By on July 27, 2009

The Swedes are sinking fast. Swedish Wire reports that Ford’s Volvo brand continues to be the elephant fart in the room, sucking wind to the tune of $231 million for the second financial quarter. “The decline primarily reflected lower volumes, partly offset by continued progress on cost reductions and favorable exchange,” the American carmaker pronounced. You mean it could have been worse? Meanwhile, SAAB,’s guzzling a gas tanker’s worth of not good. The former GM division, now owned by Old GM (which is like having an arsonist for a security guard), “made an operation loss last year of 4,148 million kronor ([€]377 million, $553 million). That is an increase of 90 percent from a loss of 2.194 million kronor a year ago . . . . During 2008 the company sold 93,220 cars, according to the TT news wire. That’s 25 percent fewer than 2007 when the company sold 125,085 cars.” And even then Saab didn’t make a profit. Despite deals to off-load the Swedish automakers on suspecting “investors,” their days of mass market sales are färdig. Unlike GM, they probably know it.

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23 Comments on “Sinking Swedes: Volvo Loses $231 Million, Saab Drops $553 Million...”


  • avatar
    slateslate

    a purely “near luxury/premium” business model doesn’t work. Hear me Buick/Acura/Volvo/et al?

    I’m too young to be alive in the old days when Chevy v. Olds meant something but nowadays people are perfectly comfortable buying into a brand like Honda/Toyota that sells both an entry-level model (Fit/Yaris) and a premium model (Accord/Avalon).

  • avatar
    windswords

    “continues to be the elephant fart in the room” –

    You almost upset my afternoon coffee with that one, RF!

  • avatar
    Bruce from DC

    slateslate —

    Let’s review the bidding here. The entry of both Saab and Volvo into the US market in the 1960s was the result of them following the lead well-established by VW at the cheap end and by Mercedes at the expensive end of trying to get a piece of the US market. In their European incarnations, Saabs and Volvos were not as cheap as VWs nor as expensive as Benzes, so everything worked fine coming to America that way. The Swedes “market position” here corresponded to their native market position. The Japanese were over the horizon and, in their quirkiness, the Swedes didn’t really compete with anything from Detroit. (The Saab, with its oil-burning, smoking, 2-cycle engine was especially quirky.)

    As the lower-priced Japanese competition that arrived in the 1970s moved on to larger cars the size of the Saab and Volvo, the Swedes were unable to compete on price, so, of necessity, they had to position themselves as “near luxury” i.e. not Mercedes-Benz. You pay more money for them than for a Japanese car, but you’re getting an “upscale European” car, not a Japanese econobox.

    Of course, as we know, the Japanese invaded the “near-luxury” market in force in the 1990s, throwing the Swedes out of the comfortable bed they had tried to make for themselves here. Interestingly, the other European candidates for execution in the “near luxury” market during the 1980s — Audi and BMW — responded to the Japanese assault by moving upmarket and, fairly successfully, confronting Mercedes on its own turf. In the case of BMW, the strength of its 3-series forced Mercedes to develop and market the 190-series against it in the mid-1980s.

    It’s doubtful that a similar strategy would have worked for the Swedes, because that market would have become very crowded.

    Which is a very long way of saying that the present position of these two companies is the culmination of a process that began probably 20+ years ago. While it’s fun to slam Ford and GM for “ruining” them, I think the future of the Swedes was cast a long time ago; and there is not much that anyone could have done about it. It was probably a waste of both American companies’ money to have tried.

  • avatar
    MikeInCanada

    Regarding Saab….

    Whatever happened to the Swedish kit car company that was supposed to buy them out from GM?

  • avatar
    rnc

    Saab did provide one big asset to GM, up until the purchase (early 90’s?), GM was still using the same transistor based computer system developed in the early and implemented in the mid-70’s (despite owning Hughes).

  • avatar
    Richard Chen

    The pictures of the new 2010 Saab 9-5 are out. I’m not sure how this car, appealing as it is to traditionalists, is going to bring in new blood and help the bottom line.

  • avatar
    twotone

    It’s tough trying to sell four cylinder FWD cars that are expensive to buy, maintain and repair. Why buy a Saab/Volvo when Acura/Lexus/Infiniti do a better job for less?

    Twotone

  • avatar
    Seth L

    @Richard Chen – “Ist der dick, Mann!”

    Looks nice, will it be built, how much, and who’s going to sell it?

  • avatar

    Looks nice, OK. Good job
    But why should I buy a Saab or Volvo? Where is the unique selling point?
    There are simply too many decent, nice-looking cars on the market now.
    The argument, to decidedly buy a car from a small company won’t work either. They have sold their soul, because they have had to, because they were broke long time ago. Upmarket or mainstream directions often end in dead-end, given the competition.
    Facel (c.f. http://de.wikipedia.org/wiki/Facel) and Panhard (cf. http://en.wikipedia.org/wiki/Panhard) died long ago without a cry. They had nice cars too, but the market said NO.

  • avatar
    thebanana

    That photo looks seriously photoshopped to me.

  • avatar
    50merc

    Ford should dump Volvo even if one buck is all they can get for it.

  • avatar
    th009

    You mean it could have been worse? Over at SAAB, it is.

    Actually the Volvo numbers are worse than the SAAB ones: SAAB’s $553M was a full-year loss, while Volvo lost $231M in a single quarter.

    At this rate, if the Chinese don’t take it off their hands, Ford might want to consider doing a “Pontiac” on Volvo and just shutting it down.

  • avatar
    venator

    @herb, you are on to something. Each Swedish company had a defining feature, i.e. “safety” for Volvo and “front-wheel-drive” for Saab. Nowadays the vast majority of passenger cars on the market are front-wheel-drive and al of them are safe by Government mandate, therefore one has to ask what defines the Swedish makes. The answer is, nothing. They are overpriced for what they offer, dealers are few and far between, in fact, there is not much going for them at all. Their market share and fiscal situation is about where they are to be expected.
    As for Panhard, they are alive and well. Their overlords of the time, Citroen, made them pull out of the passenger car market in the late 1960s, but they still build rather fine armoured cars.

  • avatar
    paulie

    It’s a tough world.
    (That’s why I advised my kid NOT to graduate…just keep taking classes. Eventually they just give you a class to teach)

    Many remember the classic taxi Checker. It controlled the market.

    http://www.checkertaxistand.com/Repair_Tips/General_Info/Everything_You_Wish_You_Had_Known_Before_You_Bought_Your_First_Checker_!/

    It was the perfect transportation.
    The Volvo had it. Every English teacher had one.
    They stood for something.

    But they didn’t keep perfecting their niche.
    Volvo seems to have had horrible development meetings with all brainstorming being confused and reduced to Swedish stew.

    A sort of design montage.

    Nobody had an overriding vision, so it started to design in everything, ending up being nothing.

    Safest?
    Sportiest?
    Luxury?
    Conservative?
    Youthful?

    Gone.

  • avatar
    John Horner

    I’m surprised anyone is buying new Saabs or Volvos these days, especially Saabs!

  • avatar
    MMH

    +1 herb
    +1 venator

    I was in the market for a new vehicle late last year. Needed 1-3 years old (I refuse to buy new), lowish mileage, near luxury, AWD, and was fairly open to wagon, CUV, or SUV. Spent a couple months reading reviews and scouring cars.com for a plethora of different vehicles. I wanted – wanted – to find a reason to buy a Volvo, and couldn’t. I’m 32, white-collar, and apart from a love for long-distance motorcycle trips, I should fit right into Volvo’s wheelhouse. They had nothing that really differentiated for the money. Went with a generic American luxo-yacht instead, based on deadly low resale price.

  • avatar
    Lug Nuts

    Years ago, Volvo and Saab made a fatal mistake. In pursuit of snootier (but far more fickle) clientele, both companies strayed from the affordable, no-nonsense, offbeat, semi-rugged designs that attracted a rabid following in droves, a following that literally built each brand’s market presence. In response to the unwanted changes, former loyalists said adjö and switched to other brands, Subaru in particular. Now Subaru appears to be making the same mistake as each new model rolls out, with the new Legacy and Outback being the latest not-so-shining examples.

  • avatar
    AlexD

    Wouldn’t mind buying a V70 family hauler. They’re even offering 5 years 0% financing. Here’s the catch: they start at 42K base! I think that Volvo forgot that people who need a family hauler actually have family expenses.

    And once I’m done bleeding daycare expenses and school funds and have 42K to drop on a car, it sure as hell won’t be a Volvo at that point.

  • avatar
    John Horner

    Volvo and Saab lost the plot when they went after the same customers everyone was going after with me too designs, ever higher prices, ever higher running costs and ever more contemptuous treatment of customers.

    There is no reason to buy a Volvo or Saab over competing models from Toyota/Lexus, Honda/Acura, Nissan/Infiniti or VW/Audi.

    BTW, according to carsdirect.com, a new V70 starts at an MSRP of $33,700 including freight … but can be bought for $26,321. The market has fixed Volvo’s pricing problem :(.

    Volvo and Saab both could have learned a lot from the best exhibitors at Comic-Con: Play to your rabid fan base. They will buy your stuff AND proselytize for you. In the early days of the 850 I convinced a number of people to buy an 850 for a few thousand dollars more than a comparably equipped Camry. These days I cannot make that argument. My 850 was eventually replaced by a well equipped Accord.

  • avatar
    Flipper

    Well I’m not surprised with Volvo’s downturn. I was recently in the market for a small hatchback, and really liked the looks of the C30.But when I found out that just to get cruise control on a $23,800 (MSRP pricing) car that you had to pay $300 for a “custom build” and then $185 for the cruise control I said forget it.add in destination and an automatic transmission and they want $26,360. Why a “premium” car doesn’t come with as basic a feature as cruise control is beyond belief.Why wouldn’t anyone just chose the Mazda 3 which manages to share the same architecture for almost six thousand less, and comes well equipped ?

  • avatar
    niky

    It’s even worse, globally, in which the Volvo C30 and S40 are available on the market right beside the Mazda3 and the global Focus.

    The Mazda3 aims at the low-end of the market… it’s sporty, stylish and good-looking, inside and out. The Ford Focus adds more sound-proofing, better interior materials (on the new Focus) and a styling language that looks suspiciously Volvo-like. Volvo adds a little more luxury and much better interiors, but their cars don’t seem to drive as well as the Focus… which is bad. Really bad. While Ford and Mazda3 can co-exist peacefully by aiming at different segments of the market, Ford’s European products are so good for the price that upgrading to Volvo just doesn’t seem worth the extra money.

    Saab actually makes enough cars to lose over 500 million a year? Who knew?

  • avatar
    pb35

    Here’s why my I put my loved ones in a Volvo and not the competition (from a NCTD review):

    “Maybe more than anyone, Volvo devotes impressive resources and manpower to improve occupant protection. The XC90 offers the full array of active and passive safety features, including a Roll Stability Control system designed to keep the XC90 from rolling over, and a rollover protection system intended to shield occupants in the extremely unlikely event that a rollover actually occurs. Less obvious are features like a roof structure fashioned from high-strength steel, or a lower front crossmember engineered to inflict less damage on small vehicles if an accident occurs.”

    Has anyone seen the recent roof crush standard tests? Watch the XC90 vs. say, the Ridgeline. There’s no comparison. I hope this isn’t the last Volvo that I get to purchase.

  • avatar
    AlexD

    John Horner: I forgot to specify that I was referring to Canadian pricing – Volvo has barely adjusted it here. You are correct about the US pricing. BTW, 42K CDN is currently about 38K USD. No bargain.

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