killed Saab Automobile? - Business School - University of Edinburgh

I/ THE DEATH OF AN AUTOMOTIVE ICON
The final collapse of Saab Automobile in December 2011 marks the unhappy end of a long road for this
automotive icon. Saab has a long and proud history as a niche auto producer with a strong brand, and
has been a source of technical innovation as well as innovative design to the automotive industry. Over
the 62 years it produced cars, it made 4.5 million vehicles, most at its Trollhättan headquarters.
However, contrary to the other vehicle manufacturers in its segment such as Audi, Mercedes-Benz and
BMW, Saab failed to grow by offering a wide spectrum of models. As a result, production volumes
remained stagnant at around 125,000 units a year. This left Saab dependent on its corporate parent
GM (1990-2010) for engineering, for parts and for new product development, which weakened the
appeal of the brand. Saab was left vulnerable when the global financial crisis hit in 2008. Production
volumes fell from 90,281 units in 2008 to 20,791 in 2009, and never recovered amidst concerns about
the future of the company. Production was halted in April 2011 due to parts shortages, and never
resumed until the firm finally was declared bankrupt in December 2011.
There will be many opinions on the causes of Saab's failure: manufacturers will point towards
insufficient government support during the crisis; workers will point to poor management by GM; and
the general public will reminisce about how Swedish manufacturing is a faint shadow of its past glory.
Yet what facts stand beneath this rhetoric? What are the causes? Was the failure preventable? Why
could even mighty GM not make Saab work? Could the Chinese investment have saved Saab, if only
GM had agreed to the rescue plan? And should the government have stepped in? Was Saab ultimately
too quirky for its own sake?
In this report we provide analysis of the underlying reasons for Saab's failure, and set these in the
context of the contemporary global automotive industry.
II/ A BRIEF HISTORY OF SAAB
Formation
Saab (Svenska Aeroplan Aktie Bolag) was started in 1937 to produce military aircraft. Its formation was
the consequence of 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, where
Saab cars continued to be built up to the company’s demise in 2011.
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.
As the Second World War drew to a close, it was clear that there would be a significant reduction in
demand for military production and that other means were necessary to keep the Saab workforce
employed. A number of alternative avenues were suggested, including spinning reels and prefabricated
sheet steel warehouses, but two were selected for further development – civil aviation and car
manufacture i .
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