up expands to 2,3,4 & 5 door models 1959 Shortly after the 95, the 96 sedan was introduced. The 96 stayed in production until 1980. 1978 The 900 was introduced in 1978, with a convertible added in 1986. 1977 Saab intros one of the first series-produced turbos, the 99EMS. 1950 The 92 was finally released for production in January, 1950. 1993 The new 900 was introduced in 1993, the first product produced under GM, with cooperation with Opel. 1959 The 95 (wagon) was introduced.

5/99 Reasons for Rejecting Vehicle Seriously Considered Purchase Reasons Cross-Shopped Segments Purchase Patterns SAAB are more likely to consider Luxury & Mid-Size Vehicles (9-5 & 9-3 Maritz Segments). - SUV segments don’t appear in top 5 for SAAB, whereas CSUV and F/S SUV do for Total Market. - Price is a significantly low Purchase Reason for SAAB owners. - On the other hand, Fun To Drive and Safety are significant Purchase Reasons. - SAAB buyers reject other vehicles because of a stronger “preference” for SAAB. - Styling is less important to SAAB buyers (less likely to be a reason for rejecting another vehicle).

1/03 REFINED Cross-Over Premium SUV’s, as represented by XC90, offer more “On-Road” orientation, higher levels of Refinement, Dynamic Performance & Exclusivity. EXCLUSIVE Mainstream Upscale COMMON • Likeliest competition for a SAAB SUV would be Volvo XC90. • Latest Premium SUV/CUV in $35- $45K Price Range (along with RX330 & VW Touareg); • Swedish brand with many parallels to SAAB; • Relatively late addition to SUV market. GMT360 supports so many brands that the matter of differentiation is even more key than it would normally be in sharing product for SAAB. Truck RUGGED Likely Competitors to SAAB 9-7X

1/03 TARGET: Import Intenders TARGET: Trad. SUV Intenders Exclusive Product Pass. Car Basis Available in Europe 3rd Row Seat Unitized Basis Indepen- dent Susp. Comments XC90 X Next S80 X X X X X Prime SAAB Competitor Global Mid Size Platform; Capacity taken by N.Am./ Jpn MDX (Pilot) Odyssey X X X X Next generation to be consolidated w/ G-Class RX330 (Highlander) Sienna X X X X 5-series basis strongly denied ML-Class X X Opt. X X New Audi SUV (Pikes Peak concept previewed) X5 X 5-series X X X X Phaeton/ A8 Touareg (Cayenne) X X X X Nissan FM Platform (Premium Pass. Car) FX35/ FX45 X G35/ Z-car X X X X Supports 3 mainstream GM brands plus Isuzu & SAAB GMC Envoy 4 Others X 370 “Image stretch” handicaps building appropriate image SAAB 360 4 Others X Image compromised by variety of brands supported by 360; SAAB presence not strong enough to overcome this kind of relationship with other brands. Passenger Car platform basis of major target competitors belies the typical European focus on Performance, Drivability, Operating Refinement typically a Passenger Car advantage. If SAAB 360 is not appropriate for European drivers, then it is difficult to imagine that European-brand shoppers in North America would consider it appropriate. Likely Competitors to SAAB 9-7X

1/03 Acura SLX Case Study • Acura was a “2-pillar” model line-up (Integra & Legend). • Uncertain brand positioning, post-Lexus launch, with Acura chasing unnatural Lexus image; • Legend was in a precarious position due to the changing market, leaving Integra, potentially, as the “image-leader” for the first Japanese upscale brand; • SUVs were beginning to appear prominently in “Cross-shopped Vehicle” and “Other Vehicle in Household” trends for Acura; • Lost opportunities and potential threat to Acura franchise. • Some dealers wanted to “dual” their franchise with other brands in order to attract an SUV shopper. • “Fast-to-Market” approach. • Head off rumored Lexus –configured and –trimmed Land Cruiser; • Lack of Expertise in what was then considered SUV design and construction: • Separate Ladder-type frame; • Solid Rear Axle; • No appropriate platforms (size/ capability); • No appropriate manufacturing facilities. • Adapt a proven SUV to the Acura channel • At that point, the Honda Division had experienced some success in marketing the Passport, a re-badged Isuzu Rodeo. • Acura SLX was first “Luxury-branded SUV” on the market. • Market did not accept re-badged Isuzu Trooper as a true Acura product. • Acura owners proved to be very aware of non-Honda pedigree and rejected SLX. • When Honda launched the Pilot CUV, their ads specifically referred to it as the “SUV built by Honda”; • Few conquests of non-Acura/Honda SUV shoppers; • Acura stores were not a natural “stop” for SUV shoppers; • Acura Division and Dealers were not pre-disposed to commit resources to SLX; • Isuzu Trooper was the same vehicle for lower MSRP… AND Isuzu Dealers heavily discounted Trooper. • Consumer Reports killed Trooper with “Unacceptable” label; • Isuzu forced to cut prices, incentivize, undercutting SLX even more; • V8, 3-row replacement postponed and, finally, cancelled; • Re-inforced “fake” image for Acura/Honda stalwarts. • Dealers started to demand a revised CR-V

1/03 Acura SLX Case Study • AHM demanded a true Acura/Honda SUV, letting Isuzu agreement lapse. • By this time, the CR-V had become a success in the U.S., despite being originally unwanted by AHM. • Established a scale-able blueprint for Acura/Honda SUVs. • MDX/ Pilot developed in North America, exclusively for North American market. • Contrary to conventional wisdom, Acura/Honda identified opportunity for a vehicle to attract SUV intenders that fit the characters of each of their brands. • No blueprint from other brands, MDX is still unique among Japanese CUVs in offering such features as a fully integrated 3rd Row Seat. • MDX and Pilot have been extremely successful for AHM and their dealers. • MDX has been a saviour for the Acura Division, creating new traffic and high grosses for it’s dealers.

5/99

5/99

Presentation Transcript