The fate of Swedish automobile industry

Currently Swedish news services are covering the crisis for SAAB and Volvo. This morning SAAB applied for a reconstruction at a court in west Sweden.

Heartless as this may seem it does seem pretty obvious to me that manufacturing cars has nothing to do with Sweden in the new world of work. It could never be our edge and really hasn't been for many decades. Even when the two companies were sold to American giants Swedes somehow contuined to take pride in these companies. And they have sold many cars in the local Swedish market – especially Volvo. But I would say that this was more out of tradition than from intelligent consumer choices. 

I have yet to meet someone who is enthusiastic about his/her Volvo or SAAB. And that says something about their true status of these cars and probably quickly turned to a big liability these last couple of months. Sales have more or less halted. Of course cars in general aren't selling well. But the problems for Volvo and SAAB are spectacular. And the old slogan "buy Swedish" doesn't work anymore… Who wants to sink good money into the gigantic black holes of GM or Ford?

So let us quickly get out of the mental slavery of having a "Swedish" car industry. Let us cover our losses and quickly discuss which new exciting businesses and industries we can build instead.


In case you wonder – yes I have owned a Swedish car once. In the early 90's I inherited by grandfather's old SAAB 96 from 1967 and drove it for a couple of years. That was an insanely cool car. But not much has happened since then. 

2 kommentarer

  1. Brilliant contribution to the understanding of the situation. I agree totally on the management weakness view you have. Your ”insider” perpsective and my amateurish ”outsider” perspective seem to support the overall conclusion – the Swedish car industry is smoked.

  2. Let us not forget that the global automotive industry suffers from an enormous overcapacity. The marginal players, such as Volvo and Saab, have survived by aspiring to the luxury segment. But the truth is that their historical roots lie in a more intellectual/nerdy segment.
    Many players saw the potential in the emerging markets and supplied them with luxury cars and made the error of believing that they had a foothold. Now car manufacturers in those markets are rapidly expanding and adding to the global overcapacity.
    Saab made the mistake of refusing a merger with Volvo in 1977, they were scared of being overrun by Volvo people. As I by then had worked for both companies I know that they were right. Saab has suffered from weak parochial management. Volvo made the mistake of refusing the merger with Renault. They felt intimidated by the French well-educated managers. The Americans seemed so much nicer guys, and probably played better golf. But after a few years with Ford they had their regrets. American top-down management is not a very Swedish thing, particularly when the decision-maker is in Detroit, far away from reality.
    In ”the good old days” Gyllenhammar and Gösta Renell, the CFO, made sure that the aftermarket profits were retained in the mother company and not frittered away by the car division. As soon as Cars gained control of the total cash flow their downward slide began.
    So it all boils down to weaknesses in management.

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