Why are Youngman so keen on Saab?

Last week autonewschina.com featured an interesting piece written by their managing editor, Yang Jian. It gives a few insights how Saab is seen from a Chinese view. It also indicates that Youngman’s interest in Saab in not that fresh, they already looked at the brand for quite a while.

Why are the Chinese so keen to acquire Saab?
Yang Jian | 2011/12/16

SHANGHAI — Once again, liquidation looms for Saab Automobile AB as a Swedish court decides whether to end the company’s credit protection.

And once again a Chinese suitor — this time Zhejiang Youngman Lotus Automobile Co. — is trying to save the brand.

This week, Youngman wired $5 million (32 million yuan) to pay Saab’s immediate tax expenses. Earlier this year, Pang Da Automobile Trade Co. paid 401 million yuan to buy a fleet of Saab vehicles.

But why are these companies so keen to acquire the deeply troubled Swedish brand? The answer is that Pang Da and Youngman understand the value of a global brand.

Read moreWhy are Youngman so keen on Saab?

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

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.

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

Chinese getting serious about Saab

Updating the sales figures for June and reading the last press release from Saab is like being in a pitfall for days and hearing the leader coming to you. You know you are still in the pit but you will come out soon.
And while the rope leader keeps falling, yes it is a deep pit; I would like to share my thoughts on this last press release.

Read moreChinese getting serious about Saab

China: While Uncertainty Remains Over Future Deal, Saab Must Focus On the Present

  • Future hurdles to setting up the Manufacturing Joint Venture (MJV) between Saab, Pang Da, and a Chinese domestic manufacturing partner include getting past the NDRC. However, Pang Da has suggested that they will be asking the NDRC themselves who they would recommend as a partner– casting doubts over the reports that suggest the NDRC would get in the way.
  • No matter what happens with the future MJV, Saab’s focus continues to be securing short and medium term financing to ensure a smooth production in Trollhättan and continued development of the NG 9-3. The distribution agreement with Pang Da for Chinese importation of Saabs is a needed cash infusion, and sets the stage for future cooperation. In the meantime, Victor Muller recently suggested that his focus will return to Trollhättan and the EIB loan. “After the Pangda deal is implemented, my focus is going to be finding a new CEO and getting a commercial loan to take out the EIB,” Muller said. “We cannot be dependent on the government or the EIB for whatever we do with the company. We have been paralyzed, we cannot move left or right.”

No doubt the Chinese auto market is complex and difficult to navigate, certainly for a small automaker from Sweden. The deal between Swedish Automobile (formerly Spyker) and Pang Da has multiple arms, the first are solely based on distribution and sales. Pang Da as one of the largest dealership groups in China as we know already sells a number of brands. Several news reports filed over the weekend with more expected to come this week suggest that Saab’s future partnership to produce cars for the local Chinese market will meet resistance with China’s regulatory agencies. Two articles emerged in particular, one from Bloomberg and the other from Automotive News that cast doubt over the future of the MJV Saab and Pang Da intend to form. But should we even be worried about deals that were crafted to take place a year or two from now when there are much more pressing matters happening in Sweden now?

Read moreChina: While Uncertainty Remains Over Future Deal, Saab Must Focus On the Present

Victor Muller’s Essential Optimism

A lot of positive press has come out of the 9-4X test drive that took place over the last four days in the Capital of what will be its largest market, the United States. Journalists impressions are forthcoming, but from what I’ve heard most were impressed and consider it a true competitor in its segment. We’ll certainly be covering all of their accounts in great detail here in the next few days. But in the hours since the reporters packed their bags and went home to write their articles, it appears that the first waves to be felt from the event are more about the management and company itself than the products which it sells. In regards to this, I’d like to take a minute to debunk and rectify what I see as a fair bit of sensationalism.

Read moreVictor Muller’s Essential Optimism

SU Mythbusters: Chinese Partnerships

This is the start of a series I plan on doing from time to time that will debunk common perceptions about a particular topic of interest to Saab. I’m sure you all have had to counter someone’s claim that Saab is bankrupt, was killed off by GM, or maybe that it’s part of a communist scheme to take over the auto industry (I kid you not, I’ve heard that now twice). We at SaabsUnited aim to give you the tools to shoot down those crackpot theories with real data, backed up by research and facts to prove that Saab is not only in a great position to capitalize on years of development, but already succeeding on their turn-around as an independent automaker.

This inaugural article intends to show that Chinese partnerships, joint-ventures, and even part ownership is not only common in the auto industry, but a necessity if a brand intends to compete in the global market. In the wake of Sweden’s Chinese Ambassador’s Lars Fredén’s initial report on Hawtai, I feel it’s more important than ever to explain the hard facts about China’s auto industry (stay tuned for a post tomorrow that goes more in depth into Hawtai in a much more holistic fair way than you’ll see from Mr. Fredén’s letter home). In January 2009 for the first time ever, China became the number one consumer of cars in the world, and went on to take the title for the entire year. Can you guess what the number one automaker in China in 2010 was? Some domestic automaker you say? In fact, the Volkswagen Auto Group had the highest sales in 2010, when one combines VW, Audi, and Skoda sales, a staggering 1,886,902 cars were moved on Chinese soil. Hot on their heels is General Motors, who between Buick, Chevrolet, and Cadillac sold 1,052,434 units. To that end, nearly every single automaker in the US has representation in China through a joint-venture. The last two exceptions have been Jaguar/Land Rover and of course, Saab. To their credit, JLR have been in talks with Great Wall Motors and expect China to be their third largest market in the next few years. What this all means is that you can’t be a player in the global auto market without a Chinese partner. Saab’s deal with Hawtai motors shows that it takes the changing landscape very seriously.

A person familiar with Saab, Nick Reilly, who is head of GM’s International Operations in Shanghai, told thetruthaboutcars.com just how up to speed China is in terms of auto production.

Many Chinese plants are more modern than U.S. plants, where modernization clashes with unions. Reilly agrees:

“Their rate of progress in terms of technology, innovation and quality improvements is really remarkable, and we are totally underestimating the technological advances they are making. The gap has completely shrunk. It is a tenth of what it was and a quarter of what we expected it to be. I think everybody thought we had 10 or 15 years before China became competitive, and that is just not true.”

Here’s a quick snapshot of each major automaker and their Chinese partner, by sales in 2010. For those who knew little about the Chinese auto market before this week, let these statistics be your wake up call.

Volkswagen Auto Group (SAIC-SVG/FAW): 1,886,902

General Motors (SAIC): 1,052,434

Hyundai-Kia (Beijing Hyundai Motor Company-BAIC): 1,036,036

Toyota (Guangzhou Automobile Industry Group – Guangqi Toyota Automobile): 775,245

Nissan (Dongfeng-Nissan): 681,360

Honda (Guangzhou Automobile Industry Group – Guangqi Honda Automobile): 646,355

Peugeot-Citroën (Dongfeng, but soon to be Chang’an): 373,366

Ford (Chang’an): 304,103

Suzuki (Chang’an): 275,672

Mazda (Chang’an)225.378

BMW (Brilliance): 62.550

Mercedes-Benz (BAIC, BYD 2013+): 58,382

Jaguar/Landrover (in talks with Great Wall Motors): 26,114

Volvo (owned wholly by Geely): 17,090

For skeptics looking for a background on each automaker’s connection to their Chinese partner and additional analysis and insight on the Chinese market, find out after the break.

Read moreSU Mythbusters: Chinese Partnerships

The Day After the Hawtai Deal

Yesterday was a big day for Saab. They gained a critical partner that not only helps them stay alive in the short term but also helps them establish a strong foothold in the largest auto market in the world. To say it was a big day for Hawtai would be an understatement.  And it was an even bigger day for Hawtai, who gets the most valuable commodity of all in its home market– credibility. They scored the deal that a dozen other automakers wanted, which should give them new respect among consumers and competitors.

So how will Saab turn the tide of bad press, skeptical consumers, and financial uncertainty?

Read moreThe Day After the Hawtai Deal

On Chinese Partnerships

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:

  1. Get quick cash to restart production
  2. Gain access to the Chinese market to sell and market their vehicles in a more direct way
  3. 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.


Read moreOn Chinese Partnerships

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