The Demise of Saab

Saab is one of the major brands that will go under this year. Once owned by GM (NYSE: GM), it has not been able to find financial backers to take it forward. So, it will join Pontiac, Oldsmobile and Plymouth on the scrap heap.

It is not hard to see what happened to Saab. It was an up-market car without up-market features. Saabs did not have the reputation for hardiness that Volvos did. And, the Swedish car company, once part of the marker of jets, lost whatever chance it had to compete with more luxurious and superfast products from BMW and Mercedes.

Saab was not helped by the improved quality of U.S. cars, or GM and Chrysler’s return to health. Saab’s market share had already been hurt by the ascendance of the Japanese low-priced high-quality brands, especially Toyota (NYSE: TM), Honda (NYSE: HMC), and Nissan.

But Saab  did not have to fail. It continued to have a respectable brand until recently. Jaguar and Range Rover had severe financial problems like Saab did. Those two car firms were lucky to find a buyer in India’s Tata Motors (NYSE: TTM). Saab did not make it in large part because no company with a strong balance sheet was willing to take a chance on the failing car manufacturer, especially when the global automotive markets are still relatively troubled.

Douglas A. McIntyre