Rising from the ashes: Saab and the Chinese dream

Sold by General Motors, bankrupted under Spyker and mothballed for two years - the car with the world's most loyal fans is back and wants to sell electric cars to China.

by Rachel Savage
Last Updated: 30 May 2014

The first car rolls off NEVS' production line

'Saab: chequered history, bonkers advertising and lots and lots of hairbrained ideas.’ So Jeremy Clarkson described the Swedish carmaker in a Top Gear tribute when it shut down in December 2011, seemingly for good.

Said ‘hairbrained ideas’ included a car with a joystick instead of a steering wheel back in the early 90s, while you can get a flavour of the ‘bonkers advertising’ from this Finnish ad featuring naked men cosying up in their car after getting locked out of the sauna in the snow. However, Saab’s recent travails, ending in bankruptcy after being shunted between owners since the financial crisis, were far from amusing.

Walking around the factory in Trollhättan, a city of 60,000 in western Sweden, you can see cars starting to roll off the assembly line again. However, production is still very small scale and the enormous manufacturing facility feels relatively empty - the new owners are definitely taking things slow and steady.

After the US government stopped General Motors from driving off a cliff during the financial crisis, the American automotive giant announced plans to sell off Saab at the end of 2008. Many potential suitors flitted in and out of the picture, until the Swedes were sold to Dutch sports car company Spyker in January 2010. It was not a match made in heaven. Less than two years later, Saab finally succumbed to bankruptcy, 3,500 people lost their jobs and the Trollhättan factory shut down for the first time since it had opened in 1948.

‘You should talk with your heart - it was a little bit tough,’ Stefan Lövberg, the taciturn manager of the factory’s general assembly line, who has worked at Saab since 1984, explains to MT. ‘It was not just direct employees and suppliers, it was affecting the whole area. [Unemployment] is still very high here.’

Enter Kai Johan Jiang, a Chinese businessman who studied in Sweden in the late 1980s. He acted as a senior adviser to Volvo in the 1990s and now has more than 30 biofuel power plants across China. Having built up his green energy business since 2004, Jiang wanted to diversify and formed National Electric Vehicle Sweden (NEVS), which bought Saab out of bankruptcy for 1.7bn Swedish Krona (£150m) in June 2012.

‘Obviously in China there’s some very severe emissions and pollution, so [Jiang] saw potential in that and thought actually Saab could be a perfect fit,’ says NEVS business development manager Johan Andersson.

NEVS’ plan is to sell electric cars in Sweden and China (where billionaire PayPal and SpaceX founder Elon Musk has recently been expanding his electric car company Tesla), before moving into other markets. China is a potentially huge market - and not just because of its size. The government has woken up to the fact environmental issues are toxic (literally and metaphorically) and are heavily subsiding electric vehicles. It is targeting 5 million on the roads by 2020, although only 15,000 were sold there last year, estimates NEVS’ communications director Mikael Östlund.

The government of Qingdao, a Chinese city of some 5 million people, formed an investment company and bought a 22% stake off NEVS in January 2013, and electric Saabs will eventually be made there. The company is keen to emphasise, though, that Saabs, for now both electric and petrol, will also still be made in Trollhättan.

An engineer works on one of Saab's new electronic cars

‘The real worth of the factory is actually the people who know how to handle [it],’ says Andersson. ‘To teach people how to handle the processes...would take around 10 years. With all the investments that have been done here, it would not be financially sustainable to move it.’

General Motors invested some $4bn (£2.4bn) in the Trollhättan factory and development facilities, in between buying a 50% stake in Saab in 1989, purchasing the remaining half in 2000 and getting rid of the brand in 2010. NEVS has also put more than SEK100m into new tools for both itself and some of its 400 suppliers.

However, since the first new Saab, almost identical to the old 9-3 model, was unveiled to great fanfare in December, the approach has been gradual. The factory has turned out 350 cars, all of them petrol, at a rate of six a day. At full capacity, it can churn out 39 cars an hour, or 120,000 every year. NEVS had said it would make its first electric cars for China this Spring, but now says it will launch them in 2015, as the vehicles are still in the prototype stage.

The mothballed factory equipment all needed testing and completely new staff, who make up around 20% of Lövberg’s 80 operators, had to be trained (some are still being taught and more will be recruited as production is increased). Many of Saab’s suppliers, and their 2,200 or so suppliers in turn, had gone bankrupt, so new relationships had to be forged.

NEVS has now delivered the first ‘12 or 15 cars’ to ‘very loyal customers who have owned Saabs before’, says Andersson. Those devoted car fans keep coming up again and again during MT’s tour of the factory and museum. ‘There’s over 100 Saab fan clubs all over the world,’ Andersson says, something he believes is ‘unique’ to the brand. It could be the cars’ ‘special Scandinavian design’ and ‘sporty performance’, but Andersson admits he isn’t actually sure where the adulation comes from.

Moreover, while Saab nuts are spread across Europe and North America, any Western company worth their salt knows finding such dedicated fans, or indeed any success at all, is something that can’t be easily replicated in China. Although being Chinese-owned will obviously help, super fans can’t do much if they don’t speak the language.

Nonetheless, there seems to be an air of optimism about Saab’s employees. ‘When Spyker [came] in we didn’t know anything about the future, we just heard Victor [Muller]’s big visions. Now we feel that we have a plan - a long-term plan - so I myself feel more secure,’ says Lövberg.

The 9-3 car will be replaced in the next few years by a range of Phoenix models, according to Östlund. If Saab can crack China, it’ll be a pretty neat metaphor for a company rising from the ashes.

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