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Reports indicate Saab will build cars in Tianjin, China *UPDATE: Youngman May Make New Investment*

July 26, 2011 in News

According to China Car Times, Saab will set up shop with partner Youngman in Tianjin, a city near Beijing. It is also the site of Great Wall Motor’s new plant, serves as a major automotive import hub, and is home to many major Chinese suppliers.

CCT mentions that they’ve heard reports that Saab sent a team of engineers to Youngman and found that their existing production lines (which a commenter mentions in the same article are elsewhere in the Guizhou to Shangdong provinces) can easily handle the additional 150,000 vehicles a year when they’re brought online. They say that the plant would be operational in 2 years at the earliest, and that they would need to import cars in the meantime. I’m sure the workers in Trollhattan would be more than happy to ramp up production to cover the difference if Pang Da is placing orders for tens of thousands of Saabs.


You’ll also remember that Saab and Youngman will produce not only Saabs, but “child branded” vehicles for the Chinese market. From the June 13 press release:

Spyker, Saab Automobile, Pang Da and Youngman will set up joint ventures with respect to the manufacturing of Saab branded and child branded vehicles and the distribution of Saab branded and child branded vehicles for the China market. Saab Automobile and Youngman will each have a 45% interest in the manufacturing JV and Pang Da will hold the remaining 10%. Saab Automobile and Youngman will each have a 33% interest in the distribution JV and Pang Da will hold 34%.

So while that 150,000 figure may seem high, remember that it includes this new brand that is exclusively for Chinese consumption. We don’t yet know the breakdown yet, but whatever it is, these Chinese made Saabs can only further the brand’s image if built in a quality facility, which Tianjin seems to provide. Aircraft manufacturer Airbus assembles its A320 there, and it’s position as an industry center should help Saab get off its feet in China, if this report is true.

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UPDATE:

According to SinoCast Daily Business Beat who cite this article (google translate only takes us so far, young people = Youngman ;)), Youngman is considering making an additional investment into Saab to help get them through this supplier mess. They along with Pang Da and Saab will reportedly meet this week, according to an executive with Youngman who wished to remain anonymous.

63 responses to Reports indicate Saab will build cars in Tianjin, China *UPDATE: Youngman May Make New Investment*

  1. I’m hoping that the Chinese government approves the deal quickly so that funds can roll into Saab and this joint venture can get off the ground. Saab needs this to hapen immediately.

  2. Interesting that the Chinese can force Saab into producing Saabs in China, but somehow neither GM nor Ford could ever manage to produce Saabs, Volvos, or Jaguars in the US when they were part of GM and Ford. Yet all the major German and Japanese and Korean manufacturers set up production in the US.

    Let’s hope what is made in China stays in China and let’s hope that Saab production continues in Sweden.

    • +1, I’m sure saab will still produce in Trollhaten.

    • +1, The plant in Trollhaten, and the talent pool there is simply too well-established to be tossed aside. At the end of the day: even if Saabs for China are mostly built in China, that will mean more $$ back towards the mothership (which will always be in Trollhaten).

      • Why does Saab always have to stay in Trollhättan?
        Of course it takes time to start a new factory and to build up knowledge there but why in the long run?

        Especially if the major market is in China, who knows best what the Chinese wants? Not to mention the cost of labor.

        Before the comment thread gets out of hand on moving production from Sweden, let me just clarify for everyone: Saab = Trollhättan = Saab. They’re forever linked. We can all agree that the situation the Chinese government advocates, domestic production for their auto industry, forces Saab into producing cars for that market locally. But we can also agree that as a small car company with an incredibly lean facility with a high production capability, that Saab will be producing cars in Trollhättan as long as there are Saabs to build. -Jeff

        • Why does Saab have to be in Sweden? Why not move it all to China? I would say this… examine Chinese indigenous cars. Then examine a 2012 Saab. The product design staff and product planning staff in Sweden created the 2012 Saab model line. (Then the 2013 9-3!) This is competitive with Europe’s finest car products. Sure, you could outsource all that product creation staff to China. Then you would have cars build using today’s Chinese indigenous methods and refinement levels (something well below a Kia).

          We could outsource BMW engineering to Kia, for another example. It wouldn’t be quite as good, and it wouldn’t maintain BMW’s point of view, the DNA of their brand, but you could do it.

        • Sure, Saab = Trollhattan = Saab to us + people in Trollhattan/Saab… but to outsiders, well, Saab is a luxury brand + now a publicly traded company. If sales in China are outstanding (Chinese production) + sales are weak in the rest of the world (Trollhattan production), and particularly if Chinese production costs are lower than Swedish production costs, there undoubtedly will be pressure to relocate all production to China… This is of course is only 1 scenario, but iirc, the recent deal puts overall controlling ownership in the hands of the Chinese companies involved, and we already see some allusion to that in the latest (whimsical imho) future product direction commentary (including 2 much larger vehicles which would almost certainly not be in the pipeline otherwise)…

          Hopefully, those with a controlling interest will be wise enough to recognize the importance of the Trollhattan site to the Saab identity in the rest of the world… but, there is no guarantee of that… my other concern here is that none of the parties seem to have deep enough pockets to get things rolling properly… certainly not VM, probably not Antonov, and I wonder even about the Chinese owners… either that, or there is a game being played for acquisition of control… these “near” defaults we keep seeing are relatively petty cash in large-scale business terms… in comparison, the damage being done in the media + to the dealer network + customer base is significant, at least in North America…

          I don’t doubt the Saab brand will live on in some capacity. I do have my concerns re where it might go directionally… I really hope it stays, as you say, Saab = Trollhattan = Saab! As Jim suggests, it’s hard to imagine all BMWs made in Korea, and would they have the same appeal/market?

          James…

      • A more obvious reason is that the brand name “Saab” s shared with the defence manufacturer with the same name which has the legal rights to the name, and the agreement that allows Saab Automobile to use the name has a lot of conditions. I’m pretty certain that anything similar to moving Saab HQ out of Sweden voids that agreement. This is also why the company owning Saab Automobile, SWAN, does not contain Saab in it’s name.

        That is, the owners of Saab Automobile can’t move the HQ out of Sweden if if they want to. End of story.

        • Horsesh*t. The name without the production of cars is worth 0 as a car company. What was Spyker’s name worth? The fact that it is the name of an aeronautical company as well, will mean that once car production is gone, the name will only have value as an aeronautical company.

    • Audi builds autos in Germany and many other worldwide locations. Same for BMW, and Benz and GM
      and now SAAB will. So?? Nothing new here.

    • Are you still being forced if you do what you want? I think Saab would have loved to have had a manufacturing JV in China since many years. If this works out they get what they want and what they need. No talk about being forced to do anything.

      The fact that GM never saw the benefit to set u production line for Saab in the US is interesting but should be addressed at GM.

      Totally agree with your last line!

  3. 150k units? Why not start with spare parts for current units first? SAABS in dealerships and body-shops all over the U.S. and Europe right now that can’t run because of no spare parts. I’m sure the Chinese partners won’t care about that.

    SAAB MUST do right by their current customers first. Econ/Business 101 – it’s always cheaper to keep a customer than go find a new one. They better remember that!

    • I think in order for Saab to succeed, they have to be able to juggle several balls at once. This Chinese lifeline is crucial to giving Saab breathing space so they can grease the rest of the wheels that need help. I completely agree Saab has several problems to address, but they also need to achieve stability to be able to get there, something they’re very lucky China provides.

  4. Hope the Chinese government approves this deal — and soon. Saab can’t afford a fumble. I wonder if this deal is the reason we haven’t heard too much from VM lately.

  5. Let’s face it, Saab needs way more money than VA is able to put in at the moment and it seems the only people who have that kind of cash are the Chinese. There are one of two possible scenarios here in my opinion 1/ the Chinese buy Saab and set up production in China for local consumption with Trollhattan producing cars for the rest of the world or 2/ Saab goes belly up and the Chinese buy the technology. I really can’t see any other scenarios at play in the moment.

  6. I would personally put that headline in quotation marks, BTW.
    After all, there’s only one report…which mentions reports…from an unknown origin.

    • I can’t stand when someone “quotes” something they’re trying to call out. A lot of press/journalism “style” sheets say to use italics, but that’s not available on headlines in our “current” wordpress layout. God I hate quotes. Also: I HATE all caps.

  7. Is China right hand drive? Could have implications for Australia, the UK, NZ… And some production and transport economisation for Saab perhaps.

  8. Nice to see you writing again Jeff, was wondering where you’ve been. I think it’s good news that they continue to move forward with this Chinese deal and if they make cars in China for the Chinese, I’m more then ok with that.

    • Just a busy, busy boy. I’ve been working on big stuff behind the scenes mainly. Not so focused on the day to day insanity.

      • “big stuff”…. I look forward to see it, whatever it is! :)

        • Jeff, just glad to see you back on here. Sorry that your post from today has forced you to waste time on nonsense from the one you blocked. Thanks for taking action though to stop someone from continuing to insult a Saab employee who exemplifies what a great employee looks like. Great work.

  9. JH said on July 26, 2011

    As long as there are Saabs made in Trollhättan, I am positive to this. China will be a huge market for Saab and generate income for Saab in Sweden. If Saab can overcome the hurdles that they face now, which I believe they can, Saab have good chances to prosper. :)

  10. If you plan to manufacture 150k units in China / for china and virtually nothing for the rest of the world (30k units?), why not just loose the Trollhättan plant and focus on china only? If you want to revitalize the sales in europe and US you can do that later on by either exporting units och setting up local production in America (mexico?).

    I don’t really see the need for the Trollhättan plant.

    The development on the other hand, must stay.

    • The quick answer?

      If you skip the Euroepan production for china only, you will have killed the brand.
      Most car buyers are snobs, who may buy an iThingy made in China, but not a Car
      At least not for the next 10-15 years

      • Exactly. And by the way – thanks for that extraordinary piece of music. Let´s hope that Saab will survive in an extraordinary way, too. Uh – what a complicated transition to the main theme here. ;-)

    • RS said on July 26, 2011

      At the end of the day the biggest loser in all this would be the Swedish Government if all the cars in the country would be imported, but I guess they’re just too short sighted/blinded by something to see it.

      Here’s one way to look at supporting the auto industry: http://money.cnn.com/2011/07/21/autos/chrysler_bailout_costs_gains/index.htm

    • Remember that it’s Tim Colbeck’s ambition to sell 30,000 Saabs in the US alone to start with. This year is an anomaly.

  11. China IS right hand driving, steering wheel on the left.
    In terms of quality, I am very satisfied with my Apple products, that are virtually exclusively manufactured in China, That includes all i-products that are actually a deficit in the US trade balance. Still, BMW, MB, Audi, VW all have manufacturing in China. The Chinese are brilliant (in general) to produce something as cheaply as possible, but also if a high standard/quality is required, they can do that very well to. Many “luxury” products are manufactured there, in part or parts, to complete and ready products.
    I hope that there can be funds flowing from east to west so that Saab at least can keep R&D in Trollhättan, if at all possible also the manufacturing for the western markets…
    Still, it must be extremely costly to have the workforce ready and paid, with no manufacturing for all this time. Bleeding money is never a good thing… Hopefully there will be more infusions of Yuan coming.
    Fingers crossed!

  12. Saab certainly needs to get some income from this China production and China/Asia sales. Elsewhere I think it’s still going to struggle until the aging 9-3 is replaced. Then if that car is right, it has a good chance. That car also has to be made in Trollhattan, even if it is not exclusively made there? The NG9-5 might be good and Saab may make a little bit of income from the GM sourced 9-4x, but it really needs a new ‘bread and butter’ car ASAP. Let’s hope the late 2012 launch is not delayed by current circumstances.

  13. Seems like wishful thinking to me. Its not entirely certain that Saab will be around in 30 days much less two years. Maybe those engineers should be in Sweden on the line making a car or two? Or maybe instead of the travel expense they should be putting some bucks into an ad campaign for the 94x?

  14. Judging from the outside of things, the Chinese solution, possibly in cooperation with allowing V A into the company as partowner and financer, seem to be the only viable path forward for SAAB.

    This will mean V M, the Chinese partners and V A as shared owners of SAAB

    Obviously the chinese investors want a solid return and a production in China is logical and make sense
    in order to get quick access to and share the SAAB technology, production skills, design and brand – all make sense – its probably both less costly and faster to buy their way in to SAAB than starting from scratch on their own.
    Production behind the custom duties and custom barrier and giving the cost advantage enjoyed by all of SAABs competition in China

    Even if I sincerely hope that management, development and design will remain in Sweden, just as production for Europe / US markets

    GM have with their final investment and preferred shares and their IP of the existing modells 9 5 and OG 9 3
    also controll of the development in many ways – perhaps there are behind the wall discussions to get more liberty to use their IP in a way – opening up for production in China.
    Obviously GM may demand to get bought out all together
    Otherwise the new investors have to to await the N G 9 3 which to my understanding will be the full IP property of SAAB giving them the freedom to produce and share technology with whom ever they want.

    With this lenghty production stop and strained relations with staff, suppliers, dealers and customers SAAB need to get moving and solve the maze of owner/IP/EIB/financial problems they face.
    Even hard core SAAB fans like myself find myself in despair sometimes – it would be very sad if they could not make it, since my firm belief is that they are on the verge of launching everything they need in order to survive – the SAAB 9 5 SC, the 9 4 X and fine tuned and upgraded OG 93 and hopefully the N G 9 3 within 2 years

    Why did not the SAAB management see this coming – they burned a lot of cash at a fast rate and sales did not meet expectations at all – can only hope that a good part of the money also got invested into the development of the N G 9 3 and that the timeline for this car is on track. This is crucial and the biggest bargain chip for SAAB when they discuss with their partners.

    Still hoping for the best and awaiting some positive news.

    It would be great if the mentioned orders of 11000 cars is correct and that these customers >(incl myself) have the ability to await the start of production come August 29th.

    • A very good comment!

    • From my understanding, the NG 9-3 has already seen huge investments, so on that part yes, Phoenix platform IP has been one of the major cash drains for Saab. One of the reasons they thought they’d have enough cash on hand was that by producing cars, it allows them cash flow (liquidity). When this whole thing started, I made some harsh and angry comments towards suppliers that were halting deliveries. I stated that they should just buck up and give Saab their supplies, or risk losing considerably more money. The fact is, if production had continued with late payments, Saab would have at least been able to pay their bills, albeit at a delayed pace. I can’t comment on whether or not the suppliers themselves had enough credit facilities to float that payment window, and it’s clear some were on the brink as it was. But by dismantling the supply chain the way this break did, it created much larger issues for both sides, that can’t really be ignored. Argh.

      • Indeed. It can be very complicated for a company like Saab in this situation. If they are too open, the suppliers can get scared and run away. If they are too closed, the suppliers can get scared and run away.

        Too much communication is almost always bad, in the UK at least; being ‘difficult to get answers out of’ is usually better than being honest about cashflow problems, because the latter cannot be ignored by the responsible supplier.

        In this case, it seems that Saab were probably damned either way. But it is still a shame that VM couldn’t persuade them all of his ability to move the ship forward and keep them all on board.

    • Why did not the SAAB management see this coming – they burned a lot of cash at a fast rate and sales did not meet expectations at all

      Of course they saw it coming. That’s the whole point, the intention has all the time been to move the whole business to China. There are no other ways to explain and describe the situation Saab is in today. The Saab company today will be going default and bankrupt very soon, matter of weeks or months. This is the only solution, if not, Saab would never have treated its suppliers like they do today. VM will make Saab bankrupt, write off the debts off course in the default and sell/move the factory and machinery to China for restart of the production over there. The question is if he will be able to use the Saab brand in the new production?

      Continued production in Trollhattan is out of the question, there is absolutely no logic in that since the Saab brand in Europe and US is more or less dead as for mass production.

      • Clever you…
        It’s good to know that someone has all the answers.
        Maybe you could help out the US government?

      • Lets assume you’re right – but what about the IP in the hands of GM?
        Unless GM accept full transfer / usage of these IP controlled products there is nothing to sell to China or any other party for that matter?

        And the Ip controlled by SAAB remains under the controll by the bancrupcy court – in the event of an bancrupcy.

        And the EIB loan that have preference to all securities and collateral…….

        Bancrupting the company doesnt make sense since the Swedish goverment will have to cover the defaulted loans to EIB – by selling and managing the assets – this will deny VM or any other party access and controll of this process.

        It might very well be that financial wizardry behind the scenes and the lining up of an asset / technology transfer as you describe it, is the main reason for EIB / The Swedish goverment to block or stall certain options. Who knows?

        And if the SAAB management mistreat and burn their suppliers – how could they expect these suppliers to support a reborn SAAB in a another set-up in China?

        With thousand of parts and hundreds of suppliers – it’s not done in a coupple months….to replace them or find new suppliers.

        Moving a full production line – reinstall it in another country and establish a supplier base take years, not mention the complications and delays risked by a planned bancrupcy process of which you have no controll.
        I find hard to believe that the suppliers, distribution network and loyal customers would endure this process.

        So actually VM will not be in the drivers seat anymore, should your scenario take place.

        This should be a just as good argument against this scenario as is general business conduct and etics shown your usual shareholders – employees, suppliers, dealers, customers etc

        Any chance of picking up SAAB cheap once they are already in bancrupcy is a very risky game – whats to be sold, production line, IP, brand name, distribution network?

        Whats left once the Swedish Goverment steps in and secure the collateral for the EIB loans?

        • A very good reply to Leeloo.
          Saab has to survive in the short term to be able to survive in the long term. I hope the chinese parners will help to ensure this if it can’t be done in any other way.

  15. A win, win for Saab.

    • Hardly a win win for Trollhattan though. Add to the fact there is no way in a billion years SAAB AB will ever let a Chinese company use the name. I wouldn’t buy a Chinese Saab. No thanks!

  16. Tens of thousands of new Saabs to build? Wouldn’t that intefrer with the traditional four month summer vacation? ;)

    No, just kidding, This is really the kind of news that we need, next after any kind of news telling that the huge EIB road block is somehow finally removed and production ready to start again. Fingers crossed…

    I don’t worry about moving Saab to China or Russia. Getting into those markets and getting much needed investments and, in the future, more cashflow from there is just great. :)

  17. Just read:
    Zhejiang Youngman Lotus Automobile Co., Ltd. will consider making an additional investment in Saab AB to help the troubled automaker out, disclosed a senior executive for the Zhejiang-based company yesterday. SAAB is here to stay. Period.

  18. They will need the extra money… This is just in:

    Published: 15:53 CEST 26-07-2011 /Thomson Reuters /Source: Swedish Automobile N.V. /XAMS: SWAN /ISIN: NL0009816248

    UPDATE ON SAAB AUTOMOBILE

    Zeewolde, The Netherlands, 26 July 2011 – Swedish Automobile N.V. (Swan) announces that Saab Automobile AB (Saab Automobile) has delayed payment of the wages to its white-collar employees as some of the funds that were committed by investors were not paid in time to effect such salary payments. Saab Automobile is taking all necessary actions to collect these funds and continues discussions with various parties to obtain additional short-term funding so that the payments can be made.

    Swan will update the market of any new developments.

    – Ends –

  19. Zeewolde, The Netherlands, 26 July 2011 – Swedish Automobile N.V. (Swan) announces that Saab Automobile AB (Saab Automobile) has delayed payment of the wages to its white-collar employees as some of the funds that were committed by investors were not paid in time to effect such salary payments. Saab Automobile is taking all necessary actions to collect these funds and continues discussions with various parties to obtain additional short-term funding so that the payments can be made.

    Swan will update the market of any new developments.

  20. I sense ‘positioning’ by VM once again and adding leverage to his discussions with Youngman & Pangda to raise much needed short term capital. Worked once, worked twice, can he pull it off a third time? Hope so….

  21. Wow! Didn’t realize he has a new baby, I wish him & his family good health & luck!

  22. Let’s hope he takes better care of the new baby. :(

  23. Each of these international hooks up and manufacturing agreements is certainly different and unique depending on the specific deals and the parties involved. Having said that, I look at Volvo and can’t help but think they are thriving under their new ownership. While it may change in the future as Volvo’s product line is updated and renewed, it doesn’t seem to me that Volvo has lost its own heritage while under Chinese ownership. I suspect that the Chinese parents may take parts of Volvo engineering, manufacturing and distribution network to further their own Chinese made products, but thus far at least, there has been no attempt to undo the Volvo and Swedish born engineering, manufacturing and overall product philosophy of those passengers vehicles which bear the Volvo name. In short, no one looks at a current Volvo and thinks of it as a Chinese car and in fact it isn’t. That seems to make good business sense for the Chinese parent company because it plays off the most valuable assist of Volvo’s which is the brand identity known worldwide. In that regard, I can only hope that SAAB’s Chinese partners would take the same course of action and allow SAAB to be SAAB while benefiting from their association with them to better create a separate domestic Chinese product that itself is different from what will be created in Trollhättan.

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