Volvo and Saab have long since been rivals in the automotive industry. Recent years have seen a decline in this competition, but the two still share much in common. After General Motors was finished running Saab into the ground by making re-branded Chevrolets with their nameplate, it was sold off. One of the most unique companies in the world, Spyker, bought Saab and has been running it since 2010.

Earlier today a Swedish newspaper has reported that Volvo in conjunction with the Swedish government were in talks about buying Saab. Volvo spokesman Per-Ake Froberg said, “No such talks have been going on and no such talks are scheduled.” The idea of this merger is rather interesting and has several implications on capital markets.

The De Telegraaf newspaper mentions that the Swedish government would like Volvo to take over Saab because that would mean a greater chance that a loan from the European Investment Bank (EIB) granted to Saab, which was guaranteed by Sweden, would be repaid. This type of acquisition would also help Saab deal with its cash problem. Spyker had its 2010 sales fall below forecasts and has therefore struggled to pay suppliers. Sweden has also come to the rescue here by approving financing to help get production on the move once more.

The Swedish government is not the only player in this transaction seeing as China is essentially the owner of Volvo. Geely Automotive Holdings took over the Volvo brand after its sale from Ford. This acquisition was the largest of any automaker by China. You may also remember the acquisition of the Hummer brand, but that paled in comparison to this. The Saab CEO, Victor Muller, has said, “the Swedish carmaker is negotiating with a wide range of Chinese car makers about a tie up.” It will be interesting to see how this situation plays out and whether these two monikers can rise from the ashes of their U.S. ownership and become profitable once again.


Source: Reuters

What do you think?
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  (474) posted on 04.29.2011

Well, one thing that they need to work on is the quality of their cars. It’s not that they lack in that department, but they definitely would want to improve on that more to attract customers.

  (345) posted on 04.28.2011

Well, let’s just see what Volvo and its parent Geely can do to save Saab. Who knows, a little bit of oriental magic might do the company good.

  (412) posted on 04.27.2011

Actually that’s the whole point of them making this move. But considering that Saab sales have dwindled in the last few years, they might have a problem on this one.

  (683) posted on 04.26.2011

Well, one company that will definitely be quite happy if this deal does push through is Geely. Imagine that, they will soon be able to get a sizeable amount of shares in the car industry.

  (359) posted on 04.25.2011

It was said that Volvo and Saab has been a rival but i think Saab is far better than Volvo since many company wants to buy this brand.

  (402) posted on 04.25.2011

Well, IMO, the only thing that is common between the Volvo and Saab is that both have an outdated engine and their designs is not stable, sometimes its good but most of them is ridiculous and I can’t see the character in every car that they produced. Sorry but this thing is important for me.

  (798) posted on 04.25.2011

Well now, there is certainly a lot of movements going around in the auto manufacturing world these past few months. But I thing that it would be an advantage for Saab if this deal does pull through.

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