Now that Ford and General Motors have announced that their Volvo and Saab subsidiaries are on the market, a number of potential scenarios have come out – none of them particularly kind to the Swedish auto industry. Sweden has essentially ruled out buying the two brands, so they will either end up vanishing from the market, being swallowed up by another automaker or spun off as independent manufacturers.
The government of Sweden is still evaluating what to do with the automakers, both of which date back more than 60 years and are seen as pillars of the local economy. Despite continued discussions with GM and Ford representatives, no decisions have been made.
Earlier today, the government announced a $1 billion stimulus package, but it won’t go towards the automakers.
Independence
A management buyout is a distinct possibility, even though a small, independent automaker will surely find difficulty marketing its products to consumers in a world of large, multi-national automakers.
In different economic times, finding the funds to buy the automakers wouldn’t be quite so difficult. With the credit market in its current situation, the ability to secure funds by traditional resources has all but dried up.
Steven Odell, the current head of Volvo, has only been in place for a few months after being placed in his current position by Ford, Volvo’s owner. The rest of Volvo’s management team is also from Ford.
“I’m not sure the Volvo management actually would want to do that [buy out the company], because management at the end of the day is Ford management,” said Stuart Pearson, analyst at Credit Suisse.
Pearson told Reuters that he’d expect Volvo management to be more interested in retreating back to Ford.
Selling the brands
Both brands have their positive selling points, but both also have numerous hurdles to overcome.
Saab’s small engine and turbocharging expertise would be valuable to a manufacturer of larger automobiles looking to move a bit downmarket. GM has relied heavily on Saab’s engineering ability to produce small engines, like the turbocharged four-cylinder in the North American Chevrolet Cobalt SS.
Yet Saab relies heavily on GM-developed platforms and larger powertrains, making it difficult to remove from the GM group.
Volvo, on the other hand, sells about three times as many cars as Saab, but would still take a large infusion of cash to keep afloat.
“You will need tens of billions (of Swedish crowns) after buying it,” an unnamed investment banker told Reuters.
Suitors for either brand from France, Germany, Italy, Japan and China have all been rumored, but only time will tell what happens to Sweden’s volatile auto industry.



12/05, 2:17 PM
posted by:
howsmydriving
All my life has been spent in preparation for this development. Having lived near Berkeley and having been victimized by hordes of Volvo’s being habitually driven at 10 mph below speed limit, I can wish only death to the miserable brand.
12/05, 2:20 PM
posted by:
Lariat Luxury Locomotive Liner No.3
If it means the demise of the Swedish motorshow models, then by all means save the Swedish car manufacturers!
12/05, 2:26 PM
posted by:
pavlindrom
Save them both! Come on, Bill Gates. We know you can do it.
12/05, 2:39 PM
posted by:
TomF
Both brands have value but cannot survive independently. There is no reason why they should not be acquired by Renault-Nissan, Peugeot-Citroen, VW-Audi-Skoda-SEAT, Hyundai Group… there are multiple global auto brand groups that would welcome the addition of an upscale marque with strong worldwide brand equity.
Heck, Hyundai-Volvo might be a natural match. Hyundai wants to run that Lexus upscale play, but doesn’t have the native chops, as the Genesis shows. Plenty of opportunity here.
Almost anybody would run Saab and Volvo better than their US disaster-masters. GM should rue the day they decided to try turning a Chevy Trailblazer into a Saab. Idiots.
12/05, 3:06 PM
posted by:
inline6
TomF,
Renault-Nissan and VW AG would be TERRIBLE partners for Saab or Volvo.
Renault-Nissan is in the middle of taking Infiniti global. How on earth would either Saab OR Volvo fit into that picture?
VW AG is still trying to move VW upmarket, and they have 96% of Audi…maker of FWD-based luxury and near-lux cars. Adding Saab or Volvo to VW AG’s cavalcade of brands (Skoda, Seat, VW, Audi, Bentley, Lamborghini, and Bugatti) would be overkill to the extreme.
PSA would be a MUCH better fit for either of them. Both Peugeot and Citroen run on FWD platforms, just like Saab and Volvo do. Both have safety-crazed Renault to compete with, so either Saab or Volvo engineering would help them there, too.
Hyundai-Kia might work, but it’s not in the nature of Asian automakers to expand through acquisition. That and they’re invested in RWD technologies, which would not be a good fit (especially for Saab, less so for Volvo) for either Swedish company.
Tata’s Jaguar/LR division might be a decent fit. Though platform sharing between, say, Jaguar and either of the Swedish companies wouldn’t work out too well, Tata could use the economies of scale with sub-components in order to keep costs down. That’s where having Saab or Volvo can help. And Jaguar’s car line starts basically where Saab’s and Volvo’s leave off.
Proton might be a good fit, too. They’ve got Lotus, and they’ve got a line of mass-market cars. Having Saab’s or Volvo’s safety engineering would probably be a boon to them, as well as their car lines being complementary to one another.
Fiat AG is another company whose interest have been speculated. I seriously doubt there’s anything to it. Fiat’s hands are full putting life back into Lancia (which, historically, has been the Italian equivalent to Saab and Volvo), getting Alfa Romeo competitive with the Germans, and re-establishing Maserati as a respected luxury/GT marque.
12/05, 3:09 PM
posted by:
johnnycanuck
We’ve got a couple of Swedish forwards on the Vancouver hockey team. When it comes to crunch time they’re nowhere to be found either. Maybe when their careers are over they can go work for their government.
12/05, 3:21 PM
posted by:
TomF
inline6:
I hear you on VW AG. Nissan-Renault I still think merits consideration; why spend all that energy taking Infiniti (a premium brand conceived as an us-too response to Lexus and that hasn’t exactly set the States on fire) global when Volvo is already there? If I were Ghosn I would look at Volvo as a ready-made upscale opportunity, with stature that would take years for Infiniti to grow organically.
Proton is a really interesting idea, especially as they have a culture of glomming onto vehicle lines and concepts born elsewhere. Seems like a very downmarket brand family at present though.
As for Tata, I guess so… although I’m not sure why Tata, which already has Jag and LR, is a good idea while Nissan/Renault, which already has Infiniti, isn’t.
My pipe dream would be for Peugeot-Citroen to snap up Volvo and then pump little Peugeot hot hatchbacks through the North American Volvo dealer system. Those little cars rock, and you’d amp up showroom traffic with some cool, cheap offerings from Peugeot.
12/05, 3:25 PM
posted by:
Z06ified
China is still sitting on a TON of cash – people forget that. They could easily buy a smaller automaker like Saab or Volvo for next to nothing, and gain access to a lot of technology that they could apply to their own auto industry. Same goes for India.
12/05, 3:55 PM
posted by:
gugy
For me Volvo can go away for good. I won’t miss it.
I have a 98 S70 and the cars has been so damn expensive to fix through all these years. My wife had two AWD V70 and it was the same thing. Very poorly build and Volvo NA never cared to addressed all the issues I had.
I probably spent over $20k fixing all Volvos in the last 10 years. I will never buy them again.
Also the Volvo San Diego dealer is a joke to deal with.
Screw them!
12/05, 4:04 PM
posted by:
Borat
My thoughts are somewhat similar to what TomF wrote. There is also historical precedent of Volvo, PSA and Renault developing together. In 70’s they developed V6 for Renault/Volvo/PSA applications. Then during past decade Volvo, true to Swedish tradition, adopted “latest” technology I6, of about the same displacement. But combination of those make sense especially in Europe, where Volvo is perceived as more luxurious brand then proletarian Renault or Peugeot. As far as Infinity brand, it is so much in its infancy in Europe, that if development will seize, no one would notice. However, in PSA set up I think that Citroen leads innovation weirdness associated with either Volvo or Saab.
And yes “new”Asian (China, India) brands would get instant foothold all over the world: dealers network, customers (especially those owning cars) and supplier network. Those infrastructure pieces are expensive to develop and development is much riskier then acquisition.
12/05, 4:06 PM
posted by:
mayer_ray_nagin
It takes a lot of ovolvaries to name a car brand after something that sounds like Vulva. What kind of SOB would do something like that?
12/05, 4:22 PM
posted by:
Get Real
University professors wail.
12/05, 4:38 PM
posted by:
inline6
^Probably someone who knew it meant “I roll” in Latin.
TomF,
Thing is, there’s no way Renault-Nissan backs away from Infiniti (which, I think, sells close to the same number of cars in the US). That is a RWD-based line of near-lux cars, which is exactly where Volvo is at. All of the momentum in Renault-Nissan is toward Infiniti-type vehicles. Your answer seems to highlight the biggest argument against Renault-Nissan acquiring Volvo or Saab: it would have to be one or the other for R-N. And I don’t see how it’s a likely choice that they’ll abandon their own home-market luxury marque after 20 years of development for a FWD-biased stalwart like Volvo. Renault-Nissan are already heavily invested in Infiniti. And they can do with it whatever they want. Volvo’s got a longstanding enthusiast following (if you could call them enthusiasts) that would expect a certain type of product. So R-N would not have the same free hand with Volvo.
Jaguar cars in America start at the $50k line. That’s where the Saab lineup ends. J-LR is going to need economies of scale in material and components purchasing to be profitable, since Tata doesn’t offer really any products that could share much in common with Jaguars and Land Rovers. And they’re more likely to get that with a line of vehicles that complements them in most markets. Both Volvo and Saab do.
I’m interested to think about the Proton family, as well, as a possibility…especially with Lotus Cars as a subsidiary. Lotus would be an EXCELLENT companion to Saab. With their combined powertrain and chassis engineering expertise, they’d do VERY well, I think (imagine a 350hp FWD Turbo Direct-Injected 4cyl Saab with a chassis so good that there was zero torque steer, and minimal understeer). Plus, their vehicle lines would be totally complementary. Lotus would have an upscale mass-market sister division to help with economies of scale for its more exotic tech, while they get a steady stream of excellent Saab engines, instead of having to outsource them from Toyota. While the Proton-branded range is a bit more primitive, it’s emerging quickly, and it wouldn’t be for long with the tour-de-force that a Saab-Lotus combo would bring.
PSA would be the best partner for Volvo. And I, too, would love to see that be the basis for a Peugeot (though I like the Citroens – especially the Picassos, C5, and C6 better) comeback in the US. Hot-hatches first, of course!
12/05, 4:52 PM
posted by:
justagigilo85
JCannuck- Henrik Sedin has been pretty good acquisition for my fantasy hockey team : ]
12/05, 5:57 PM
posted by:
Lionwithoutpride
I will grant that Volvo does not make a good air conditioning system; but, the cars never stop accomplishing their central purpose (to go from A–> B safely). My brother’s inherited ‘93 Turbo 940 has 300,000+ miles on it with no mechanical problems ever. My inherited ‘94 Volvo 850 wagon has 280,000 miles on it and I have had no engine problems or really any problems other than with the air conditioning. And my father’s 1981 Volvo 240 has more than 500,000 miles on it and its never had any engine problems. So, I am confused by the folks who have had so many problems with their Volvos and while I am sure they are telling the truth, there is a flip-side to the story that needs to be told to counter-balance what they have said.
To the folks who complain about fixing their Volvo . . . I am sorry you bought into a car range you cannot afford. Volvo is not even a true luxury brand (it was always “near luxury”); but, yes, they are expensive to fix. That is what you get when you buy a car from a foreign brand that sells in low volume. My father is convinced he had one of the first BMWs in Delaware in the early 1970s after he brought it back from his time in England. He had to order his parts FROM FRANCE and IN FRENCH (luckily mom is fluent as he had to order a LOT of oil filters). The point? Dad got rid of the BMW after having only had it from something like 1968 to lets say ‘74. He loved the car; but, he just could not afford it. No one blames BMW for that and BMW found a way to claw into the U.S. market and justify the costs of repairs for its vehicles (obviously, some great performance). Volvo has not been as successful and I think we all know why (Ford’s real motivation in owning Volvo was to get access to safety technology).
Whomever buys Volvos will have to figure out if they are viable cars for the U.S. market since it seems that many of the people who own them cannot afford the upkeep on them and they do not, in the estimation of many, warrant luxury repair prices at only near-luxury accouterments.
12/05, 6:38 PM
posted by:
howsmydriving
How can Volvo’s be expensive to fix when 30-year old Volvo’s are the official hippie car of Berkeley?
12/05, 7:38 PM
posted by:
mayer_ray_nagin
There are no more true berkeley hippies. Only a load of drippie californisnobs who like to pretend that they are one with transcendentalism and the moon is in the seventh house while they put on their hippie costumes and pray toe the god of political correctness while watching the home shopping channel. They keep 30 year old Volvos to the left side of their 4-car garage to play the part, right next to the leased Benz in their subprime mortgage house, just like all cäliförnifäggöts do.
12/05, 8:45 PM
posted by:
TomF
howsmydriving: Those 30-year-old Volvos are a whole different generation of car. Everything changed when they goodnighted the 144/240 platform. Since the late ’80s I think Volvo has traded on a heritage brand aura that is not actually validated by the current product.
Lionwithoutpride: we traded Volvo notes in another thread, and you know my story… I own a ‘99 V70AWD that was a real hangar queen for its first five years and cost me an insane amount in repair bills (I thought I was buying durability, craftsmanship, peace of mind, ha!) … the issue isn’t really the money. It’s uptime and reliability. The car feels great when it’s running right, but when it’s not you realize that a $17,000 Corolla is a better-built machine that gives better peace of mind, and over the long term many Volvo owners start to feel screwed. Why should berserk ownership costs, intermittent catastrophic failures and indifferent-to-terrible dealer service be the price to pay for a safe car with nice road manners? It shouldn’t. And I’m sure this ten-year foray into FoMoCo’s parts bin hasn’t helped the brand.
I think Volvo’s “specialness” has been declining in the US market for a long time, thanks both to volume pressure from Ford and mediocre Volvo QA. I’d love to see the brand get its mojo back, and I think that points to a European owner. I agree with inline6 that Peugeot would be a great complementary choice.
12/05, 11:04 PM
posted by:
jdasch1
RIP Volvo. Poor fit and finish, noisy drivetrain, poor body work….oh yah, HIGH PRICE.
12/05, 11:47 PM
posted by:
gugy
howsmydriving,
I can guarantee is very expensive to fix a Volvo.
Maybe the really old ones from the 80’s might be cheaper but anything 1990 up oh my god.
Just the latest fix on my car a very trustworthy shop is charging me $2500.
I am selling the car for $1500 just so I don’t ever have to deal with this piece of crap. Volvo please die!
12/06, 1:10 PM
posted by:
elviososa
Hopefully Chinese will pick up the Volvo…and for SAAB…RIP.
12/06, 1:30 PM
posted by:
CraigH
I am getting a bit tired of seeing a “reporter” stating that SAAB is for sale. I have seen no such statement from GM. I sell SAAB’s for a living and quite honestly such statements have hurt my dealership and have taken money out of my pocket.
Please do not jump to any conclusions. You do not think they have consequences? They absolutely do and there is no good to come of it. If GM puts out any other statements that says SAAB is for sale and uses that explicit terms such as in how they worded the situation of Hummer actually using the word “sale” in their statement to Congress then it is true. Please avoid helping to kill a person’s legitimate and honest livelyhood.
12/06, 6:37 PM
posted by:
mtema99
i have another idea
what is the main thing that volvo need now
it is surely the reliability and better build
so why not toyota can buy volvo
toyota need an old named brand to commerce it’s cars in europe because it’s sale their is not good enough
i know that toyota build Avensis specially for that to compete with Swedish mainly and specially the new third generation but just think about it
and it won’t intersect with either lexus or Avensis sales if it planned correct
and about SAAB i think the best thing is to be with Proton
other wise make the both in one corp
saab responsible on small to mid cars and volvo in higher and lux.