Initially the V4 engine was designed by Ford for a new entry compact car intended for the US market to be called the Ford "Cardinal" which eventually evolved into the Taunus 12m P4. Ford abandoned the "Cardinal" project and sought other uses for the V4 engine which was initially tested in the Saab 96. Ford bought several SAAB 96's for testing and eventually sold the cars back to SAAB with the V4 engines in them. SAAB tested the V4 SAABs at their Trollhattan Sweden test track which stimulated SAAB to acquire the V4 engine for their model 95, 96, and model 97 (Sonett) cars starting in mid-year 1967 production. The V4 engine eliminated the need to mix oil with fuel for the two-cyle SAAB "Shrike" engine and provided better low end torque. SAAB dealers offered the first owner a "Lifetime Warranty" for the V4 for US$ 50.
The 1.5 L (1498 cc) V4 had a 90.0 mm bore (3.54 in) and 58.86 mm (2.3 in) stroke. It produced 55 hp (40 kW) and 107 N·m (79 lb·ft), 60 hp (44 kW) and 114 N·m (84 lb·ft) or 65 hp (48 kW) and 117 N·m (86 lb·ft) at 2500 rpm.
The 1.7 L (1699 cc) V4 had a 90.0 mm bore (3.54 in) and 66.8 mm (2.63 in) stroke. It produced 65 hp (48 kW) and 129 N·m (95 lb·ft), 70 hp (52 kW) and 137 N·m (101 lb·ft) or 75 hp (55 kW) and 130 N·m (96 lb·ft).
Since the engine mounts and gearbox connections are identical between the Ford Cologne V6 engine and the V4, some vintage V4 Saab 96s were modified to take a V6, for rally racing, although this dramatically changed the weight distribution and steering characteristics.
Since the Saab 96 was used for rallying it was also tuned. In the rally versions it was bored and stroked to 1784 cc and 1933 cc giving around 150 hp (110 kW) in the naturally aspirated version and 200 hp (150 kW) DIN at 7000 rpm in the Saab 96 RC Turbo version, doing 0 to 100 km/h (62 mph) in five seconds. SAAB also tuned the engine to 240 hp.