Saab-Scania A.B.

S-581 88 Linköping
Sweden
13 18 00 00

Public Company
Incorporated: April 1937 as Svenska Aeroplan
Aktiebolaget
Employees: 47,000
Sales: Skr 33.6 billion (US$4.944 billion)
Market Value: SKr 13.8 billion (US$2.038 billion)
Stock Index: Stockholm

During the 1980’s many larger automotive corporations in the United States and Western Europe purchased aerospace companies, partly in order to gain access to advanced technology in the aviation and space industries. Saab-Scania, however, has had such access for four decades. One of the world’s oldest automotive manufacturers, Saab-Scania has a history which begins at the end of the 19th century.

In the early 1890’s the English bicycle manufacturer Humber built a factory in Malmö, Sweden called the Svenska AB Humber & Company. Near the turn of the century, the plant was sold to Swedish interests and the name was changed to Masinfabriks AB Scania. Initially the plant manufactured vacuum cleaners and paper machines as well as bicycles. New bicycle models introduced in the early 1900’s cost the average consumer the equivalent of six months wages, so ownership was limited to the wealthy. At the time, the company was also manufacturing a primitive type of motor vehicle, consisting of a French gasoline-powered engine with an English carburetor fastened to the bicycle frame. The construction of this vehicle was important in that it gave the company practical experience in combustion engines.

In 1901 a new managing director, Hilding Hessler, and a new plant manager, 23-year old Anton Svensson, assumed control of company operations. The two men began focusing on the manufacture of automobiles. During 1901 and 1902 the company’s best engineers, Fridolf Thorssin and Tomas Krause, built at least three experimental models. All were constucted with the engine and gearbox under the driver’s seat. Svensson, however, believed that the engine should be placed in the front of the car. This disagreement led to Thorssin’s departure from the company, at which time Svensson decided to establish a regular production model based on his own ideas.

At the beginning of 1903 Scania offered three models: the four-seat Model A, the two-seat Model B, and the Model C, a larger luxury car, with one, two and four cylinder engines, respectively, ranging from 4.5 to 24 horsepower. The engines were purchased from the Kemper Motorenfabrik in Berlin, thus enabling Scania to concentrate on the development of a chassis. The new vehicles were remarkably advanced for their time, featuring a track-rod steering system and central chassis lubrication. The Scania Model A featured a rear seat which could be converted into a small loading platform.

In 1911 Scania merged with the Vagnfabriks Aktie Bolaget in Södertälje (Vabis), a railroad car manufacturer which had also been producing automobiles since 1897. The new company, ScaniaVabis, developed the world’s first “purpose-built” bus. In 1924 ScaniaVabis decided to concentrate its efforts on the manufacture of larger trucks and buses, and in 1929 discontinued automobile manufacture altogether. The company introduced its first diesel engine in 1936.

With the threat of another war in Europe, it became imperative for Sweden to improve its defenses. Not least important was the need for a domestic aircraft industry large enough to supply the Swedish forces with military aircraft. This led to the formation in April 1937 of the Svenska Aeroplan Aktiebolaget, abbreviated SAAB. Two years later, SAAB, with headquarters in Trollhättan, took over the aircraft division of the Aktiebolaget Svenska Järnvägsverkstäderna, or Swedish Railroad Works, located in Linköping. SAAB subsequently transferred its corporate headquarters and construction and design departments to Linköping.

Construction was accelerated at both the Linköping and Trollhättan plants, which were building aircraft designed by Bristol, Junkers, and Northrop. During this period work proceeded on the first SAAB aircraft, the Svenska B-17 dive bomber, which made its first flight in 1940. When war came to Europe, however, Sweden declared itself neutral. As a result the country was spared from occupation by Nazi troops which had already taken control of its Scandinavian neighbors Norway and Denmark.

Plans for car production at the SAAB plant at Trollhättan started evolving as World War II was nearing an end, and management sought to widen the production program to meet an expected decline in military aircraft requirements. The success of small European cars in the Swedish market just prior to the war provided management with the confidence that cars of the same type should also prove popular in the future, and that demand would be steady enough to ensure the success of a SAAB automobile.

A talented aircraft engineer named Gunnar Ljungström was placed in charge of the development of the SAAB auto, the first prototype of which, the 92001, was ready by the summer of 1946. The body design, however, was neither practical nor aesthetically pleasing. The car was reintroduced in 1947 with an improved external design, and designated the 92002. The design of this model was to characterize SAAB automobiles for the next 30 years. Streamlining helped to reduce fuel consumption and engine wear, and enabled the car to reach speeds of 60 miles per hour. Despite a number of minor shortcomings, the car’s road performance was excellent, and its appearance was stylish and popular.

Improved versions of Ljungström’s original design appeared throughout the 1950’s, and by 1955 SAAB automobiles had become the most popular in Sweden; one car was leaving the assembly line every 27 minutes. In order to meet anticipated demand, more plant space was required, and a new factory was established at Göteborg to manufacture engines and gearboxes.

During the previous 20 years, ScaniaVabis developed and produced heavy vehicles, particularly trucks and buses. While somewhat less dynamic in character than SAAB, the company managed to make several innovations in Swedish industry, including the introduction of a turbocharged diesel engine in 1951.

SAAB continued to develop a variety of aircraft, particularly military fighter jets. The first of these was introduced in 1949, and production in various forms was maintained throughout the 1950’s. The SAAB aircraft division also held licenses to manufacture foreign-designed aircraft and produce aircraft components for foreign manufacturers.

As early as 1953 SAAB management started exploring the possibilities of selling cars in the United States, but hesitated from entering that market until 1956, when a more promising atmosphere had developed. Using New York City as a base of operations, an American subsidiary was created to import SAAB automobiles, and a depot was established near Boston to receive cars and store spare parts. It was a modest beginning for a small foreign company in the world’s largest automobile market, and growth was difficult and slow.

During the 1960’s the scope of SAAB’s operations expanded from automobiles and aircraft into satellites, missiles, and energy systems. On May 19, 1965, as its business continued to grow, the company changed its name to Saab Aktiebolag (the acronym had become so popular as to warrant the elimination of the old name). Over the next four years, officials of Saab and ScaniaVabis began to investigate the viability of operating as a single corporation.

Saab and ScaniaVabis merged their operations during 1969, and absorbed two other military contractors, Malmö Flygindustri and Nordarmatur. All automotive operations of Saab-Scania AB were centered at the facility in Södertälje, and the aircraft division headquarters, which produced the JAS-35 Draken and JAS-37 Viggen fighter jets, remained at Linköping. Also in 1969, Saab-Scania, in cooperation with the Finnish company Oy Valmet AB, established an automobile factory at Uusikaupunki, Finland.

Saab-Scania decided to focus its efforts on competing for a significantly larger share of the American automobile market, the main goal being to define its cars as a better choice than those offered by BMW, Mercedes-Benz, and Volvo. These cars had been highly successful with more affluent American consumers. The expanded marketing campaign produced few results over the first half of the decade, but by 1978 began to pay off handsomely. The company’s sales increased by 19% in America and by 17% in Scandinavia.

In 1980 the company introduced a new line of Scania trucks based on a unique method of modular construction. These trucks are primarily class 7 vehicles (26,001 to 33,000 pounds in gross vehicle weight), which have recently become extremely popular in the United States. Meanwhile, the automotive division was preparing to introduce a restyled line of cars in its 9000 series; they were introduced in 1984 and proved to be popular. However, problems related to retooling production plants thwarted a planned expansion of production capacity by 10% during 1985.

Saab-Scania entered into a joint venture with Fairchild Industries of the United States in 1980 to develop a new 30-36 passenger commercial airliner called the SF340. However, a corporate restructuring of Fairchild forced the company’s withdrawal from the project in 1985. Saab-Scania took complete control of the SF340 in November of that year and completed the project in 1986. The SF340 is currently in service with a number of airline companies, providing connection services between small airports in outlying areas and major airports. The aircraft division has also started development of the JAS-39 Gripen fighter jet, expected to enter service in 1992.

In the late 1980’s, Georg Karnsund, the current president of Saab-Scania, is expected to place greater emphasis on marketing programs in Europe, particularly in France and Italy, and in Australia and Japan. Karnsund believes that Saab’s ability to develop advanced technology will give its cars a distinct advantage in increasingly competitive international markets.

Principal Subsidiaries

VAG Sweden Group (67%); Bill & Buss Group; Saab-Ana Group (Sweden); Saab-Scania of America, Inc.; Saab (Great Britain) Ltd.; Saab-Scania Combitech Group; Saab-Scania Enertech Group (Sweden); Oy Saab-Valmet AB (50%); Oy Scan-Auto AB (Finland) (50%); Scancars AG (Switzerland) (25%); Scania Nederland BV (Netherlands). The company also has subsidiaries in the following countries: Argentina, Australia, Austria, Belgium, Brazil, Denmark, France, Great Britain, Norway, and West Germany.