Pangda’s CEO reveals Saab plans in interview.

I’ve just found this interview at a web site called China Car Times.
A link to the original piece can be found here,

The sudden buy into Saab by a relatively unknown Chinese car dealership group took the automotive world by storm earlier this week, the deal was announced just 11 days after Saab’s sudden marriage to Hawtai broke down after Hawtai were unable to satisfy Saab’s demands. It appears that Saab hammered out a deal with Pangda in extra fast time, but at the end of the day it appeared that Pangda were more interested in gaining products to sell rather than taking over Saab, Pangda’s CEO and founder Mr. Pang Qing Hua talked about his plans for Saab in a recent interview with the Chinese website, Auto Sohu.

Translation by China Car Times
Sohu: When did you start talking with Spyker? And what level are you at now?
Pang Qing Hua (PQH): We first started talking after the collapse of the Spyker-Hawtai deal. We went through foreign channels to further understand Saab’s problems, we recognised that their underlying issues were sales based, they didn’t sell enough to cover their costs. Now the Chinese government is slowing down on joint venture deals, so first we will sell cars in China to slowly enter China, this way there will be less problems.
On the day Hawtai and Saab ended their agreement Spyker came to Beijing to talk business. In the end we talked about prices, Hawtai and Saab said 4.88RMB a share, but we talked about 4.19rmb a share.
During the talks everyone was aiming for the same outcome. I’ve personally been involved in many different deals and negotiations and I have to say this was the smoothest one yet. Mr. Muller also has great foresight, whatever problems we have we can work them out. They need finances, but we need a product to sell, everyone is a winner here. I don’t want to talk majority ownership with them, and they just want to sell cars in China, so this is great deal.
Everybody knows, Pangda is a well respected company, on Monday we signed a contract, on Tuesday we were preparing to send them 30 million Euros, and now it has already been sent. Saab has promised to restart production within the week and we will go and visit them to carry out inspections.
Sohu: Does Pangda have a time frame in mind for this project, what needs to receive government approval, and when will you build a factory?
PQH: Time is important, as Saab has suspended production for three weeks, according to the contract both parties will aim to set up a sales joint venture within three months and we will set up a production company within the year, within two years we will see Chinese production of Saab vehicles.
Sohu: When dealing with overseas companies, most Chinese companies will undergo multiple rounds of inspections and checks on their proposed partner, but it appears that Pangda has not yet done this and has paid 30 million Euros before carrying out an inspection. Is this not a dangerous game, what will happen if there is something that does not meet Pangda’s expectations?
PQH:With regards to the deal, I am very happy. As soon the deal was signed we sent them 30 million Euros, Spyker promised to restart production in 7 days, as soon as this starts Pangda will create a team to carry out checks. The board of directors will create a framework of cooperation. If we hear from our team that Saab has kept upto its promises we will put forward a proposal to the NDRC (National Development and Reform Council) for approval. As soon as we receive approval we will start to looking for a partner, or the NDRC will recommend one to us. The next round of investment for this project relies on the report from our team, if it is not upto expectations then Pangda has the right to terminate further investment plans.
Until now, the information we have been receiving is very good, firstly on the day that Spyker announced the deal Spyker’s share price sky rocketed. Secondly, Mr. Antonov wants to buy into Saab, and thirdly the Swedish government has come out in support of Saab. These things added together are great pieces of news for Saab.
Sohu: What made Pangda strike up a deal with Saab so fast?
PQH: Pangda is not willing to change their identity, we are a car dealership group and always will be, we only approached the possibility of producing cars to make sure that we can protect our market share.
Now the manufacturers have a bigger voice than the dealers, so if we didn’t come up with a strategic production plan we would have been pushed out of business by the manufacturers. So now we are starting to infiltrate the production side of things, but when we do start making cars we won’t be a major partner in the company, we will just take a small share – enough to understand the factory, so I stick to my words, Pangda will always be a car dealership group, we won’t wade into the car making business too deeply.
Pangda’s policies are quite clear, anything we say, we do. Pangda is based in the car selling business, if we jump into the car making business or other areas we still need to protect our corer interests.
Sohu: So we could say that this round of investment copies the Subaru method?
PQH: (background: Subaru and Pangda were in talks to produce Subaru’s in China, but with the added twist of Pangda offering to buy into them)
The Saab method is likely to be more stable than the Subaru method. Subaru-Pangda is just a simple car dealer, but one day Subaru’s will be made in China. The problem with working with Saab and Spyker is that is that we hope we can be the main sales company, we want to protect our sales rights.
Sohu: Then what is the standard for working with Saab on localized production in China:
PQH: Until now, Pangda has not thought about this problem. We need to wait for the report from our new team and the NDRC have given approval, we will then search for a partner factory. Our standard for a partner is basically , whoever understands Saab, whoever is proactive in making Saab vehicles work for China, then we will choose them. So on this issue, we really need to wait for that preliminary report from our team before we can think about this issue. One other thing regarding the choosing of a partner, in the contract we have Saab it stats Pangda have the right to choose and suggest a partner but Saab has the right to refuse a partner, but Saab has no right to choose a partner, to put it basically if any Chinese company wants to produce Saab’s in China, they have to go through Pangda.
Sohu: When a joint venture production company is set up, what will the ratio be?
PQH: I personally think Pangda’s share won’t be more than 20%, with regards to other shareholders specific share I think we will need to wait until the talks have ended before we can comment further.
Sohu: Previously Saab’s sales in China were very bad, when Pangda brings in Saab again they will be looking at some serious risks, are you worried about these?
PQH: When Pangda started working with Subaru, we didn’t sell a single vehicle! But now I think that Saab are in a better position than when Subaru entered China.
When we’ve sold a batch, we’ll pay for a batch, our cooperation is really quite simple, by selling cars in China we will help them with their production issues, as soon as they see car buyers are waiting for their cars they will produce faster, and the Swedish Government has also offered support to Saab so I think our risk is currently very low.
I look at sales and production as a pair of sisters, one cannot leave the other. So the products strength is mated with the sales strength, one cannot be without the other.
Sohu: Previously Saab set up a deal with China Automobile Trading Company (CATC) to import Saab’s into China, where is this deal now?
PQH: When we signed with Saab we also thought about this issue, CATC signed a deal with Saab for three year distribution rights, we have good relations with CATC, Im good friends with their General Manager, but business is business. The deal that Saab and CATC signed can be cancelled at the end of this year, we will take over the importation from 2012 onwards.
Sohu: What is Saab’s goal for a dealership network in China? What do you think of the brands prospects?
PQH: I think that Saab first of all needs to restart production, then we will begin to think about the layout for the dealerships. Perhaps the cars we are bringing in will set out quickly, but if anything out of the ordinary happens to further delay production then we cannot comment, this is why we are going to look at Saab soon.
Sohu: When Pangda gets hold of the rights to sell Saab’s in China, will it have a monopoly on the dealerships?
PQH: According to the contract, Pangda will own 50% of the Saab dealerships in China, the other 50% will be independent dealerships, we have the right to choose the other 50%, these will include the 8 former Saab dealers.

scottishsaab
Member
5 years 4 months ago

Spyker promised to restart production in 7 days, Lets hope they can stick to this promise!!!!!

Knug Olaf
Member
5 years 4 months ago

This article made me feel very good! Nice to see that Pangda’s CEO seems to have such a positive view on the future with Saab. One thing worries me a little though, as he seems to have been promised a production start in seven days, or the deal can be put off. I hope production starts as planned.

Jos
Member
5 years 4 months ago

Loud and clear. Very nice article, PQH seems a very sensible and result driven business man.
I’m on board with this deal.

theSandySaab
Member
5 years 4 months ago

Very interesting interview, that clarifies a lot. But the Swedish government support is mentioned a few times – what exactly is their support?

till72
Member
5 years 4 months ago

Sounds like a good partnership.

Dejjo
Member
5 years 4 months ago

good news, happy dance.

But looks like good old Victor has oversold saab again……hope panda likes what they see.

Carmania
Member
5 years 4 months ago

One might think that Pangda take a big risk when they just send SAAB 30 million EUR but would they fail to restart the production and go bankrupt we know that SAAB assets still are much larger than debts. Panda offers SAAB liquidity without really taking a risk.

BoeBoe
Member
5 years 4 months ago

When Saab goes bankrupt Pang Da will be last in line to receive any money (or cars). Customers/consumers are always last in line.

Carmania
Member
5 years 4 months ago

Yes, you are correct. But since assets are larger than debts all creditors will be paid. Remember, so far they only used half of the 400 MEUR EIB credit.

BoeBoe
Member
5 years 4 months ago

Saab has much more debts than that 😉
Have a look at the balancesheet and you will see that they have almost 1,3 billion in debt.

BoeBoe
Member
5 years 4 months ago

PS And the assets are “only” worth 1 billion. And I can tell you that when Saab goed bankrupt they will never get 1 billion for those assets.

Khrisdk
Member
5 years 4 months ago

When?

BoeBoe
Member
5 years 4 months ago

@Khrisdk: What do you mean?

It is common knowledge that when/if a company goes bankrupt the assets are worth less than the amount they are for in the books.

When you go bankrupt you are forced to sell and you will get less money for it.

At the moment Spyker has more debt than assets.

Carmania
Member
5 years 4 months ago

BoeBoe, do you mean 1.3 billion EUR or SEK? If it’s EUR please explain to whom the owe this.

Phoenix
Member
5 years 4 months ago

BoeBoe why are you making statements that you don’t have a clue about? There are several companies covering up for the EIB loan. What assets are you talking about or think you are talking about. You should be careful spreading your words when you don’t know.

Carmania
Member
5 years 4 months ago

It is also common knowledge that many assets are very conservatively valued in the books. You cannot look at book value you have to look at for example the valuation of assets that EIB made for their loan. Their conclusion was that their 400 (450?) MEUR loan was fully secured with a good margin. And that valuation was based on a liquidation scenario.

BoeBoe
Member
5 years 4 months ago

@Carmania & Phoenix: I’ll keep it simpel:
Read the Annual Report!

You can find it here:
http://www.spykercars.nl/download/investor/JV2011SpykerSaab.pdf

It ain’t that hard to find financial information for a listed company.

1,3 billion euro in debt
1 billion euro in assest
The rest is shares

Carmania
Member
5 years 4 months ago

You keep it too simple. You cannot use the annual report to make this type of analysis. I repeat what I wrote before:

“It is also common knowledge that many assets are very conservatively valued in the books. You cannot look at book value you have to look at for example the valuation of assets that EIB made for their loan. Their conclusion was that their 400 (450?) MEUR loan was fully secured with a good margin. And that valuation was based on a liquidation scenario.”

BoeBoe
Member
5 years 4 months ago

Saab told Pangda that production was only stopped for 3 weeks? Make that 6/7 weeks.

And production has to restart in 1 week? Fingers crossed…

kochje
Member
5 years 4 months ago

Are you always so pessimistic; is here nothing good at all in this deal?
I just like the Chinese business mentality; fast, do what they say and be straightforward.
Perhaps they should adapt this same mentality in other western countries; they would get again more successful.

GML
Member
5 years 4 months ago
I must admit, I have never been a fan of Chinese business. As a manufacturing engineer, I have seen my product outsourced to China and return with poor quality. I must say, however, this interview has taken a weight off of my shoulders. Could this be the ideal relationship? The largest dealer network in China now has a vested interest for Saab to sell. And this partner’s sole focus in this relationship is to sell Saabs. What will happen when Saabs are manufactured in China? Does the profit come back to Saab-Sweden, or does it have to stay in China?
kaiger
Member
5 years 4 months ago

So what will happen if they can’t keep their promise with these 7 days…..?

Börjesson
Member
5 years 4 months ago
Pangda are apparently planning to sell 10 000 Saabs in China this year! If they can actually do that, then this deal is made in heaven. And the fact that Pangda are not interested in owning Saab or taking more than a marginal interest in building Saabs, but only in selling them, is deeply reassuring. The only worry is that Victor seems to have led Pangda up the garden path a bit. It seems highly unlikely that production can start within seven days, or even less likely if they mean seven days after the deal was signed. And this thing… Read more »
marvin
Member
5 years 4 months ago

From di.se:

Pang Da ska sälja 10.000 Saab i Kina i år. (Pang Da to sell 10 000 Saabs in China this year.)

That is pretty good if they manage to do that!

I think this deal will be considered very important in Saabs future..

snabster
Member
5 years 4 months ago

Best news I’ve read in a while.

The 9-5 is a perfect fit for China. Very easy to sell 10-20K there.

9-3 will not sell well. Will be interesting to see if a 9-3NG can do it. My sense is German brands have a stronger lock on the luxury market, and there isn’t much of a sport market.

No idea on the 9-4. Is the SRX even old in China. I don’t think it will take off.

golfhunter
Member
5 years 4 months ago

We report live what has been said at the meeting on Saablog-in if you want to have a look here it is
http://saab.skynetblogs.be/archive/2011/05/19/zeewolde-live.html

Mynoob
Member
5 years 4 months ago

Thanks.

It appears that they will soon have a replacement for JAJ.

Skipper
Member
5 years 4 months ago

The deal seems to be a great idea! Saab needs to sell more cars and needs fast cash, Pangda needs to buy more cars and are prepared to pay some cash up front. Almost seems like a win-win situation all round, lets hope it is!

SaabSouth
Member
5 years 4 months ago

Not sure where you could find a self contained complete car manafacturing facility and a brand in Europe with a complete distribution network for 1 Billion…… Look how much Lexus have spent trying to get into the European market…… The valuations used for the EIB funding would have been at fire sale levels.

Kurt Schirm
Member
5 years 4 months ago
@ BoeBoe – All convertible preference shares in the company are listed as debt because the have a maturation date. If they cannot be paid by maturation date, they convert to common stock. So there is 177MM Euro that is listed as debt, but not necessarily due. PPE is listed at 282MM Euro. This is book value and nowhere near market value. LIquidation value of these assets during GM’s wind down of Saab was over 600MM Euro. Current market value is in excess of 1.2BB Euro. Also as Saab were basically in liquidation mode in Dec. ’09 (After the K-segg… Read more »
JasonPowell
Member
5 years 4 months ago
Bottom line is: (1) Victor didn’t over sell anything – Saab are currently under an international microscope. I think overselling the current affairs would be impossible ever for the World’s best salesman, VM. (2) As CEO founder of the largest dealer group in China, I have full confidence that Pang Quing Hua is a very very smart man and knows exactly what he is buying with his deal with VM and Saab. Kurt, My thought exactly, I can’t believe people would think it’s possible to oversell or play down the current situations with Saab. You either are saying the Chinese… Read more »
saabdealer
Member
5 years 4 months ago
Bottom line is: (1) Victor didn’t over sell anything – Saab are currently under an international microscope. I think overselling the current affairs would be impossible ever for the World’s best salesman, VM. (2) As CEO founder of the largest dealer group in China, I have full confidence that Pang Quing Hua is a very very smart man and knows exactly what he is buying with his deal with VM and Saab. Well said. I was given some enlightening information regarding the Saab 9-5 and the China market. It seems this type of vehicle (Euro Luxury, large, executive style) is… Read more »
SPG900NY
Member
5 years 4 months ago

these specifications are a very important element to this crowd. the 9-5 should do quite well there.

The size of the vehicle is not the only issue. The fact is, the Chinese are very brand-conscious when it comes to their automobile preferences. Brand=status. I’m not sure Saab has the cachet of a Buick or BMW over there, but we’ll soon see. It might not have much to do about the size of the vehicle, although that is a secondary issue (first brand, then size and features).

Jeff
Member
5 years 4 months ago

Ah Kurt, you always come through.

Kurt Schirm
Member
5 years 4 months ago

Hey Jeff,
I sent an email to the address listed on the SU contact info: 2 pretty cool NHL articles you might find interesting. Check them out when you get a chance.

zippy
Member
5 years 4 months ago

Seems like this guy knows what he wants which is a good thing. However, I’ll not be cheering until production is up and running again.

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