If Ford Drops Volvo, Will GM Drop Saab?

Will GM drop Saab, now that Ford looks like it will drop Volvo?

If GM dumps Saab, it would be for a lot of the same reasons Ford is euphemistically "reviewing strategic options" for Volvo.

In the immediate term, if you're an automaker asking Congress for an emergency loan, as Ford and GM are doing this week, do you really want to explain to some hostile senator or representative how Saab or Volvo is going to help you return to profitability, despite the fact that you've owned it "X" number of years, without much apparent success?

GM bought 50 percent of Saab in 1990, and the remaining 50 percent in 2000. In all that time, Saab's sales record in the United States, its biggest single market, is still fewer than 50,000, which it set back in 1986. True, GM is now saving money as never before, by sharing products among Saab, Opel, Saturn and other GM brands. But Saab is still microscopic. Even in Sweden, it's considered an offbeat brand.

In the medium term, dollar-denominated profits are taking a beating in euros and in Swedish krona. That makes Swedish-built Saabs unprofitable and/or too expensive in the United States, and forces GM to offer big incentives in the U.S. market. That's a big headwind for Saab in the present environment. At the same time, buyers aren't embracing Saab-badged products built elsewhere, like the Saab 9-7X (shared with Chevrolet), or the former Saab 9-2X (shared with Subaru). In the long term, Ford clearly has scuttled its "premium-brand strategy" built around its former Premier Automotive Group: Aston Martin, Jaguar, Land Rover and Volvo. The first three are sold, and now Ford says it could sell Volvo. Today, Ford is hunkered down to the Ford, Lincoln and Mercury brands.

GM's latest version of a premium strategy is to group together Cadillac, Saab and Hummer dealerships. But Hummer is now for sale. Cadillac's long-term prospects are improving. But Saab? A Saab-Cadillac combination? GM has had almost 20 years to make that work, with next to nothing to show for it.

Even if GM hypothetically dropped Saab, GM arguably still would have too many brands, with Buick, Cadillac, Chevrolet, GMC, Saturn and Pontiac in the U.S. market; plus Opel in Europe, GM Daewoo in South Korea, Vauxhall in the U.K., and Holden in Australia.

Pushed by the same market forces, the car companies tend to move in a pack. Ford and GM bulked up on acquisitions in the late 1980s and early 1990s, and now they're shedding those acquisitions. With GM fighting for its life, can it afford to keep hanging onto Saab for a rainy day?

Don't get me wrong, I like Saabs, I like driving Saabs, I like Saab quirks like the ignition on the floor, I like Swedish products, and the balanced, Swedish home-life-work philosophy. I think GM is doing a better job sharing products between Saab and Opel. I recently test-drove a turbocharged Saab 9-3 wagon and enjoyed it. I wish GM could hang on. But GM doesn't have another 20 years, or 10, or five, or maybe even one more year to get it right.