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.