China Covets Saab And Volvo

by Bertel Schmitt

Published: September 9th, 2009

China has a booming car market, the biggest of the world. Their car exports on the other hands, of which the world is dead afraid, are a joke: China exported a trifling 190,000 vehicles in the first seven months of this year, down 58 percent from 2008. Adding insult to ingrained rivalry, India out-exported China in the first half of 2009. China is mad as hell and won’t take it anymore. They do what they have to do: Buy foreign brands in earnest. Today: Saab and Volvo.

China’s FAW will help Koenigsegg to come up with the money to buy Saab, Sweden’s Dagens Nyheter reports via Reuters. GM signed a deal last month to sell its Saab car business to Koenigsegg. Eyebrows went up over the financial wherewithal of tiny Koenigsegg, and the raised brows haven’t come down since. Time for some shuteye: FAW, better know as the Chinese joint venture partner of VW and Toyota , can solve Koenigsegg’s troubles out of petty cash.

We wouldn’t be surprised if FAW has been in the background all along. They have lots of experience with western companies, and could have used Koenigsegg as a stalking horse. FAW is also a fierce competitor of SAIC, also a VW joint venture partner. FAW could get some GM technology via Saab, and get even with SAIC. SAIC is deeply involved with GM. However, “a source with knowledge of the situation” told Reuters that SAIC might also pitch in and take a passive stake in Saab. Are FAW and SAIC together on this one? Or competing as usual? Mysteries of the Orient ….

But it’s most likely all wrong, because our own Leif Eriksson reports from Sweden: “According to Dagens Industri, a Swedish business paper, Christian von Koenigsegg has now confirmed that it is BAIC who will take a minority post in Koenigsegg Group (KG). KG will own 100% of Saab Automobile. This will solve KG’s problem with financing the deal without trying to hassle an (extra) loan from the Swedish government. Next step is to get approval for loans from the EIB (European Investment Bank) and a guarantee for these loans from the Swedish government.” BAIC is most likely still reeling from getting shunned during its attempt on Opel. Getting it’s hands on Saab will be some consolation. We know, “BAIC, SAIC, it’s all fawking Chinese to me.”

As if on cue, Geely confirmed that they are seriously bidding for Ford’s Volvo. Their petty cash is a bit pettier than state-owned FAW’s. Privately owned Geely “may need help from a state-owned investment firm.” Gasgoo writes.

Gui Sheng Yue, CEO of Geely, said that Geely wants full ownership of Volvo. He confirmed that they are too small to go it alone and will likely team up with a state-owned investment company. Gui said the Volvo deal would offer a good opportunity for the Geely Group to expand its international profile and overseas sales growth. He’s right on that.

Bertel Schmitt

Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.

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2 of 36 comments

Jmo on Sep 09, 2009
How do free-market ideologues square the success of China’s government run industries with the belief that anything government touches always fails? Wow - you really don't know much do you? http://en.wikipedia.org/wiki/Chinese_economic_reform

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Anonymous on Sep 09, 2009
How do free-market ideologues square the success of China’s government run industries with the belief that anything government touches always fails? Isn't this precious. First of, free markets and free trade WORK, they generate peace AND prosperity that Mao-styled Commies cannot even DREAM of. China was a basket case under Mao, but under the realist, common-sense PRO Market DENG, it porospered. And even today, which are the few failing Chinese Businesses? All of them are state-owned large dinosaurs where nobody has any incentive to be efficient and succeed.

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