The Truth About Cars » Yougman http://www.thetruthaboutcars.com The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. Wed, 23 Apr 2014 16:01:59 +0000 en-US hourly 1 http://wordpress.org/?v=3.8.1 The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars no The Truth About Cars editors@ttac.com editors@ttac.com (The Truth About Cars) 2006-2009 The Truth About Cars The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars » Yougman http://www.thetruthaboutcars.com/wp-content/themes/ttac-theme/images/logo.gif http://www.thetruthaboutcars.com Saabstermath: Of Vultures And Phoenixes http://www.thetruthaboutcars.com/2011/12/saabstermath-of-vultures-and-phoenixes/ http://www.thetruthaboutcars.com/2011/12/saabstermath-of-vultures-and-phoenixes/#comments Fri, 23 Dec 2011 14:01:48 +0000 http://www.thetruthaboutcars.com/?p=423372

 

If you are worried that you may have to live without daily episodes of the Saab Soap, now that the company is bankrupt, worry no more. Or in the words of Saabsunited: “never ever give up!” The show will go on.

Today, Automotive news China [sub] reports:

“Zhejiang Youngman Lotus Automobile Co. says it has purchased Saab Automobile’s Phoenix architecture despite its failure to acquire the automaker itself. Youngman already has set up a company in Sweden to develop new models based on the architecture, said Rachel Pang, Youngman’s spokeswoman and daughter of Youngman President Pang Qingnian.”

The trouble is, nobody in Sweden or elsewhere has heard about it. As far as Sveriges Radio knows, the discussions between Youngman and the bankruptcy administrators  are ongoing. No sale of nothing has been announced. Victor Muller’s and Vladimir Anntonov’s propaganda organ The independent enthusiast site Saabsunited implores the faithful:

“Don’t believe any report that shows up. The media is desperately looking for things to write about and comes up with, to say the least, strange news. Like with the rumours about Phoenix being sold to Youngman seperately we will try to figure out the truth behind it and keep you updated ad good as possible.”

To me, the story comes as expected. A few days ago, I predicted:

“I wouldn’t be surprised if a license for the PhoeniX platform won’t suddenly show up at Youngman, pledged as security for some of the money that had been paid. Then, GM will say that Phoenix IP is mostly theirs, and there will be a protracted and messy lawsuit.”

Whoever thinks the Chinese paid a few million out of the goodness of their hearts is gravely mistaken. The way we (and other Swedish media) understand the deal is that there was a loan, with the Phoenix platform pledged as collateral. Youngman most likely takes the position that the loan was defaulted upon, and the collateral is theirs. This can be a long, expensive, and messy lawsuit until this is sorted out, and in a bankruptcy, who has the nerves and money for that?

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Our Daily Saab: The Detroit Court Says No http://www.thetruthaboutcars.com/2011/12/our-daily-saab-the-detroit-court-says-no/ http://www.thetruthaboutcars.com/2011/12/our-daily-saab-the-detroit-court-says-no/#comments Sun, 18 Dec 2011 14:10:10 +0000 http://www.thetruthaboutcars.com/?p=422731 Tomorrow is he day when the court in Vänersborg will decide whether to lift creditors’ protection, thereby throwing Saab to the circling wolves. Even a bankrupt Saab wold have a slim chance of survival. However, there is a higher court that holds Saab’s fate in its hands. That court sits in Detroit and is called GM. That court has spoken. The verdict is:

No.

GM has the rights to the technology in its hands, and without that technology, Saab is just a name. A name which Saab AB, the defense company, would like to get back as quickly as possible anyway. GM had said no to several proposals so far. The latest deal that had been cooked-up involves selling a subsidiary to China’s Youngman. Rather naively, Muller seems to think that this way, a cooperation of GM is not necessary.

GM is rather miffed by ”the various new investment/sale/loan proposals that have been floated by Saab in recent days, including statements that inaccurately suggest that the consent of GM is not required for them to move forward.”

Through is spokesman James R. Cain, GM made the following statement today, deliberately ”in advance of the hearing” on Monday:

“Saab’s various new alternative proposals are not meaningfully different from what was originally proposed to General Motors and rejected. Each proposal results either directly or indirectly in the transfer of control and/or ownership of the company in a manner that would be detrimental to GM and its shareholders. As such, GM cannot support any of these proposed alternatives.”

Something else will happen on Monday: The unions representing Saab workers will check the bank accounts whether the unpaid salaries have come in. No money, no support by the unions for a continuation of the reconstruction process, union representatives told the Göteborgs Posten. That money would have to come from Youngman. With the verdict from GM, Youngman would be crazy to pay.

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Or Daily Saab: A Wale Of A Botched Sale http://www.thetruthaboutcars.com/2011/11/or-daily-saab-a-wale-of-a-botched-sale/ http://www.thetruthaboutcars.com/2011/11/or-daily-saab-a-wale-of-a-botched-sale/#comments Mon, 07 Nov 2011 11:32:55 +0000 http://www.thetruthaboutcars.com/?p=417011

GM’s China chief Kevin Wale poured a huge bucket of ice-cold water over hopes that China’s Pangda and Youngman will rescue Saab. The deal needs to be approved by the Chinese government, the European Investment Bank, the Swedish government and – GM.

Wale told Reuters today:

“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.”

In the last few days, Saab had been busy spinning the story that the Chinese government is all for the deal and that GM won’t dare to mess with it. Reality looks different.

Last Friday, GM spokesman Jim Cain told everybody who asked:

“GM would not be able to support a change in the ownership of Saab which could negatively impact GM’s existing relationships in China or otherwise adversely affect GM’s interests worldwide.”

The technology that is in current Saabs is all by GM, and is shared by many models produced in China at GM’s joint venture with SAIC. Even the new PhoeniX platform is not completely GM-free. The Chinese buyers want technology, and GM made it clear that they will not get it.

Just in case the subtlety of the GM comments went unnoticed by Saab et al (a crowd that tends to live in a parallel universe at times), the pouring of cold water went transcontinental. Later in the day, GM spokesman Jim Cain told Reuters and everybody who asked:

“Although General Motors is open to the continued supply of powertrains and other components to Saab under appropriate terms and conditions, GM will not agree to the continuation of the existing technology licenses or the continued supply of 9-4X vehicles to Saab following the proposed change in ownership as it would not be in the best interests of GM shareholders.”

Translation for the dense: We will sell parts to all comers with cash, but we will never agree that technology we own will be sold by someone else to someone else, dig?

Saabsunited still needed clarification, and Jim Cain provided it:

“As you can see in our statement, the issue of supplying components and power train and other things to Saab is something we’d be open to continuing under the right conditions, but when you talk about the 9-4X and the technology licenses, that is something we have to manage so carefully because it potentially impacts us in markets all over the world. We need to be able to control our own technology in order to be successful for the long term.”

“It’s a decision that we’ve made and wanted to be as clear as we possibly we could. How that impacts the way things develop from this day forward is something that Saab and Pang Da and Youngman have to discuss. Our piece has always been related to our role as a supplier and as a technology licensor.”

As reality began to sink in, Victor Muller claimed he had known it all along. In an interview with Sweden’s TTELA, Muller said:

“I warned about this all the time.”

“It required no great knowledge to predict this. I warned the Chinese all along that they wanted something that would not go down well at GM.”

This must have been a different Muller than the one that had said on Friday, October 28, when quizzed by Sverigesradio about the viability of the deal:

“This is very good news for Trollhättan, very good news for Saab.”

And when he was asked whether GM would agree, Muller had answered:

“This is up for the buyers and General Motors to agree on, but I am very confident that that will be achieved.”

No word about warning the Chinese all along that this won’t work. Of course, this was on the Friday before the creditors meeting, where Saab received the stay of execution, based on the very good news.

Having been administered ample amounts of cold water all day, Saab finally issued a terse press release:

“Swedish Automobile N.V. (Swan) and Saab Automobile AB (Saab Automobile announce they have taken notice of a press statement issued by General Motors Company (General Motors) today regarding the proposed sale of all shares in Saab Automobile and Saab Great Britain Ltd. (Saab GB) to Pang Da Automobile Trade Company Ltd (Pang Da) and Youngman Automotive Group Company Ltd (Youngman). 

Swan and Saab Automobile acknowledge the position taken by General Motors and will now discuss with Pang Da and Youngman to see whether a structure can be agreed which is acceptable to all parties concerned.”

Or as Muller had said to TTELA: “It’s back to the drawing board again.”

What Muller seems to be drawing is the old plan of Youngman and Pangda taking a hair less than 50 percent in Saab, with Muller back in the driver’s seat. He thinks that will avoid the change of control problems a 100 percent sale caused. The problem is that the Chinese don’t want Saab, they want technology. The Chinese government has given a clear mandate to its industry to get as much technology as possible under Chinese control.

A control problem avoided at GM creates a control problem in China. No technology, no deal.

There simply are too many parties with diametric interests who have to say yes to this deal. Saying no or nothing is always easier.

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Our Daily Saab: Dark Clouds Gather Around Saab’s White Knight http://www.thetruthaboutcars.com/2011/11/our-daily-saab-dark-clouds-gather-around-saab%e2%80%99s-white-knight/ http://www.thetruthaboutcars.com/2011/11/our-daily-saab-dark-clouds-gather-around-saab%e2%80%99s-white-knight/#comments Thu, 03 Nov 2011 12:35:25 +0000 http://www.thetruthaboutcars.com/?p=416714

 

Pangda, one of Saab’s presumptive white knights, could itself be facing financial difficulties. Both the staid government-owned China Daily and the more outspoken Taiwan-based China Times report strange financial going-ons at PangDa. Says China Times:

“Shareholders and securities analysts are scratching their heads over how a top automobile marketing group in China managed to “burn” a huge fund of 6 billion yuan (US$944 million) in just six months. Many have speculated that Pang Da Automobile Trade Co has shifted to financial leasing services to cope with stalling car sales caused by the government’s credit-tightening regulations.”

According to China Daily, $659 million had been “used to repay bank loans and supplement working capital.” China Times reports a lot of the money as lost and says:

“Corporate executives have dodged the questions about what happened to the capital from the initial IPO fund.”

Further digging revealed:

“The group has been saddled with financial leasing operations exceeding 2 billion yuan (US$314.8 million), although the company did not include this information in its IPO prospectus.”

Even after the record IPO, Pangda finds itself short of funds.To rectify this, a corporate bond issue of nearly $600 million has been approved.

For years, Pangda has operated a successful auto financing operation in the usually credit-adverse China. It is a risky undertaking.  In the “Jidong Mode” of car financing, named after the predecessor company of Pangda, the dealer guarantees the bank loan of the car. For years, PangDa has been running a giant Buy here, pay here operation, replete with GPS transmitters in cars, company-own credit enforcers and repossessions. When a customer defaults, PangDa pays off the loan, repossesses the car and sells it to recoup part of the loss. This model worked fine during times of easy money, but those times are over. Says China Times:

“Securities analysts said the newly disclosed financial information means that the business model followed by the company is no longer as effective, as the central government has squeezed credit to fight inflation and dampen speculative real estate purchases.

Growing numbers of enterprises in China have complained of the increasing difficulty of getting bank loans as financial institutions have also found themselves short of funds.”

Sound familiar?

A lot of these reports are based on an in-depth piece in the printed version of China’s 21st Century Herald, which keeps good relations with the top echelons of the auto industry.

With money getting scarcer by the day, it did not help that Pangda had already written off “bad debts of 45 million euros which were paid to SAAB as the latter may become bankrupt.”

 

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Our Daily Saab: Chengdu Noodles http://www.thetruthaboutcars.com/2011/10/our-daily-saab-chengdu-noodles/ http://www.thetruthaboutcars.com/2011/10/our-daily-saab-chengdu-noodles/#comments Fri, 14 Oct 2011 08:55:41 +0000 http://www.thetruthaboutcars.com/?p=414703

 

There was no better place to clear up some questions about Saab than in Chengdu. After all, nowhere can you find the CEOs of all major Chinese carmakers and government officials all under the same roof, or even at your dining table. There also was no better place to get entangled in the messiest web of facts and fiction. Here is some local color:

When on stage, nobody made any public announcements or mentions of Saab. Even when a lone moderator of a group discussion dared to say that “Saab certainly is a hot story,” he was ignored by Pangda’s chairman Pang Qinghua, who was one of his panelists.

Did I say no one? I lied. Representatives of BAIC, from Chairman Xu Heyi on down, never missed a chance to weave Saab into public comments. It was usually branded as “cooperation.” Once, the “cooperation” mutated to “joint venture,” but that could have been a slip of the simultaneous translator. BAIC had bought tooling of previous generation Saabs, and appears to be quite happy with what they received.

Any remarks coming from Chengdu were made, as they say, “at the sidelines of the conference.” When Chairman Pang had said “now that Saab is in bankruptcy protection, all previous pacts are invalid. It’s up to the court to decide. It can also find a new partner,” he had said it. The quote still sits on the little black recorder Reuters reporter Fang Yan had stuck in Pang’s face. There was no room for a “misunderstanding.” Both are Chinese and literally saw eye-to-eye. The later “what I meant …” correction was no correction. It was damage control.

Interestingly, Chairman Pang was the lone Chinese voice that warned against introducing new brands to a China that already is knee-deep in brands. Ever the boss of a car dealer, he warned that new brands require huge investments (also) from dealers, that customers treat unknown brands with suspicion and reservation, and that his dealerships don’t have the room to show all these new brands. Those were not the words of someone who is about to introduce another unknown brand to China. Saab has no brand equity in China.

When word spread that Youngman had (finally) sent money to Saab, it was quickly noted that nobody had said when, how much and for what. On Wednesday, Youngman had denied any comment. Conference participants were divided in their comments. Some called it downright “crazy” to send money to Saab under the circumstances. Some noted that paying a little money, even if it is paid for not completely clear intellectual property, establishes an interesting legal position that could take many years to challenge, especially in a Chinese court. Intellectual property cases already tend to be lengthy. By the time it is sorted out who bought what, who cheated whom, and who misunderstood  when, that PhoeniX  platform probably will be ready for cremation.

As for the NDRC decision, there was no one at the conference that would not have questioned the sanity of a person that hopes for an impending decision. People who have seen the NDRC in (in-)action suggest immediate medical care when someone thinks that the NDRC will approve the Saab deal within days, or even months. At a conference that was very serious, predictions of  quick NDRC action always was good for laughs. It’s the end of October 14 in China, for when a decision of the NDRC was expected and predicted. There was none.

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