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  • Print publication year: 2015
  • Online publication date: December 2015

6 - The failure of Saab Automobile

Summary

As this book goes to press in 2015, Saab Automobile is not producing cars and has not done so in significant volume for four years. The company declared bankruptcy in December 2011. Its main assets were acquired by a Chinese consortium, National Electric Vehicles Sweden (NEVS) in June 2012 and for a few months in the latter part of 2013 and early 2014 a small number of vehicles were actually produced, before NEVS filed for bankruptcy in August 2014. In late 2014, Indian Auto Group Mahindra & Mahindra was rumoured to be considering buying the remnants of the company.

In this chapter we trace the history of Saab Automobile from its establishment in the 1940s to the present day. We analyse the underlying reasons for Saab's failure, and set these in the context of the contemporary global automotive industry and in terms of the conceptual framework that we introduced in Chapter 4.

Saab (Svenska Aeroplan Aktie Bolag) was started in 1937 to produce military aircraft. Its formation was a government initiative, a response to the increasing likelihood of war in Europe. The company was started with private capital and built a new factory to the north of Trollhättan, which built Saab cars until 2014.

The company initially built a version of the German Junkers Ju-86 medium bomber under licence, adding a light fighter-bomber (the American Northrop B5) soon afterwards. Production of various other aircraft followed. However, as the Second World War drew to a close, it was clear that demand for military production would fall and that other activities would be needed to keep the Saab workforce employed. A number of alternative avenues were explored, including spinning reels and prefabricated sheet steel warehouses. Two were selected for further development – civil aviation and car manufacture.

EARLY CAR PRODUCTION

The German auto producer DKW provided an example for Saab to follow, building relatively inexpensive cars powered by two-stroke engines. Ironically perhaps, DKW was later assimilated into what became Audi, one of Saab's strongest competitors. After the war, Saab began work on a front-wheel drive vehicle, powered by a two-stroke engine. Saab applied its expertise in aerodynamics from its aircraft operations to the vehicle, the Saab 92, and in 1949 produced a car with an astonishingly low drag coefficient for the time of 0.30.