Like so many ill-considered marriages, GM’s entanglement with Saab was destined to end badly. We look back over this unhappy union.
Throughout the late 1980’s and 1990’s, GM looked on enviously as its arch-rival Ford carefully and methodically assembled the pieces of what would become its Premier Automotive Group* (PAG), a stable of European premium, sports and luxury car marques to which it would add its own Lincoln and Mercury brands.
Ford began by acquiring an interest in Aston Martin in 1987, then assuming full control in 1991. It purchased Jaguar in 1989, followed by Volvo’s car business a decade later. In 2000, Ford acquired Land-Rover from the wreckage of BMW’s failed ownership of Rover Group, which it folded into the newly formed PAG.
The latter acquisition was particularly painful for GM because, in March 1986, it had agreed the purchase of Land-Rover, then part of the nationalised British Leyland, from the UK government before a public outcry and political pressure forced Prime Minister Margaret Thatcher to renege on the deal.
GM had also held exploratory talks with Jaguar in 1989 about co-operation shortly before Ford made its successful bid for the British carmaker. Thwarted a second time, GM was desperate to grab a slice of the highly profitable European premium automotive manufacturing business for itself. However, the political and financial obstacles to acquiring BMW or Mercedes-Benz were insurmountable, even for a behemoth like GM.
Instead, GM looked north to Sweden. In 1989, Saab’s passenger car business was demerged from truck manufacturer Saab-Scania into a new company, Saab Automobile AB, and GM acquired a 50% stake in this company for $600 million. The other 50% stake was retained by Investor AB, a holding company for industrial investments controlled by the Wallenberg family. GM did, however, negotiate an option to purchase the remaining 50% of Saab within the following decade.
The sale to GM was, in hindsight, a smart move on the part of the Swedes. Although it enjoyed a loyal following of owners, Saab was a marginal player in the European automotive landscape. In 1989 it had just two models in production. The 900, although well regarded, was already over a decade old and was an extensive update of the earlier 99 model, launched in 1968. The larger 9000 was five years old and one of the Type Four models developed jointly with Alfa Romeo, Fiat and Lancia.
Saab’s global sales in 1989 were just over 120,000. By way of comparison, BMW sold over 520,000 cars in the same year. Saab-Scania probably realised that this was not the basis for a sustainable, independent automotive business, so was happy to sell.
Saab was not so much a premium marque as an alternative for those who, for whatever reason, eschewed the obvious choices of Audi, BMW and Mercedes-Benz. In 2011 Bob Lutz, former Vice-Chairman of GM and never a fan of the Swedish company, described typical Saab owners in forthright terms as “leftish intellectuals who admired the failed Swedish experiment in 90% tax rates and womb-to-tomb welfare”. If Lutz’s attitude was typical of GM thinking, the relationship with Saab was never going to be a happy one.
Nevertheless, GM set about the task of transforming Saab into a true premium brand. The first order of business was a replacement for the ageing 900. It decided to base this on the GM2900 platform, which underpinned the 1988 Opel Vectra A. The New Generation 900 was launched in 1994 and was sold as a three and five-door hatchback and two-door convertible.
The design referenced the earlier Classic 900, but existing Saab owners regarded it with suspicion. Its Vectra roots were very apparent, and it didn’t have the heft or solidity of the earlier car. Saab engineers also regarded the NG900 poorly and almost immediately undertook an extensive re-engineering programme, allegedly without informing their masters at GM.
The NG900 lasted just four years before being replaced by the 9-3, which was based on the same body but incorporated over 1,100 improvements, including reinforced A-pillars, door frames and sills for better crashworthiness, traditionally a Saab strength and selling point.
One thing they couldn’t fix was a propensity for the front bulkhead to split. This was hard to spot, but became evident on full steering lock, when the crack would open and the pedals would deflect slightly. Even though this would lead to a UK MOT test failure, Saab never issued a recall. Affected owners had to stump up around £700 for a repair, which was pretty galling for those who bought the car based on Saab’s reputation for engineering integrity.
Saab continued to struggle. Having fallen to around 87,000 in 1991, annual sales would not exceed 100,000 for another six years and reached a low of around 71,000 in 1994, the year the NG900 was launched.
Next up was a replacement for the 9000. Again, this was based on the ageing GM2900 platform, albeit with a 98mm stretch in the wheelbase over that of the NG900 and 9-3. The new 9-5 was launched in 1997 and was available in four-door saloon and five-door estate versions. This was a rather more convincingly engineered car than the NG900.
However, early four-cylinder petrol-engined 9-5 models suffered from a high incidence of engine failure due to poor oil circulation. The adverse publicity this generated forced Saab to offer a retrospective eight-year warranty on these engines, provided the recommended oil-change intervals had been observed. In fairness to GM, the affected engines were Saab’s own design, based on the unit originally purchased from Triumph for the 99 model.
Notwithstanding the engine issue, the 9-5 was well received in the market and Saab’s global sales rose to almost 125,000 in 1999. However, this was barely better than when GM bought its initial stake a decade earlier, so the effort to convert Saab into a true premium competitor for the German trio was clearly failing. Despite this, GM went ahead and exercised its option to purchase the remaining 50% of the company in 2000, for which it paid an additional $125 million.
In Part Two we’ll conclude the story of GM’s ownership and, ultimately, its forced sale of Saab and subsequent collapse of the company.
* The Premier Automotive Group, which allegedly cost Ford over $17 billion to assemble, would not come close to fulfilling the company’s ambitions for it and was progressively dismantled through disposals between 2007 and 2010.