The differing fortunes of Saab and Volvo

Christopher Werth Aug 9, 2011

The differing fortunes of Saab and Volvo

Christopher Werth Aug 9, 2011

Kai Ryssdal: The Swedish automaker Saab is in no small amount of trouble. Last Friday, the company narrowly dodged having to file a bankruptcy petition. But it’s unclear how long Saab will last. Assembly lines have been shut down since April, which is making some people in Detroit really happy.

Big American carmakers first began selling off their Swedish brands a couple of years ago. General Motors did away with Saab; Ford washed its hands of Volvo.

So Christopher Werth went to see how the Swedish auto business is getting along without us.

Christopher Werth: I’m in Gothenburg, where Magnus Prim, a production manager at Volvo, is showing me around the company’s sprawling auto factory.

Magnus Prim: So we’ll take you through the plant, and we’ll start at the start of the line.

But as we squeeze past a set of control panels, he warns me not to touch anything.

Prim: That shouldn’t be good if you and me stop the line right now.

We laugh, but he’s not joking. Last year, Ford sold Volvo to Geely, a Chinese carmaker that plans to more than double sales to 800,000 vehicles over the next decade. And to keep pace, Prim says his workers need to receive one car every minute.

Prim: We are running at the speed of approximately 800 cars a day.

Now, contrast Volvo with my tour of Saab’s factory about 50 miles away in the city of Trollhattan. Gunnar Brunius, a vice president at Saab, walks me through a dark and silent plant with cars sitting half-made on the assembly line.

Gunnar Brunnius: In the position where we are right now, we are not running production lines, and we are in a fairly tough situation.

Just over a year ago, General Motors sold Saab to a tiny Dutch carmaker named Spyker. But the company ran out of money to pay its suppliers and employees. And in April, work at the factory shut down. So how did these two iconic, Swedish carmakers end up in such different positions?

Hans Nyman: Ford gave Volvo freedom to find their own way. That is not the case with Saab.

Hans Nyman is with Automotive Sweden, which tracks the auto industry. He says it all goes back to the fact that Ford continued to invest in Volvo, developing stylish new models and the kind of innovative safety features Volvo is known for. General Motors stopped investing in Saab as a premium brand. Eventually, he says, it was simply mounting Saab car bodies on the same chassis used on any other GM models.

Nyman: So a bit of the Saab soul was lost on that journey.

Despite the company’s troubles, Saab’s Gunnar Brunius is still optimistic. After all, he notes, Saab has a very loyal fan club.

Brunnius: We have 11,000 orders on hand as has to be produced, and I think that is really something amazing. I mean the orders are still coming into the factory every day.

Saab says it’s on track to secure $350 million dollars from Chinese investors so it can turn the lights back on and fill those orders. The deal is awaiting approval from the Chinese government and the European Investment Bank, which rejected a Russian investor last month. Howard Wheeldon is an analyst at BGC Partners. He says if Saab does manage to survive, it’s going to need a makeover.

Howard Wheeldon: The one thing Saab has that nobody else has is the name. But it doesn’t have a future with the cars that it’s making. They’ve got to say, “Right, we’re going to create a new Saab.”

But he says that will take money. Money that, so far, Saab is struggling to find. The company had been hoping to resume work at the factory this week. Now it says that won’t happen until the end of the month.

In Sweden, I’m Christopher Werth for Marketplace.

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