Who killed Saab Automobile? Obituary of an Automotive Icon

The question appears simple and the answer easy.  Who killed Saab?  General Motors is the easiest to blame for the demise of the Swedish automaker.

After Spyker took over SAAB from GM and it failed in the end, it was easy to point the finger to Victor Muller. Mr. Muller’s goal to bring the brand back to its roots was admirable.  But in the end, he could not save Saab either.

One group of Saab enthusiast thought Muller was all talk without the funds to back it up. Others admired his tenacity and big dreams to make Saab a successful company that produces great cars again.  Either way, he was one of the few who saw the possibilities and had a real passion for the brand, the company and the cars.

It was too bad the Swedish government and many Swedes didn’t seem to care too much if Saab would live or die.  It is easy to understand the government did not want to get involved with business but a company like Saab should be considered cultural heritage.  It also supplied jobs to many people at Saab and its suppliers. When these great companies like Saab are gone, they will not be coming back.

To get back to the original question, there isn’t one single easy answer but it was a combination of events that ultimately killed Saab Automobile.  Globalization of the automotive business is unstoppable and there doesn’t seem to be room for small manufacturers like Saab anymore.

Matthias Holweg and Nick Oliver from the United Kingdom wrote a research paper where they analyzed the company and explain how there ultimately was no possibility for Saab Automobile to survive.  You may not have heard of these gentlemen before but they have credentials that certainly make them qualified to give an informed and unbiased explanation of the great story of Saab.

Below is an introduction to their research.  The full document is 40 pages long so sit back and enjoy.  It is very well written and, in my opinion, the best research and explanation in existence about the life and end of Saab Automobile.

who killed saab 2

Matthias Holweg is Reader in Operations Management and Director of Research at Judge Business School, University of Cambridge, UK.  He also is a visiting researcher at Chalmers University, Sweden.

Nick Oliver is Professor of Management and Head of the University of Edinburgh Business School, Edinburgh, UK. He is also a fellow at Judge Business School, University of Cambridge.

Introduction

Saab Automobile AB was declared bankrupt on December 19, 2011. This marked the end of 62 years of car production for the iconic brand, which during its final years was beset with financial problems and changes of ownership. More than 3,700 workers lost their jobs when the Trollhättan factory finally closed its doors after producing a total of 4.5 million Saab vehicles over the years. But what was the root cause for the company’s demise? Was it preventable? And who was to blame? 

The failure of Saab was ultimately a market-constrained failure. While Saab enjoyed loyal customers and a history of distinctive and innovative products, its operations were subscale and the segment in which Saab operated gave it insufficient room to grow given the strength of its competitors. With production never exceeding 150,000 units per annum, the niche that Saab occupied was too small to sustain its operations at the prices its products were able to command.

In its final years, Saab produced the same volumes as Porsche, yet was competing with Audi who not only had almost ten times Saab’s volumes but also benefited from well-executed platform-sharing and economies of scale within the Volkswagen Group. In simple terms Saab had the worst of both worlds – Porsche volumes with Audi prices. This was not sustainable.

Read more: WHO KILLED SAAB AUTOMOBILE?: Obituary of an Automotive Icon

What do you think killed Saab? Please share your thoughts in the comments below.

7 Comments

  1. GM could have acted more in a way of how Ford did when selling Volvo, which means not puttning up struggling obstacles.

  2. GM is a business and does what is good for its shareholders. And American taxpayers who bailed them out. A business doesn’t have feelings, unfortunately.

  3. Some of the issues come from within Saab , although I am the biggest fan of Saab and currently own two . Gm was not their finest hour but Saab also would not tow the line and massively altered and over engineered the cars , also in my opinion only the new 95 as stunning and awesome as it is was the wrong car at the wrong time , the recession was at its deepest when this was launched and companies like ford and fiat survived on fiesta/ focus and 500 sales. Had Saab had developed a smaller economical mass market car like these we may have seen a different story . It’s so sad that Saab had to go because I need a 95 combi .

  4. As a loyal SAAB owner for over 45 years, I feel that I can give my two cents to this discussion. It all began in 1989, when the camel, GM, pushed its nose under the tent, so to speak. SAAB was looking for an investor to maybe bring in some capital and increased publicity. When GM bought it, it brought neither. Instead all SAAB got was increased GM interference in production and parts purchasing and later forced introduction of GM parts and body styling. Much later, after GM owned SAAB, the technology and patent drain was in full swing.

    When GM had drained SAAB of all the technological advances that it had, it was time to cut the apron strings, and let it go. Stryker might have made a go of it had GM left them all the patents and technology in place. But the sale was for the SAAB brand, the factory, and equipment and none of the finer things that made a SAAB a SAAB. While SAAB may have been able to continue under Stryker, it could not survive if it could not be produced without paying patent royalties back to GM. One previous comment is one I had said for years. While it was okay for SAAB to strike out into new markets with the larger 900 and 9000 series and later the 9-3 and 9-5, they forgot their roots when they dropped the smaller affordable units like the original 93, 95, and 96 models which made them popular originally.

  5. ArtR makes some very valid points. SAAB would not have survived financially, without GM. However, once GM got its tentacles in SAAB, they indeed just begin to siphon off the technology.

    I never understood why SAAB got away from the c900, with over 918k units sold, it was by far the most successful and most appreciated model ever produced by SAAB! The shape of the VW bug/beetle and Porsche 911 is very similar to the c900. While SAAB got away from its “bread and butter”, VW and Porsche never really changed the overall look/shape of their successful designs — you can put the silhouette of a 1964 911 next to a 2016 911 and easily recognize both. The 911 and Beetle have done well with 70%+ of all 911’s ever produced still on the road and over 5.5 million+ Beetles produced.

    Nobody can question Spyker’s CEO’s tenacity and energy. However, I was never a fan of that group. When they were announced as a suitor of SAAB, I did my research and quickly determined that they were not a good choice.

    In my opinion, SAAB; 1) began its fall from grace when they were independently owned 2) was hurt the most by GM, who basically “stripped” and stifled the soul of our beloved brand 3) was saved from a sure death by Spyker and 4) was somewhat revived under a totally clueless NEVS, who truly never understood or even had a clue of what the brand meant to the brand loyalists. However, to determine who actually dealt the “death blow” and killed the company, that is such a meaningful and tough question for the SAAB community.

    One could say SAAB died on NEVS’ watch, but to say who actually “killed” our brand — my vote goes to GM.

    One can only wonder “what if Koenigsegg…..?” That man is a true car, engineering and business genius, put simply…..he gets this whole thing!

    BTW, like Wulf said, the “Who Killed SAAB Automobile?” report is really a great read. The ultimate conundrum for all lovers of SAAB is addressed in the report. Thanks for sharing!!

  6. I agree with most of the points that SPG9 mentions above.

    When the SAAB 900 came out around 1980, it was at the peak of sports sedan technology. The competitors were not as good. The Volvo DL was slow and not very sporty. The BMW 320i was smaller, underpowered, and not that good. The SAAB was very practical, had excellent handling, and some cutting edge things like a turbo, fold down rear seats, no sill to access the trunk (hatchback, but not the sedan), etc.

    It added more sales with the convertible. However, after that it couldn’t duplicate the success with the 9000.

    The costs of production and development in high cost Sweden hurt, too. Absenteeism and a new inefficient plant in Arlov didn’t help.

    In contrast, BMW had a popular 3 and 5 series. They eventually added the X5 and other SUVs. SUVs were not very logical according to the Saab hatchback philosophy but sold very well. BMW also had the 7 series, but I’m not sure it’s such a big seller. Add to that were the reasonably popular Z3 convertible (now Z4) and M series variations of BMW cars. BMW also had a larger home market to generate loyal supporters. Having the Autobahn without speed restrictions helped development of sporty cars.

    Toyota became successful in a totally different way. Mass market, catering to consumer tastes, not necessarily good engineering decisions, low costs (and moving production out of Japan in many cases) helped propel Toyota. However, Saab drivers don’t envy Toyota’s rise, usually.

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