Is the Swedish Auto Industry Dead Yet?

The Swedish auto industry and its two iconic brands, Volvo and Saab, appear headed for the ash heap of automotive history. Saab has halted production at its plant in Trollhättan, Sweden because its owner, the Chinese-owned National Electric Vehicle Sweden (or NEVS), cannot pay the bills.

Not your father's Volvo the 2014 S60

Not your father’s Volvo the 2014 S60

Swedish media report that NEVS has literally had to pawn the company’s assets in order to stay in business. The current speculation is that NEVS is seeking to sell part ownership of Saab to another automaker to keep the Swedish Enforcement Service (the Swedish IRS) from seizing the company.

SAAB could soon join Packard, Oldsmobile and Saturn in the graveyard of dead auto brands.

SAAB could soon join Packard, Oldsmobile and Saturn in the graveyard of dead auto brands.

Volvo, Sweden’s other brand, appears to be in a little better shape. Like Saab, Volvo has been sold to a Chinese company, the Zheijiang Geely Holding Group Company. Among other things, Geely is expanding showrooms in China, the world’s biggest auto market, and possibly planning to export Chinese-made Volvos to the United States, Reuters reported.

Volvo Now Made in China?

Volvo seems to be making a little progress. Its executives expect sales in China will increase by around 50% in 2014. Note: the executive who made this claim remained anonymous, which should cast serious doubt upon it.

Volvo’s been having a tough time of it in recent years. Bloomberg reported that Volvo sales in the U.S. fell by 55% between 2003 and 2013. An entire generation of U.S. auto buyers has said no to Volvo.

The company cannot seem to gain acceptance in today’s car market. Companies like Volkswagen offer safe and practical vehicles that look cool and are fun to drive. Japanese and Korean automakers undercut its market in the U.S.

Another problem is that Volvo is a solid middle class brand in a luxury car world. Bloomberg reports that the sales of luxury imports like BMW and Lexus rose by 11% in the first quarter of 2014, while sales of midsize cars like the Honda Accord fell by 3.6%. Luxury cars, including Lincoln, are now the fastest segment of the U.S. car market.

That might good for Saab if it ever gets its act together, but not for Volvo. Saab might survive, particularly if Tata, the Indian company that rescued Jaguar and Land Rover, gets its hands on that brand. Tata has a history of resurrecting old iconic brands and preserving their reputation. Volvo, on the other hand, does not.

The company that made those boxy station wagons your high school science teacher drove has a hard time marketing to the upwardly mobile. The practical image just doesn’t cut it in today’s consumer driven world.

Volvo isn’t helping itself with a new ad campaign that features a woman reminiscing about riding in her parents’ station wagon as a girl. That’s likely to backfire for all those kids who grew up embarrassed by having to ride around in mom’s Volvo. It is also running ads featuring its 1970s box vehicles.

Volvo succeeded in the 1970s and 80s by being the anti-car, safe and practical, as opposed to U.S. muscle cars or British sports cars. It appealed those who saw cars as nothing but transportation and wanted to make a statement against American consumerism.

Nowadays, such people have plenty of choices that are cheaper and more mainstream, such as Toyota Corollas, Honda Civics, and minivans. Another problem is that leasing now makes it affordable for almost anybody with a decent income to lease a Mercedes or a BMW.

Part of Volvo’s past success was an affordable European import for snobs who didn’t want to drive a Ford or a Volkswagen, but couldn’t afford a Mercedes or a Jaguar. Now, of course, anybody with a middle class income can lease a new Mercedes if he or she wants to. That Mercedes might be made in Tennessee, but it’s still a Mercedes.

Volvo also lacked the resources and marketing clout to reinvent itself like Volkswagen did. VW was able to make the transition from nerd mobile to the middle class mainstream, largely by shedding its wonky image. Think Passat or Jetta as opposed to bug. Volvo has been unable to make the transition into the mainstream, even though it tried hard.

Volvo might survive as a truck manufacturer it also builds big rigs like this.

Volvo might survive as a truck manufacturer it also builds big rigs like this.

It looks like Swedish auto industry is finished. Volvo might survive as a brand of Geely or a truckmaker, but Saab might have finally bit the dust. The auto industry has changed, and there might be no more place for niche brands like Volvo, particularly as cars become more of a luxury and status symbol than ever before.

The automotive word will be a little sadder and emptier without Swedish cars. They had a unique personality lacking in much of today’s car market. It’s a shame that there’s no room for alternatives to cookie cutter Toyota clones on today’s roads.