Marcus Wallenberg Jr joined the Board of Scania-Vabis in the late 1930s, reflecting greater involvement by the main shareholders. Wallenberg searched for a managing director who could transform this craftsman-oriented company into an efficient export enterprise. The man chosen was a graduate engineer named Carl-Bertel Nathhorst, just past the age of 30, who had recently streamlined Ljungmans Verkstäder, an engineering firm in Malmö.

During his engineering studies, Mr Nathhorst had been a trainee on the Scania-Vabis shop floor under Gunnar Westerberg and was familiar with the company. With the support of the owners, the job was a golden opportunity for a man of his vision and experience. He considered it a challenge to systematise, simplify, trim costs and expand operations.

Mr Nathhorst joined Scania-Vabis in February 1939, and became managing director in 1940. As early as March 1939, he presented a "proposal for strengthening the technical staff at AB Scania-Vabis". Specialised staff units would be established under a co-ordinating production manager. Twelve new managerial positions would be filled, at least nine of them through external recruitment. Young engineers, preferably with degrees in mechanical engineering, were recruited to head new staff units for work studies, purchasing, production planning, process design and so forth. Some stayed in these positions for 30-40 years.

These reorganisations and recruitments were due to a decision to begin relatively large-scale production for the civilian market. But the Second World War intervened and Scania-Vabis became almost an entirely defence-oriented company. It delivered trucks to the Swedish armed forces, but also military special-purpose vehicles: tanks, armoured personnel carriers and four-wheel drive cross-country trucks. Defence orders were on a large scale in 1942 and absorbed almost all production capacity in 1943. These operations made substantial profits during the war. Concealed behind good profitability were improved cost accounting and planning, along with systematic efforts to simplify and lower production costs. Scania-Vabis had introduced its first diesel engine in 1936. In military vehicles, however, it used for the first time a new engine series featuring 4-, 6- and 8-cylinder engines. This engine programme was based on a modular concept and a high degree of component standardisation.

Nearly all machining had previously occurred in "functional" workshops. Parts to be turned, milled, drilled and polished thus had to pass through four different departments. Systematised standardisation made line production economically justifiable for more standard parts. Due to type variations, however, the volume was still too small for most in-house parts, causing the new work studies manager to perform pioneering work in production engineering.

Late in 1943, Scania-Vabis began preparations for peacetime production. New truck chassis would be developed and new buses would be designed. Towards the end of 1944, the company delivered its first trucks to the civilian market, but only the chassis for four-cylinder engines were completely designed. Development work accelerated. When the designs were completed, order books filled quickly.

During 1945, therefore, the whole company exuded optimism. It was important to take advantage of the relative competitive advantage the company enjoyed over foreign competitors. But optimism was replaced by an acute crisis in 1946. The reason was that products were going directly from the drawing board into series production.

Serious defects developed in the trucks that had already been delivered. Piston rings melted, pistons and cylinder heads cracked, connecting rods snapped and so on. Gearboxes that were too weak for large engine outputs failed. Brakes and frames developed cracks and other defects.

The situation was critical. These defects had to be remedied quickly and at no cost to customers. The causes had to be analysed and the sources of defects eliminated. The steps that Scania-Vabis took were very successful.
In two years, average complaints per truck fell from nine to one. The company was thus ready to venture out into the world and expand its production.