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.
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.
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.
//jan
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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