Until 1990, the company was owned by SAAB, an acronym for Svenska Aeroplan Aktiebolaget (Swedish Aeroplane Company), and was part of a conglomerate which included SAAB Aerospace and the truck manufacturer Scania.

The original Svenska Aeroplan Aktiebolaget was established in 1937 with the express purpose of building aircraft for the Swedish Air Force. As World War II was ending, it was apparent that the company's market for military aircraft would decline and after considering other options, Saab decided to move into the passenger car market, appointing Gunnar Ljungström in charge of design. The company's first car, the Saab 92 was a streamlined steel-bodied two-door saloon with a two-cylinder two-stroke engine driving the front wheels and with independent suspension all round. The company's aviation roots were evident in the car with the best drag coefficient of any production car in the world (CD = 0.32) at the time. The car's name was simply the 92nd SAAB design project and all previous 91 designs had been aircraft. One of the engineers working on the SAAB 92 prototype, Hans Osquar Gustavsson, also took part in the development of the JAS 39 Gripen.

Three cylinders replaced two with the introduction of the Saab 93 in 1955, and, until the Saab 95 and 96 in 1966, which used a 60 degree V4 4 stroke engine made by Ford, the company was renowned for its two-stroke motors, which continued until emissions regulations ended production in 1973.

In February 1970, Saab built their 500,000th car.

The company moved to larger cars with the Saab 99 of 1967, which featured an 1709cc inline four-cylinder 4 stroke engine designed by Riccardo in the UK, initially shared with the Triumph. Produced by Saab from 1970, the engine grew to 2 litres in 1972 and gained an optional turbocharger in 1977.

The turbocharger installation in the Saab 99 differed from other manufacturers by also incorporating a wastegate for regulating the boost level. With a relatively small turbocharger and a wastegate, the resulting engine would appear to the driver as a larger capacity engine (without the corresponding increase in fuel consumption), thus improving driveability as opposed to just increasing peak power and having a large lag such as in the BMW 2002 turbo.

In 1978, Saab signed an agreement with FIAT to sell Lancia A112 and rebadged Lancia Delta as Saab 600 and jointly develop a new car platform which saw the light of day in 1984 with the Saab 9000. The 9000 shared its structure with the Fiat Croma, Lancia Thema and Alfa Romeo 164 under the Type Four chassis.

Although turbocharged cars had given Saab a big boost from the end of the 1970s, especially with the introduction of the Saab 900, by the late 80's Saab was producing more cars than they were selling and in 1989 had 40,000 units in stock. The Arlöv plant was closed, but heavy financial losses continued. Talks were opened with Volvo, FIAT, Mazda and Ford and in January 1990 Saab-Scania moved their passenger vehicle operation to a new company Saab Automobile AB.

General Motors Corporation bought 50% of Saab Automobile on 15th March 1990 for USD600 million, with an option to acquire the entire company within a decade. David J Herman became President of the new entity with Stig Göran Larsson as Vice President. Before exercising its option to buy the entire company, GM shared its ownership of Saab Automobile with Investor AB.

Losses continued and the Malmö plant was closed in 1991. The 'New Generation' Saab 900 using the same platform as the Opel Vectra was launched in 1993 and in 1995, Saab declared a profit for the first time since 1988.

GM purchased Investor AB's remaining shares in 2000, making Saab a wholly owned subsidiary.

In March 2005, it was announced that GM would move the production of the next-generation Saab 9-3 from Trollhättan to the Opel plant in Rüsselsheim, Germany. The Trollhättan factory will produce European Cadillacs.

Current models are the 9-3 and 9-5, both of which are manufactured in Trollhättan, Sweden and the Saab 9-7X SUV, manufactured in Moraine, Ohio. The Saab 9-2X, a rebadged Subaru Impreza that was manufactured in Japan, was discontinued after the 2006 model year.

A new crossover SUV, dubbed the 9-4X will share a platform with a new Cadillac BRX is on its way for 2009.