Farewell, Saab – but it's not all doom and gloom for car industry

Things are grim in Sweden, but in Britain the motor trade is back from the brink – and even seems to be thriving.
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Is the global motor industry's petrol tank half full or half empty? The view from Trollhattan is certainly gloomy. General Motors' announcement yesterday that its Swedish subsidiary, Saab, will be subject to an "orderly wind-down" is conformation that, for the industry's weak players, the recovery has come too late.

GM has been looking for an investor in Saab since January. The company said that the wind-down meant that outstanding debts and warranties would be honoured, and that spare parts and services would still be provided for owners. But prospects for the 3,000 workers and those in the supply chain seem bleak. So Saab joins GM's Saturn brand, the UK's LDV vans business and a few others into oblivion. Yet the case for optimism, here and abroad, is growing.

The Dubai Motor Show opens this weekend. It is far from the world's biggest, but it confirms that the motor business is refusing to die. Those seeing their own reflections in the gleaming gold coachwork of the new Bentley Mulsanne, a £200,000-plus limo, or the striking Corvette Stingray concept, complete with "scissor" doors and military-style night vision, could be forgiven for thinking that there has never been a recession. Nearer to home, the Society of Motor Manufacturers and Traders announced the first monthly rise in vehicle production since September 2008 – a jump of 15.7 per cent in November.

The reasons for the industry's recent revival are, of course, not hard to find – unprecedented government support for the industry. The new GM, for example, is now 62 per cent owned by the US Treasury. The German government offered loan guarantees to Opel, while the British and French governments have found ways to make grants available to Peugeot, Renault and Jaguar Land Rover.

Overarching those schemes is the trillions of dollars in general support for the world financial system – and scrappage programmes, including the British Treasury's £400m scheme. It may mean lower sales next year when the scheme runs out, but it may well have saved many jobs and factories from obliteration.

Yet there have been some surprising losers. Toyota's chief executive, Akio Toyoda, the 53-year-old grandson of the founder, said recently that his firm could be nearing the brink of "capitulation to irrelevance or death", "grasping for salvation" – a reference to the stages of corporate decline in How the Mighty Fall by Jim Collins. Deeply unfamiliar, quality issues have overtaken Toyota this year.

The winners are easy to spot in the fast lane. The Korean industry, itself humbled in the East Asian crisis of 1998, has seen a transformation in recent years. Thanks to its economical city car the i10, Hyundai has established itself as the maker of the UK's number one bestseller among private buyers. Its low price makes it an obvious choice for scrappers looking for a £2,000 discount, but the idea of a Hyundai beating the more familiar Corsas, Fiestas and Clios would have been unthinkable a few years ago. Tellingly, the i10 is made in India, where Rata Tata attracted the world's attention with the Nano, his "one lakh" car – 100,000 rupees or about £1,500.

VW, another company that has shone this year, underlined the importance of the Indian industry with its purchase of a strategic stake in Suzuki – mainly to get access to the Indian Maruti Suzuki business. The outsmarting and purchase of Porsche may have grabbed more headlines, but commercially the Suzuki move was a more vital one for Volkswagen. Indeed, VW may soon overtake GM and Toyota to emerge as the world's largest car-maker, with its unparalleled stable of brands, from the Maruti through Skodas, Seats, Audis, Lamborghinis and Bentleys to the €1m Bugatti Veyron. Ford, "the one that got away" and avoided Chapter 11, and Chrysler, embraced by Fiat, also have more cause for hope than a year ago.

As we glance at the rear-view mirror of the road traversed during 2009, we see the near death of two out of America's old "Big Three", Toyota registering its first loss since 1950 and the prospective dismemberment of GM's European operations, Opel and Vauxhall, for whom the likeliest fate seemed to be that they'd be crated up and sent to Russia before to long.

Yet, as we look forward we find a UK industry that seems to have weathered the worst of the storms, boasts new models made here (the new Astra and the Honda Jazz), and which is seeing a burgeoning of its capacity to make electric and hybrid vehicles, including an electric BMW/Mini, batteries for Nissan and Toyota's hybrid Auris.

A year ago, it seemed entirely possible that great swathes of the British motor industry would disappear. Not for the first time, it has come back from the brink.

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