Unless your F5 key isn’t permanently stuck to your keyboard, you might not have heard that Saab is in talks with three Chinese manufacturers with the aim of an immediate cash injection. What exactly is the Saab management team trying to negotiate? According to Bloomberg, there are at least three goals:
- Get quick cash to restart production
- Gain access to the Chinese market to sell and market their vehicles in a more direct way
- Joint-venture with a Chinese company to produce Saabs in China.
On the first point, Saab has come up with various plans, all of which have either dragged on due to complications with the EIB, GM, or any number of other factors. A joint-venture with a Chinese manufacturer can bring with it an immediate liquidity injection through a sale or licensing of technology. This mutually beneficial arrangement helps Saab survive and allows the Chinese company access to world class engineering, safety, and AWD technology that could catapult it ahead of its competition. If you’re not familiar with the new rules of the auto industry that Victor Muller likes to talk about whenever he gets a chance, they have changed. By leveraging their superior technology, Saab can be a power player in the segment which gives them clout.
While many of you might loathe the fact that Saab might be selling out to the Chinese, lets think longer about just how beneficial such an arrangement could be. On the second point of access to the Chinese market, Saab could immediately have access to a dealer network in China. Companies like BMW, Audi, and even Buick fare extremely well among Chinese consumers because they carry with them a certain mystique and reputation for being better than domestic brands. Saab could naturally stand apart and has a great chance of doing well in China, but without proper distribution channels, they don’t have a shot. By elevating a partner domestic brand in China, they can also help to kill off some of the competition on the lower end of the segment (think Chevrolet, VW), while leaving Saab to compete against premium brands. This lets each company chase their own niche.
On the third point of producing Saabs in China, my stance is that if Chinese production is good enough for Mercedes, BMW, and Audi, it should be fine with us. As much as I’d love my car to originate from Sweden, the truth is if you read a label on a new Saab you’ll see that parts are sourced from all over the world already. So long as Saab engineering and management stays in Sweden and the company keeps its headquarters and spiritual identity in Trollhättan, I could care less where my car is built so long as it trumps the competition in quality and style. If you’ve been keeping track of Swade’s adventures in Sweden over on Inside Saab, you’ll see that he recently attended a meeting with suppliers and engineers that helps cement these jobs in Scandinavia by investing in new innovation for weight reduction. That said, all indications are that any production in China would be intended for the domestic Chinese market, something that makes a lot of sense given that they’re now the largest auto market on earth.
With those main points addressed, let’s focus on just who the background of these automakers.