Monday Morning schnitzels Snippets

Time to catch up with a few of the stories floating into my inbox whilst I’ve been travelling.
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The Wall Street Journal has an article that I can’t see as I’m not a subscriber. The headline says enough, however….
Access to GM at Question in China Bid
The undelying premise here is that BAIC previously bid for Opel and were unsuccessful, reportedly due to concerns about intellectual property. How true that actually is, we may never know.
But if GM did rebuff BAIC on technology grounds, then the big question is whether or not GM can have any sort of Veto in the Saab transaction.
BAIC, remember, haven’t done a deal with GM here. They’ve done a deal with Koenigsegg Group, who are now party to a binding share purchase agreement.
If all goes through, then BAIC would get some level of access to GM technology through Saab’s current model line.
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Do you remember this car?
SaabCarparkMysteryCar.jpg
The car we’re referring to is the one to the left…… the 9-3 with the black wheels and extended wheel arches, etc. There was a lot of theorising in comments to that post about what the car could be.
Today I’ve heard from a Djup Strupe based in the US who’s spilled the beans on exactly what it is (or was, more accurately).
What we were looking at there is a test mule of a Cadillac BLS-V. A car that will never exist.
What’s a trifle annoying about it is that it was fitted with the kind of powertrain that many of us wish the Turbo X would have had from the beginning.
The engine in that mule is basically a working version of the conceptual engine mentioned in press materials for the Saab Aero-X. That is, a high-feature V6 with twin turbos and putting down around 400hp and 500nm of torque.
The vehicle was apparently in development until the BLS was ditched. Rumour is that it’s not going to feature in any vehicles, but the other rumour is there’s another vehicle, in Trollhattan, with that engine fitted for some initial evaluations.
That vehicle plan will likely go the same way as the BLS plan. But it’s interesting to know. I’ll have to keep an eye out for it later in the week.

Media reaction to the Koenigsegg-BAIC deal

With so much criticism of both Koenigsegg and Saab in the Swedish media, it was always going to be interesting to see the reaction of the press to the announcement of Beijing Automotive’s involvement.

As was noted by a few in comments, they’d have no right to complain and seemingly little reason to protest. Koenigsegg asked Swedes for the money and were told to go jump. So they did.

ctm has been kind enough to collate a number of the Swedish reactions and michael H was good enough to prompt me towards an editorial from Auto Motor and Sport, which I’ve Googletrans’d and reproduced at the end.

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Actually not that many editorial comments on the announcement. Journalist were obviously expecting some juice stuff to scare the kids with, but got a much more low-key and sensible deal. Here’s the few prominent I could find:

di.se (business newspaper)
Interviewed the usual susp.. I mean, “experts” who says that it could be a good thing if it works (d’oh), but that there are lots of uncertainties. In other words, the same cold-reading, open-ended crap they usually produce in their so called analysis.

e24.se (business website)
One of the experts also interviewed in di.se now says that it is a milestone for the automotive industry at large and that it is an excellent solution for Saab… No need to worry about the jobs in Sweden!

gt.se / expressen.se (regional newspaper / national tabloid)
Jan-Erik Berggren: “How could GM allow this?” Koenigsegg’s license deals with GM responsible for GM accepting BAIC. But it’s not over yada yada yada. They need EIB loans and that could be a tough process.

svd.se (national newspaper)
Jonas Fröberg: “Is Saabs future secured? Not yet. It’s just a MOU and before a signed contract there are no guarantees.” EIB loans yada yada yada. It’s not something that was planned, it’s a last minute desperate solution. Positive on that BAIC is the partner and that it’s only a minority stake.

In general, I note three things.

1) Extensive coverage, but mostly matter-of-fact stuff with the press release, pictures, interviews with CvK, positive quotes from the unions and Government. No doomsday headlines so far, but rather a media coverage that I feel generates a positive spin on the brand name…

2) Feels like there is a surprise that it was BAIC. They can’t dig up dirt on them, can’t show any EuroNCAP tests with crappy BAIC cars, can’t deny them working with Daimler for 30 years…

3) Some die-hard pessimists try to spoil the party with no EIB loans yet, not a signed deal yet, we don’t know what they want, jobs will be moved to China, how come GM accepted this and not for Opel… Still, several things can’t be ignored even by them: Saab has only a small plant that is one lean machine and obviously secured for the European production, BAIC are buying only a minority stake and not controlling Saab, and access to the Chinese market could prove to be a cash cow.

My thanks to ctm for the local look!!

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And now to the editorial from Auto Motor and Sport.

For what it’s worth, Auto Motor and Sport and TTELA have been the two news services that have always kept a balanced reporting stance when it comes to Saab stories. They haven’t gone hunting for so-called experts to provide damaging fodder for their stories. Instead, they’ve kept a positive frame of mind, reported the problems when they’ve occurred and reported the real news in an accurate manner.

My hat is off to both publishers.

The following Googletrans is of an editorial written by AMS’s Chief Editor, Alrik Söderlind, and I think it sums up the enthusiast’s thoughts pretty well.

The Saab affair seems to be in port – my initial analysis is extremely positive. I can not see a better arrangement for Saab and its employees.

China is a fantastic country, but also scares. The political system we ridges and culture is almost impossible to understand for a Swedish trygghetstillbedjare.

But: Chinese companies owner of the Swedish car industry is the current trend. In the case of Volvo Geely Automobile, I am still very hesitant. The founder Li Shufu is admittedly an extremely polished entrepreneur – but it is the same as the legal owner of the Volvo? What I heard from various quarters is Geely Automobile, the people who visited Sweden is not entirely easy to understand. And having a Chinese company as the principal owner of Volvo? Well.

As I understand it, BAIC may have a number of votes in the Koenigsegg Group, but not a majority role. This means that Saab will be “guided” from Sweden.

In the case of Saab, I can not see a better partner – even though I really is not a connoisseur of BAIC. (Started a collaboration with AMC in 1983 and now has partnerships with Mercedes Benz, Hyundai and some 20 component manufacturers and is expected to build over 1.1 million cars this year. It is no small undertaking).

The Chinese market is growing extremely rapidly, Saab must of course there, and one has a partner who can kick and produce new Saab 9-5 is ideal.

New 9-5 has also the right rear seat dimensions to suit the Chinese people – we do not need to build an extended version.

BAIC is of course also in great need of skilled development engineers, all the Chinese automakers want to “catch up” western. Thus, it is not farfetched to think that Saab engineers may have lots of development work. That means Saab can stick with a large well-trained development organization – which of course will benefit future Saab cars.

On the other hand I do not think there is any reason to cut car production in Sweden, Trollhattan plant is efficient and close to the European market.

With the new approach has therefore Saab plants in Europe, in Mexico (Saab 9-4) and in a few years in China. It means hedge funds.

A Chinese partner also provides a strong future-proofing, the Chinese government is doing everything it can to help Chinese companies at the expense of the foreign Joint Venture manufacturers.

So: Congratulations Saab!

And to all the skeptics who last year demanded that Saab will be closed: ( “Do not throw good money after bad”, and “Saab has never made a profit and will never do it”) I can only say: how does it feel now ?

Certainly, the future will be extremely tough and no one can know if Saab really survive in the long term.

But the pessimists do not build the future I want to live in.

Now it feels good.

Yes, it does.

Unions pleased with the BAIC inclusion into Koenigsegg Group

The following is a Googletrans from an article at TTELA.
I’ve included it for several reasons….
First, it’s good to see that the unions are on board with this transaction and so pleased with the outcome. They have their finger on the pulse in Trollhattan and their reactions are always a good one to watch.
Second, the article has a lot of good general information about the situation, including quotes from various key players.
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Unions in favor of Chinese BAIC becomes part owner
China Beijing Automotive Industry Holdings (BAIC) is a partner in the Koenigsegg Group, which will buy Saab Automobile, according to a statement of intent. From the union side are you in favor of the deal.
For the employees at Saab Automobile, it feels very good to prospective owners of Koenigsegg Group now has cards on the table on financing, according to unions.
We have known that the money is there, but it’s next owner who must go forth with it, “says Paul Akerlund, chairman of the IF Metall Club at Saab Automobile, the TTELA.
Speculation surrounding the financing took off three weeks ago, when Koenigsegg told the government that it was three billion.
– That was a negotiating overtures to put pressure on the government. But it was very stupid.
Both Paul Akerlund and Union steward Annette Hellgren feel safe in the Chinese Beijing Automotive Industry is a minority shareholder in Koenigsegg Group.
– There are always concerns about Chinese owner, who with our neighbor in Gothenburg. With this the presentation we do not have that discussion – it feels good, “says Annette Hellgren to TTELA.

Read moreUnions pleased with the BAIC inclusion into Koenigsegg Group

My 2 cents on the inclusion of BAIC into the Koenigsegg Group

Finally, the Koenigsegg Group appear to have all the pieces in place.
The makeup of the group has changed significantly since their nomination as the preferred bidder for Saab, just a few months ago in Geneva.
Since then, they have conducted their due diligence testing, Mark Bishop has left the group, they have formulated a new business plan, signed a binding Share Purchase agreement and finally, attracted new investment to the group and convinced the Swedish Government of their financial stability.
Who said they’d never make it?
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When a Chinese company was first raised as a possible new owner for Saab (oh-so-long-ago now) it sent shivers down the collective spines of the Saab faithful. And rightly so, I think.
Call it fear of the unknown or whatever, the fact is that Saab’s heritage as a Swedish company is ingrained in its DNA and is an essential component to its future success. Design and production must remain Swedish – of that there is no doubt.
BAIC’s inclusion as a minority shareholder in the Koenigsegg Group, however, is a welcome addition. It really does seem like a win-win-win.
Koenigsegg Group gets the investor they need to take the transaction forward. BAIC get access to technical development and maybe even a new brand to promote in their home market in the future. Saab – they get to live another day – maintaining their Swedish roots and culture – a fact for which I’m sure we’re all pretty thankful.
I heard just a little about the respective Chinese bidders from some people on the ground in Sweden in the early stages of the Saab sale. I won’t repeat the impressions that were passed on, but I can tell you that I’d rather be in Saab’s shoes right now instead of Volvo’s. Both Chinese bidders made an impression but from what came through to me (which was very little actual info, just impressions) those impressions were diametrically opposed – and we got the good ones.
I don’t know the BAIC people at all but if they’re bulding Benzes for the country that buys more S-Classes than any other in the world (i.e. China) then they must be doing something right.
Nothing has been mentioned about it today, but I think we’d all better get used to the fact that all going well, there will be Saabs made in China in the medium term. I think those will be primarily for the Chinese domestic market but I would be too surprised if some other part of Asia were served from this region as well. Given the difficulty of making a profitable small car, your collective wish for a Saab 9-1 could also come true as long as it’s OK to have strings attached. I’m just thinking out loud here.
BAIC are not likely to be pulling any strings here. Saab now have one of the most efficient plants in Europe and some of the automotive sectors best engineering minds as well. BAIC are a player in what could be the world’s biggest automotive market, consistently, starting as early as the end of this year. They are going to be learning from Saab – that’s going to be one of the biggest payofffs in this investment.
The good news as far as I’m concerned is that Koenigsegg Group have been able to prove their many detractors wrong and that Saab will get a real chance to prosper and flourish.
There’s plenty of hard work left before that can happen, though.
Saab still have a business plan being tested by the EIB. They need to get EIB approval, Swedish government guarantees, and have the whole plan approved by the European Union.
They’re not out of the woods yet. But at least now they have a map, a compass, and a packed lunch for the journey.
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Related articles:
Press Release – Koenigsegg and BAIC sign memorandum of understanding
About Beijing Automotive Industry Holding Co

About Beijing Automotive Industry Holding Co (BAIC)

BAIC are the new stakeholders in the Koenigsegg Group and will therefore be part owners of Saab in the future.
Here’s some background information about them:
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The website URL is not exactly easy to memorise: http://www.bqkgdjw.com/
They are holding company owned by the Beijing Automotive Import and Export Corporation.
Government owned.
BAIC have joint venture operations building Mercedes Benzes, Chryslers and Jeeps, as well as Hyundais. They also build and market their own range of cars.
BAIC were one of the original bidders for Saab, but dropped out late in the process to (unsuccessfully) place a bid for Opel. It’s my understanding that they were one of the final three bidders for Saab at that point, and their place at the table was (re)assumed by Merbanco.
BAIC’s CEO is a guy named Wang Dazong, who came to the company a few years ago from GM’s joint venture partner, Shanghai Automotive (SAIC). Dazong earned a PhD from Cornell University in 1985 and then joined General Motors, where he worked his way up the foodchain, finally being appointed VP Development of SAIC in 2006.
The Chinese market is still growing at an exponential rate, although the government has urged many companies to stem their planning and make sure it’s sustainable. Consequently, BAIC has trimmed its growth targets for the next three years, aiming for production of 1.5 million units in 2010.
BAIC were recently talked about in terms of expanding into Europe, looking at factory sites in Lithuania. It’s unknown at this point whether they’re still considering such things, and even if they are it may well be totally irrelevant anyway.

Koenigsegg Group and BAIC, sitting in a tree…..

Enter the Dragon…..
The following is a press release shown jointly on the GM Media and Koenigsegg websites:
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Koenigsegg Group AB signs MOU with Beijing Automotive Industry Holdings Co. Ltd (BAIC) regarding SAAB Automobile AB
Koenigsegg Group AB has signed a Memorandum of Understanding (MOU) with Beijing Automotive Industry Holdings Co. Ltd. (“BAIC”) to explore growth opportunities in the Chinese and international markets for the products of SAAB Automobile and BAIC.
Under the terms of the MOU, BAIC would become a non-controlling minority shareholder in Koenigsegg Group. Koenigsegg Group will own 100 per cent of SAAB Automobile AB. The intention is to conclude an agreement later this year. Due to confidentiality agreements signed, further facts cannot be discussed at this time. The Swedish Government has been fully briefed on the MOU.
“This is an important step on the road to a new SAAB Automobile. We have a solid business plan, an important partnership and we are now in a position to go ahead without any governmental financing,” said Christian von Koenigsegg, CEO of Koenigsegg Group AB.
Koenigsegg Group now focuses on the ongoing discussions with the Swedish National Debt Office about the government guarantee for the loan with the EIB that SAAB Automobile has applied for.

Wednesday morning snippets – BAIC and cash for clunkers

Autocar have a special bit on Saab in their print pubication this week. UK readers might want to check that one out as I know that Hilton Holloway has recently visited Sweden in person so there should be some juicy stuff in there, in addition to the 9-5 stuff they published earlier in the week.
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News reports started swirling again about Beijing Automotive being interested in Saab. This was thanks to a (big publication out of China) Gasgoo report that mentions the following:

Beijing Automotive Industry Corp (BAIC), the local partner of Germany’s Daimler in China, may bid for General Motors’ Saab unit after its attempt to acquire Opel looks unlikely to succeed

BAIC were one of the original three suitors for Saab a few weeks ago, but seemed to lose interest when they put in a last-minute bid for Opel. I haven’t heard anything of them since that time from any sources.
My take: This is weeks-old news and personally, I’ll not spend any more time with it. It’s just one paper dredging up some old news and a bunch of others following.
One of the Dagens papers in Sweden has a far more interesting (and as far as I can see, accurate) story saying that Saab people are now in Switzerland and in final discussions with their three real potential buyers: Renco, Koenigsegg and Merbanco.
I’d love to be a fly on the wall in that room!!
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And with that meeting in mind, Autocar has published a story online stating that Koenigsegg, in a partnership of some type with the Swedish government, will be the winning bidders for Saab.
I’m quite unsure about this, especially given Maud Olofsson’s recent mumblings, and the PM’s as well. I can’t see the government taking any risk with Saab other than loan guarantees to the right bidder.
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The US house of reps has just passed the cash for clunkers legislation.
From Autoblog:

…..if your car gets 18 mpg or less and you trade in for a new vehicle the achieves at least 22 mpg, you receive a $3,500 voucher, or $4,500 if the mileage of the new vehicle is 10 mpg higher than your previous heap. SUV, pickup truck and minivan buyers are eligible for a $3,500 voucher if their vehicle gets at least two mpg higher than their trade-in and $4,500 if the vehicle gets five mpg more than their older model. The vehicle has to have been insured for the last year and there is no trade-in value beyond the voucher. The program is also available for leases. Dealers are required to provide proof that the vehicle (1984 MY or later) has been crushed or shredded, and the government estimates that around 25 million vehicles are eligible.

So if you’ve got an old(ish) clunker Chevy out in the back yard, this might be the time to cash it in for a new Saab.
There are plenty of good incentives around.

Opel still open to Fiat – Fiat still interested in Opel

If you’re taking an interest in the mergers and acquisitions world for the first time – like me – then it’s really intriguing how all these things work.
Last week, stories ran around the world saying Magna had bought Opel.
Earlier today, we heard that the German government still considers Opel to be up for grabs if companies want to come in with a higher bid.
Now, we hear that Fiat are still interested in Opel, and they might even have some support from the Italian government behind them.
From Automotive News:

The Sueddeutsche Zeitung quoted sources at Fiat as saying that if the GM-Magna talks were to fail, Fiat would resume negotiations over Opel. German government sources confirmed the information, the Munich-based paper said.
The newspaper also said China’s BAIC, which makes Mercedes-Benz cars in Beijing in a joint venture with Daimler, could also bid again.
Fiat and BAIC were passed over when General Motors and the German government chose Magna International early Saturday as the preferred bidder for its Opel/ Vauxhall unit.
Germany has stressed that other bidders, including Fiat and BAIC still would have a shot if they improved their bids.
“The process is still open to all the bidders,” government spokesman Ulrich Wilhelm told reporters in Berlin on Wednesday.
After being criticized for doing nothing to help Fiat’s bid, Italian Prime Minister Silvio Berlusconi said on Wednesday his government would be willing to intervene with Germany to support another Fiat bid if the automaker wanted.
A German official told Reuters that representatives from BAIC met members of the government on Tuesday and made clear they would “seriously consider” a more detailed bid if talks with Magna failed.
The German government has an interest in keeping up the pressure on Magna until a deal is closed that fully satisfies Berlin’s demands.

And yes, the BAIC that they mention as building Mercedes Benzes in China is the BAIC that was interested in Saab.
So whilst Saab have said that they’re currently in discussions with two parties, there’s clearly room for previously interested parties to trump those two existing bids. That could be via more money or better conditions being attached to their bids.
Saab want to get this deal done soon. I hope those that are interested have put their best foot forward and that all parties are doing their jobs as best they can for the best outcome.

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