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Germany’s Audi and Sweden’s Saab have an amazing amount in common. We consider how that relates to their dramatically different fortunes in the twenty-first century. Apart from being four-letter words, what do Saab and Audi have in common? Not much, you might think. One is German and owned by another German auto company, while the other is Swedish with an American proprietor. One has a limited product range for the truly dedicated, while the other thrusts a multi-pronged offensive across global segments and markets. While one does well to make 120,000 cars a year, the other is on track to build an order of magnitude more.

Yet their early years were astonishingly alike.

Both started from scratch after World War II. When the Iron Curtain came down across Europe, the factories of the Auto Union combine were on the communist side. This sequestered Horch, Wanderer, Audi, and DKW in East Germany. Before the war, DKW was one of Europe’s most popular small car marques, with its reliable two-stroke engines and front-wheel drive. Though the East Germans would have a version of the DKW, no factory in the West was equipped to make such cars.
For Auto Union stalwart Carl Hahn, this was unthinkable. He set up a new headquarters at Ingolstadt, using a facility that was a prewar parts and service base, and found a former armaments factory in Düsseldorf. In 1950 he and his colleagues were able to start producing DKW cars again. They made 1380 that year.

DKWs had been popular in Sweden where Saab, a maker of airplanes, was looking for an additional product for its factories after the war. It decided to get into the automobile business. For power it chose a two-stroke after the pattern of the DKW, whose patents on scavenging systems expired during the war. With a sleek design styled by Sixten Sason, Saab began building cars in 1950. It made 1200 Model 92s that year.

Both companies started with transverse two-stroke twins. DKW’s measured 76 by 76 millimeters for 684 cubic centimeters, and produced 23 horsepower at 4200 rpm. Saab’s had the same stroke with the bigger bore of 80 millimeters for 764 cubic centimeters, and delivered 25 horsepower at 3800 rpm. Both added three-cylinder engines to their two-stroke ranges, DKW in 1953 and Saab in 1956. These were mounted forward of the front wheels on a longitudinal axis.

In 1958 DKW maker Auto Union, struggling financially, was taken over by Daimler-Benz. Its production of larger DKW cars in Düsseldorf in 1960 was 58,846 units. Saab, in its much smaller home market, was not that far behind with 26,100 cars produced in 1960. DKW, however, was surging ahead thanks to a new factory in Ingolstadt and a smaller model, its Junior, which brought its total 1960 output to 126,237 cars.

Problems with noise, emissions, and smell—Saabs were nicknamed “Stinky Toys” in Sweden—meant that neither company could long delay a change to four-stroke engines. Auto Union, helped by a team of Daimler-Benz engineers under Ludwig Kraus, was first out of the starting gate. Launched at the 1965 Frankfurt Motor Show, its new four-stroke model carried the revived “Audi” name. The pride of launching it fell to Volkswagen, which had acquired a controlling share of Auto Union at the end of 1964. Sales of the two-stroke DKWs plummeted, the last being produced in 1966.

Saab was only slightly slower to introduce its own four-stroke. Lacking the support of a Daimler-Benz, which poured $86 million into Auto Union over seven years, the Swedes had to be ingenious. They found that Ford was making a V-4 in Germany that slotted neatly into their chassis. Developed by stealth, lest sales of the two-strokes suffer, the V-4 version was introduced in the summer of 1966. After several years, the ring-ading two-strokes were quietly dropped.

Saab followed up in 1968 with the launch of a completely new car, its 99. Developed under engineer Rolf Mellde and again using the styling ideas of Sixten Sason, the 99 was both handsome and satisfyingly Saab-esque. Its engine was an overhead-cam slant-four initially made by Standard-Triumph and later produced for Saab in improved form by Scania in Sweden. Although the ambitious Mellde rightly saw in his 99 a car with great pan-European market appeal, to his regret Saab failed to back it up with the investment needed to expand production.

Failure to exploit the volume potential of its all-new 99 must be seen in retrospect as a moment at which Saab elected to be a regional rather than global player. This decision was made when Sweden’s Wallenberg interests were acting as marriage broker at the wedding of Saab with truck-maker Scania, creating Saab-Scania in 1969. A new and more boring badge replaced the classic Saab emblem with its distinctive front view of an airplane, a badge that vividly reminded us of Saab’s aeronautical origins.

In 1970 the two companies weren’t wildly apart in production. Saab’s volume was 74,000 units against Audi’s 165,900. But Audi had taken a decisive step to secure its future. In secrecy, Ludwig Kraus had developed a larger car that hard-driving Audi chief Rudolf Leiding adopted with enthusiasm. They sold it successfully to VW boss Heinrich Nordhoff and the Audi 100 entered production in 1968.

The team of Kraus with Leiding, who rose to run VW, gave vigor and drive to Audi, whose independence of operation endowed its cars and actions with great vitality. This impetus only accelerated with the arrival at Audi of Ferdinand Piëch as technical chief. He oversaw the launch of the all-wheel-drive Quattro in 1980, creating a new and appealing image for Audi cars that has endured into the twenty-first century. From 1988 to 1993, the demanding Piëch maintained Audi’s momentum as its chief executive.

Saab had a valid counter to Quattro, a USP (unique selling proposition) of its own. I vividly recall the arrival of Len Lonnegren, Saab’s public relations man in America, on my Pelham Manor, New York, doorstep in 1977 with a black two-door 99 with something special under its hood: a turbocharger. European turbocharged road cars weren’t new; from the early 1970s Porsche had one, and BMW sold one briefly. But Saab’s was something special, a well-balanced road car that gave excellent performance insouciantly without heavy fuel consumption. The Swedes were the first to find the formula that would make turbos serviceable and attractive for normal cars.

Saab had another USP of compelling appeal: its origin as the offspring of an aviation company, a designer and maker of frontline supersonic jets. This was a heady reputation for a maker of upscale cars whose aerodynamics and interiors could only be seen by potential customers to benefit from the know-how of an airplane maker. When I consulted on the launch of Saab’s 9000 in 1984, I urged its marketers to be sure to emphasize any and all aspects of the interior that reflected aviation practice.

Unlike Audi, which mercilessly merchandised its Quattro on the road, and in rallying and racing, Saab let its two USPs run into the sand. It wasted “Saab Turbo,” a great marriage of words that—backed up by product—could have sustained its success. Especially after General Motors bought control of Saab and half the company in 1990, the other USP, aviation, was wasted—even though it had just been exploited in Britain with immense success by a creative ad agency.

For the GM people managing Saab in the 1990s, it was the separation from the company’s aviation arm that was important, not the invaluable and irreplaceable halo of a sky-riding heritage. This was made clear to me by a GM transplant during a visit to Sweden soon after the takeover. When I asked about Saab’s maintenance of its charismatic aeronautical lineage, he scoffed, “Oh, we won’t be doing any of that. We’re a separate company now.” In current advertising, Saab is trying to revive the association with aircraft. This would be more impactful if, instead of plunking another bland new badge on the cars as it has, it had gone back to the winged original.

Meanwhile, Audi has vorsprunged from strength to strength. By 1990 the contrast between the two companies was embarrassing: 87,356 Saabs produced against 421,378 Audis. In 2000, with over 600,000 made, Audi volume was still more than four times Saab’s. Having topped 900,000 units in 2006, Audi is now setting out its “Route 15” plan to launch fifteen new models to take its volume to 1.5 million units by 2015. Now that Martin Winterkorn has moved to Wolfsburg to head the VW Group, Rupert Stadler will pilot Audi on Route 15.

What of Saab? For the first third of 2007, its European production was down by 12 percent from last year. With models derived from other GM vehicles, Saab does get design input from outside sources, but these cars haven’t set the market on fire. Heralded as “dynamic new looks,” the face-lift of Saab’s 9-3 features garish chrome wedges that fail to convince as an integrated whole. I’m not a big fan of Audi’s gaping grilles, but at least they look like they were executed by professionals.

The outlook for the Swedish company is not encouraging. Among opportunities that the company has turned down was research and analysis to understand Saab’s “home market”—not in the usual geographic sense, but in terms of the kind of people throughout the world who would be most receptive to Saab’s message. It could have helped the company focus its research and development efforts more productively.

On the other hand, you can only match the audience to the message if the latter is clear and powerful. While Audi was showing how that works, Saab has done without a consistent message for more than a quarter-century. We can see how that works.

Magazine Issue: Winding Road Issue 24