GM’s China chief confirms comments on the Saab deal

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Today a comment by Kevin Wale, who is president and managing director of GM’s China operation, appeared on Reuters. He basically confirms the statement we read on Friday. Here’s a quote from the Reuters article:

Wale reiterated a company spokesman’s comment that GM might block a deal by two Chinese companies to take over troubled Swedish carmaker Saab, in which GM still holds some preferred shares.

And further down…

Wale concurred on Monday, saying, “It doesn’t make sense for us to support any change that might adversely affect us. We use global architectures and those global architectures are used in a number of products we make at SGM.”

SGM, or Shanghai GM, also makes Cadillac models.

Reading those statements do they sound more like “there is a chance for this deal to go through” or “most likely we won’t approve it”? It’s up to you to judge that.

But on a personal note, I don’t believe that this is negotiation tactics by GM, this is clearly about business. As I mentioned in my comments on Friday I have a feel that there really is something in the contracts with SAIC that would make it difficult for GM to let the deal get through, even if they wanted. Quite clear that they don’t want another Chinese company (Youngman) to step into that for Shanghai GM very profitable market with the same IP. In my opinion the deal would have to change quite a bit to get approval from GM.

Can we blame GM for that? Not really. This is not just because GM wants to see Saab die as mentioned in some conspiracy theories, this is what almost every company would do in such a situation. I’m pretty sure Victor saw that coming and prepared for such a scenario.

53 thoughts on “GM’s China chief confirms comments on the Saab deal”

    • Wasn’t VM’s first comments that a 100 % takeover was unacceptable, because it would trigger some change-of-owner-clauses (which I assumed that GM-or-someone-else-won’-approve-that)? So perhaps he did not believe in te idea himself, but was under the pressure from others to let them have a go on it? (Just wikd guessing.)

      Anyway, it did keep the reconstruction going and buy him some more time to prepare for what to do if GM or someone else sais no,

    • I don’t see this as VM’s (or Swan’s) problem, primarily; it’s YPD’s problem, they are the ones that want buy Saab. As mentioned, around the time of the first offers, 100% of Saab, 19-22 October, he said that Swan thought that it would trigger all kind of clauses (apart from that the offer was too low, and demands were too high, as well). If true, then one wonders what might have changed during the last week of October. One thing is clear; they were forced to have something at the end of the month.

      It’s possible that YPD was encouraged to go for 100% by the NDRC; otherwise there wouldn’t be an approval from them. But clearly the Chinese parties, YPD and the NDRC, must know about GM’s business in the country, and they must know about the deal with BAIC.

        • I know that, but YPD has also to provide convincing arguments why the deal should be approved.

          http://sverigesradio.se/sida/artikel.aspx?programid=125&artikel=4773600

          Mycket återstår innan Saab blir kinesiskt. Och Victor Muller, Saabs vd, är orolig.

          – GM:s godkännande är verkligen avgörande och Youngmans och Pang Das insatser kommer vara inriktade på att framställa övertygande argument till varför affären borde godkännas, säger Muller.

          A 100% sale of Saab wasn’t Swan’s idea…; it’s the Chinese guys’ problem now to help Swan convince GM; I know it’s Swan selling, but it’s Y who’s desperately interested, for their own survival on the Chinese market (then it might be NDRC who’s hinted to Y that to get an approval they must go for 100%).

  4. Don’t worry, GM likes get its money as a share and or as supplier in the future. At least the gentlemens from GM have their own interests in China and all depends from Chinas Government. So wait they will take agreement.

    • and Jeff, this is no sarcasm. I’m just trying to tease you a bit since you gave us so many ridles and enigmas the other day… and I still try to solve them… 😉

  7. This is GM protecting its interest – BAIC have taken the old 9-3 and 9-5 models- any further deal would need their blessing (I would have thought) – how would you feel if you bought a job lot only to find it outdated by another deal with better tech and price a few months later?? Remember ALL chinese companies have a very CLOSE relationship with the chinese govt – as do GM. All parties must agree – and that looks difficult from here ……….

  8. Guys, why did GM sit on it until now, though? I don’t see how the timing is particularly strategic, but more tactical to inflate the price now that the deal is “on.”

    • Nobody bothered asking GM until now.

      VM tried warning people that GM could be an obstacle. The current development really should come as no surprise.

      That said, GM haven’t really been clear on what they are protecting. Many of you leap to the conclusion that they do not want to compete against their own technology. But I think a major issue is that Chinese companies have a reputation of not respecting IP rights.

      GM have a responsibility to make sure they know who they are dealing with. They have to find companies who won’t let the director’s cousin start making the same parts at a fraction of the price. Complete production tools have been known to ‘disappear’. I guess as long as the parts are manufactured elsewhere, GM should be fairly safe though, but they have nothing to gain by not being cautious.

      In short: We will just have to wait and see.

      • GM are currently selling 220 000 cars a month in china. They are not going to jeopardize that lightly. It’s no wonder they are being a bit circumspect, as they don’t want to get blamed for saabs demise, and have all that associated bad press.

        I suspect they will drag it out beyond nov 15 th without actually saying no and see what happens if the mou expires.

        Granted, VM said that the deal was subject to “shareholder approval” etc, but he also glossed over that and went on to say ‘he was delighted to bring Saab to a safe port’ and so forth.

        He frequently conveys things are a done deal, when they arn’t.

  9. If GM is not careful the gap will be filled and not by anything related to GM, it could be BAIC or Youngman exiting the Saab deal and going elewhere in search of a viable alternative to compete with SGM.

    just becasue you are a big car company in Shanghai does not mean peple will just buy your cars, especially if you are shown to kill of any brand diversity or potential in other brands you have connections with. People get a sense of that and will look elsewhere.

    to delay the approval woud actually damage GM more in my opinion-play ball and act nice and they may be able to partner up going forwards to mutual benefit.

    Why does GM constantly stifle opportunity rather than seize it?

  10. It’s simple – plan k, l, or m are the only way forward. VM and any other party committed to a successful resolution for Saab knew – knew absolutely – that this would not pass the GM test – why should GM sacrifice its own interests after all? So all along VM has known that the “Guy Detour” is going to prove to be a distraction and a tangent from the straight and narrow. Waste a few months, further erode the brand, spin everyones wheels. VM is too committed to the vision that had him help save Saab in the first place. This ain’t over yet – and don’t count VM out either – in a way VM could emerge as a tremendous entrepreneur for Europe – taking huge personal risks and not giving up in the face of stone walls, establishment, and apathy

    Doesnt Europe want a few like Steve jobs, elon musk, ..???

      • Sarcasm police back on the prowl here, TL :P. Don’t knock skn, his words are more telling than you think. The question is, in the above scenario if VM pulled Saab back into safer waters, would you still want to give him crap for the last 7 months or would you be amenable to giving him some props?

        • What??? Jeff, you find sarcasm in everything i write. That was NO sarcasm. AND I do not belive Steve Jobs or Elon Musk would have the stamina of VM.

          • Hmmm – now im Confused – 🙂 – but in any case Steve wins the stamina race – the man was working hours before he left us – I worked for him and this is not a knock on VM – just that I admire VM tremendously for sticking to what he believes in, waking up every morning, dusting off the crap that’s been thrown on him, and pushing forward. What did Steve say about “the crazy ones …”?

  11. I think SGM is saying:
    We hold the license to current GM IP for China. If you want your car (with the same IP) to be build in China, it will have to be build by us.

    • That puts limits on any financial deal Saab could get future investors interested in – im pretty much assuming that the pdym deal is dead in its current form, and that Saab needs a different partner

  13. There are ways around this problem. A deal could be made under Chinese law that all parts that contain GM IP can only be supplied by (S)GM and that, as soon as someone tries to circumvent that, the deal is off retroactively. Severe penalties could be included for infringement.

    Ivo

      • GM wants very much to create more space for the new Cadillacs, like the XTS and ATS, before giving Saab a lifeline in the premium space. You definitely have a point, but could they trust an unknown partner with a sketchy record with their tech?

    • Sadly, Youngman isn’t really mentioned in the same breath as SAIC, not to mention have a pattern of trying to reduce production costs by sourcing as locally as possible. They’re going to have a very hard time trying to satisfy the very very expensive list of demands GM has.

      • Jeff, have you seen the list of demands? Is there anything there you can share with the community? And: couldn´t a list of that sort be regarded as the starting point for negotiations?

  14. I think it all comes down to the Chinese govt. If they want this deal to happen, it will. If not, they will find a way to kill it.

  15. All this shows how good the plan was made by VM and how got it was checked and verified by Guy Lofalk. It seems that this had no future in the basic plan. They’re worth theire money. Doesn’t they really negotiated anything?
    BRIC strategy has no future with GM on board and in behalf of IP Saabs using. From BRIC B and C is used by GM. So Russia, Europe and the US must be the focus. India i’m not sure about. Someone different can import Saabs on his own to china, not PDYM.
    Saab needs a financial strong investor behind to ramp up sales in the old markets. The sales forecast can be made there. After the end of GM IP behaviors Saab can expand to china.
    And there will be chinas gov. Do they want a partner (cash out) with GM and others or do they want to make there own products and money? The next step comes with approval of chinas gov. EIB loan can be refinanced with another bank with PDYM in behind. So Saab needs some kind of deal with GM. And this will be again license stuff and cross licensing.

    • This isn’t about VM’s plans or efforts or thoroughness. It’s about the freaking “powers that be” who thought that they know better how to restructure swedish society – and under whose leadership the “Guy Detour” has happened. This was Guy and Co. acting with their same old agendas – “who needs the auto industry” and “nothing good can come of VM and Friends.” If anybody should carry the blame for “premature celebration” it is Mr GL and his friends. Saab have remained calm and composed with the “deal” but ALL their statements have warned “there is a long tough road ahead with GM, this is not a done deal” – without GL’s meddling, about now the Chinese would have shown their hand – either they would have invested along the lines of how the deal was originally struck, or they would have found a way to back out. This is now a temporary farce that everyone is forced to play out. For once, GM is not the enemy – it is the same old enemies that have stifled, snubbed, smothered, devalued Saab since “independence.”

      • Two links spring to mind…

        http://sverigesradio.se/sida/artikel.aspx?programid=125&artikel=3410243
        From February 2010. Shortly after the sale of Saab to Spyker, Jöran Hägglund (who represented swegov during the sales process) goes on record saying that Chinese ownership would be preferable.

        A year and a half later, the ex-minister Maud Olofsson still has not abandoned the China-track: http://www.dn.se/ekonomi/olofsson-saab-klarar-sig-inte-utan-kina

        I believe swegov’s affinity for Chinese ownership has been part of the reason why swegov never officially granted (or denied) Antonov’s bid for a stake in Saab.

        Which is sad, because as should be bloody obvious by now: It was never going to happen. GM went to great lengths to exclude potential Chinese buyers two years ago, and GM know perfectly well how to play a game of chicken with swegov.

        • Couldn’t agree more. The ONLY hope of a GM approval would be China, Inc. flexing its muscle on behalf of PDYM. I guess that could happen, but really? Slim chance.. This “deal” was DOA

        • Rune,
          it’s so uncool that is cool at the same time.

          EIB played the same game with Antonov. Now GM is doing quite the same with the Chinese.
          Do you remember a sentence saying:
          We always said that Mr. Antonov will not be allowed to be owner of Saab.

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