Saab vs. Hummer: why one brand died and one survived

General Motors recently announced that it is killing off the Hummer brand, after a sale to China’s Sichuan Tengzhong company fell through. The company did manage to find a buyer for Saab. This is part of bigger move by GM to drastically focus its brand portfolio, after having gone bust last year and been rescued by the US government.

Why did the Hummer brand die, but Saab survived?

Why Hummer had to die

Some times a brand is so out of tune with consumer needs and wants that its just not possible to save it. And Hummer looks like one of these.

1. Death spiral: sales have fallen so fast and hard, that its hard to rescue the brand. US sales peaked at 71,524 in 2006. But by 2009 sales were only 9,046, down 67% on 2008. Fewer sales means less marketing budget to spend, means less sales and on it goes.

2. Out of line with needs: Hummers were the ultimate in huge, gaz-guzzling vehicles, based on the US military Humvee. As fuel prices soared on recent years, demand has fallen like a rock.

3. Brand truths: there is a bigger problem with Hummer than just the fuel consumption. After all, lots of other US vehicles also have this issue. The whole story of the brand, a big and brash US military vehicle, feels out of line with the times. This brand story means that changes to make the product more acceptable, such as improving fuel consumption, would be hard to do and sound credible.

What Saab was rescued

Saab has also had its problems. But General Motors has had more luck finding a buyer for it: Dutch company Spyker Cars, as reported here. Saab feels like a brand that has much more chance of being renovated than Hummer

- Its a Scanadanvian brand that feels like it much more in line with the trend to being environmentally more responsible.

- Saab also has a much more solid brand story than Hummer, based on expertise in aeronautics and technical innovation. 

Its always felt to me like a brand with some good product "Sausage" in the way of technology, but that needed some emotional "sizzle" in product design and communication. Perhaps Spyker can add this.

Benefits of focus for GM

Interesting to see how public GM is being about re-focusing on the core business. In a recent official press release they talked about "core brand sales" for Chevrolet, Buick, GMC and Cadillac being up 32% in February. They are focusing on these four brands, having sold Saab, and closing down Saturn, Pontiac and Hummer. So, early days, but the ruthless brand focus does show early signs of paying off.

In conclusion, sometimes a hard and ruthless look is needed on a brand to decide whether it has a strong brand story and can be rejuvenated, or whether the fundamentals are so flawed that killing it off is a better option.

Comments

[melbourne limo hire]

I am showing appreciation to you for sharing this information. You have shared great content which is informative and useful for me.

[truck rental]

The Hammer truck is a brand, a special vehicle which always be in our heart. I'm sure it will come back some day, sooner or later.
One thing we learned - size does not matter, it is for sure.
At least we can still buy ourselves those used hammers.

[David Taylor (brandgym)]

Nick, Thanks for taking the time to do such a detailed post. Thanks Matt for your comments to.

Nick, Interested to hear that GM has not given up on selling Hummer. I'm just back from South Africa, where the brand is still very much cool. Like you say, maybe its a question of targeting the right people/markets.

David

[Nick]

There are a few flaws with your theory. GM is still entertaining offers for HUMMER, as was done with Saab. Many were singing the same song about Saab in December when GM announced that it was widing down the brand. GM even brought in a liquidator prior to signing the deal with Spyker this month.

Second, the sales decline since 2008 is less about demand and more about market place uncertainty in the brand. GM put the brand on the block in 2008, and stopped spending any marketing money on it at that point. They even let the dealer inventory deminish to a point where many dealers had zero vehicles. That does nothing to inspire consumer confidence, which is actually what led to the sales decline.

Third, as you pointed out, HUMMER vehicles are no worse in fuel economy than other trucks and SUVs on the road. The issue was perception. GM targeted the wrong users with HUMMER, using mass marketing techniques and generic advertising, versus focusing on a smaller group of individuals who use and need a vehicle with the capability of a HUMMER. More focus on outdoor enthusiasts would have demonstrated that the vehicle is a necessity or a tool, not a fashion statement. It would have demonstrated authenticity.

I believe that more will play out on HUMMER in the coming months and years, but what we can take away from it is that in today's market, authenticity sells. It's why we see people buying extreme brand outdoor gear and apparel, though they'll never climb Everest. It is why men buy a watch that is water proof to 10,000 meters, though it will likely never see 10 meters.

[Mat]

I think you should add that the death of a brand is natural and to be expected. The Hummer made a truck load of cash and capitalised on the consumer mindset.

Many companies will attempt to destroy a brand by extending it and waste all the profit the brand earned and destroy share holder equity in the attempt.

Just like your HSBC post suggested they might do.

(Personally I think a new Hummer during the ClimateGate scandal might sell well.)