December 8, 2008 - 12:01 am ET
Swedes once reveled in the independence of their two national carmakers — small but highly profitable luxury brands competing in a world of giants.
Volvo Car Corp. and Saab are now money-losing wards of Ford Motor Co. and General Motors, but they could be set free again or else find themselves with new owners.
GM bought half of Saab in 1989 and later took 100 percent control. Ford acquired Volvo in 1999. The two Detroit companies hoped to get in on the worldwide growth of European prestige brands.
That never happened.
Ford said last week that it will consider selling Volvo as it explores "strategic options" for the Swedish brand. Meanwhile, GM announced a review of Saab. GM COO Fritz Henderson said that review includes a possible sale.
GM is talking to potential investors who could take partial ownership in Saab. Jan-Ake Jonsson, Saab's managing director, said GM and Saab are in discussions with several investors. He didn't name them, but GM sources say other automakers and large engineering houses are among the interested parties.
"We are looking for investors to get some external funding into some activities, such as accelerating product development, Jonsson told Automotive News Europe.
Shutting down Saab completely "is totally off the map," he said.
Ford said its review of Volvo likely will take months. In the meantime, Ford will work with Volvo on a restructuring plan under Stephen Odell, who was named Volvo's CEO in October. Part of that restructuring includes eliminating about 6,000 jobs at Volvo.
Why Sweden needs its automakers
December 8, 2008 06:01 CET
The loss of Volvo would have a more devastating effect on the future of Sweden as an automaking nation than the closure of Saab, Lars Holmqvist, CEO of CLEPA, the European suppliers association, said.
Holmqvist, a Swede, said a failure of Volvo would be immensely damaging to the rest of the Swedish economy.
Suppliers would leave the country and thousands of jobs could be lost in the supply chain and in other companies dependent on Volvo.
"Sweden without Volvo is like Germany without Daimler. It would not go down well at all," Holmqvist told Automotive News Europe. "Volvo is vital to Swedish manufacturing. Without it, it would be extremely difficult for the bulk of the industry to survive."
As one of the most famous Swedish brands, a collapse of Volvo also would be damaging to morale in Sweden.
And there would be an impact on the country's r&d base as both Volvo and Saab fund projects at the Chalmers University in Gothenburg.
Svenake Berglie, managing director of the Scandinavian Automotive Suppliers Association, said both Volvo and Saab are important to the manufacturing base of Sweden.
The two companies form an automotive cluster along with Swedish truckmakers AB Volvo and Scania.
Berglie said: "It is very important we have a critical mass of technology. Sweden still has an auto industry that takes models from concept to finished product."
Sweden is the biggest source of suppliers to Volvo, with local companies providing 25 percent of the value of production material to the carmaker, according to Volvo.
Holmqvist said Volvo's demise "would start a chain reaction." People would move component production from Sweden to other countries, he said.
Holmqvist thinks Volvo is more important than Saab because it produces more cars. It also designs and develops its cars in Sweden.
