By on December 12, 2008

It’s high time to start a new TTAC category: China Buyout Watch. It’s good for at least a post a day. The latest: “SAIC is likely to be the potential buyer of Saturn,” says Gasgoo after reading the print edition of China Automotive Review. They cite an email letter that has told Saturn dealers that interested buyers were ready to buy Saturn. A Detroit-area dealer for Dodge and Saturn said GM was seeking buyers in China. According to the report, GM tries to package Saturn and Hummer together. A price has not been named.

After last night’s Congress cruelty, there might be government help after all. From the Chinese government.  In China, the interest of Chinese automakers has grown far beyond the rumor stage. Today, government-controlled China Daily (THE English speaking news outlet for the official party-line) runs a long article on the Chinese aspirations to snap up juicy bits of Detroit. Actually, as China Daily sees it, it’s Detroit that’s making the advances to China. The headline says it all: “Big 3 look for Chinese medicine.”

After issuing the appropriate CYA cautionary notes, as in “Chinese companies should exercise caution when it comes to acquiring US assets,” China Daily lists a virtual speed-dating session between Chinese and Detroit automakers …

“Chang’an Auto is believed to be in talks with Ford for taking over the Swedish luxury brand Volvo.”

“UK’s Mail had earlier reported that Ford might sell Volvo to SAIC Motor Corp, China’s biggest automaker.”

“There were also reports yesterday that Chery intends to buy assets from Chrysler, with the help of a 10 billion yuan loan from the Export-Import Bank of China.”

“Dongfeng Motor Corp, China’s third biggest carmaker, was also reported last month to be considering asset buys from General Motors Corp.”

Folks, take my word for it: If China Daily writes something like this, then the matter is way beyond the idle chatter stage. There will be denials, or milquetoast “no comments,” but if it’s in China Daily, something is definitely in the bush.

By the way, the China Daily Group also owns the 21st Century Business Herald, which first broke the story last month that Chinese automakers are interested in taking over assets of GM and Chrysler. For a behind the scenes account of China Daily, go to the blog appropriately titled “Leaking State Secrets.”

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22 Comments on “China Buyout Watch: SAIC Sets Sights On Saturn...”


  • avatar
    John R

    It has begun!

    -Shang Tsung, (Mortal Kombat, 1995)

  • avatar
    MattVA

    What Exactly would they be buying? Merely a brand name? All Saturn designs would still be owned by GM because they’re originally Opels… Would SAIC share these with GM Europe? Would Opel be thrown into the deal too?

  • avatar
    montgomery burns

    What exactly would you get by buying Saturn? A name and a dealer network and then what do you do? Continue trying to sell rebadged Opels?

    I can see the Chinese buying manufacturing and engineering capabilities in the US and perhaps move some manufacturing of low-end cars to China.

    MattVA: you beat me to it.

  • avatar
    luscious

    Ain’t THAT a peach!!!

    GM’s “IMPORT FIGHTER” being BOUGHT (LOCK, STOCK, and BARREL) by not the Japanese, but the CHINESE!

    But hey, those Saturn SL-2’s really WERE great cars!! Trust me!

  • avatar
    aunt jemima

    Good questions.

    GM closed Spring Hill, GM owns the hybrid tech used in Saturn vehicles, they use Opel designs…

    So besides the brand name, dealers, and maybe some marketing and engineering staff, what do the Chinese get?

    Also, given where the Saturn brand is today, do the Chinese have the management skills to grow the brand in an unfamiliar market?

  • avatar
    KalapanaBlack

    aunt jemima :
    December 12th, 2008 at 8:21 am

    Good questions.

    GM closed Spring Hill, GM owns the hybrid tech used in Saturn vehicles, they use Opel designs…

    So besides the brand name, dealers, and maybe some marketing and engineering staff, what do the Chinese get?

    Also, given where the Saturn brand is today, do the Chinese have the management skills to grow the brand in an unfamiliar market?

    That’s exactly it. They’ll come in with mediocre products at first that sell only on price, but before long (if the Chinese’ learning curve is any indication), we’ll have Hyundai, Part II. Only it’ll happen in five years instead of fifteen.

  • avatar
    RedStapler

    Its a good move.

    They have the potential to pick up a dealership network for pennies on the dollar compared to what it would cost them to build out.

  • avatar

    Also, given where the Saturn brand is today, do the Chinese have the management skills to grow the brand in an unfamiliar market?

    Sometimes, it helps to have no management skills at all in an unfamiliar market. I forgot who said it, but someone said that as total babes in the woods, they will rely on American ad agencies. In the past, this produced classics. When a rigid, war-torn VW came to America, a young DDB created classics like “Lemon,” or “Think small.” When the Japanese came, hilarious stuff like “From those wonderful people who brought you Pearl Harbor” or Joe Isuzu of De La Femina fame happened.

  • avatar
    RetardedSparks

    So, what do all those iron-clad dealer franchise contracts (that eveyyone is so terrified of) say about selling the brand to a wildly different company and having every model, part, etc changed overnight? I think they’d be entitled to bail, and they would.
    As noted, Saturn exists only as a marketing channel for products GM otherwise owns. They have no design or engineering facilities, and even plants that are called “Saturn” are just GM by another name. Would they even be included in a deal? Assumed the Chinese get no product in the sale, all they are buying is the brand identity. Sure, some people will be comforted buying a “Saturn” even knowing it’s Chinese, but if GM couldn’t sell 9000 a year with good product, what’s that really worth?

  • avatar
    Geotpf

    RetardedSparks :
    December 12th, 2008 at 9:41 am

    So, what do all those iron-clad dealer franchise contracts (that eveyyone is so terrified of) say about selling the brand to a wildly different company and having every model, part, etc changed overnight? I think they’d be entitled to bail, and they would.

    Well, GM wouldn’t have to buy them out then, would they? In any case, those contracts aren’t with GM-they are with Saturn. I’m sure there’s nothing in those contracts that prevents GM from selling Saturn.

    As for what they would be selling, I’m sure there would be a transition period where GM would sell existing Saturns to the new, Chinese-owned company. Keep in mind that no Chinese company has anything that currently meets American crash test and emmision requirements. So there would have to be a period where everything is more or less business as usual until they build such.

    (Oh, and Saturn’s sales in the past 11 months were 175,434. Their sales last month were only 8,130, though. Both numbers are pretty bad, but not Saab-bad.)

  • avatar
    menno

    Actually, it truly makes sense for SAIC to buy Saturn.

    Here’s the thing few people realize; SAIC already owns a controlling interest in a South Korean auto manufacturing group, Ssangyong. Ssangyong builds some “interesting” cars, and (pardon the pun) is large on – large luxury cars (their new Chairman, the prior car was literally a license built reinterpretation of a Mercedes), and SUVs. Not exactly the stuff of dreams for the US market 2009/2010; more like 2000 maybe.

    But the point is, a REAR WHEEL DRIVE Saturn Chairman with a V6 (about 3 1/2 litres), which is well engineered enough to export to the US, would be a good starting point for a new full Saturn line, as would versions of the Ssangyong SUV’s, some of which have diesels (there are at least three SUV’s, from CRV size to about Highlander size).

    Let’s also not forget that SAIC owns Nanking, which owns MG, and SAIC also owns Roewe which used to be “Rover” – and the old Rover 75 is now updated and a downsized version, I think the 550, is being exported to western nations from China.

    For the short term (assuming GM survives), SAIC/Saturn could actually buy current GM sourced vehicles (it’d take awhile to certify the Ssangyong cars and the Nanking/SAIC/MG/Roewe cars).

    SAIC also owns a portion of GMDaewoo, so could immediately start bringing in Saturn badged versions of the Chevrolet Aveo, and could (ironically) bring in Saturn badged South Korean GMDaewoo built versions of the CRUZE before GM could ever hope to tool up their US plants to manufacture them. (The Daewoo version of the Cruze was just introduced in South Korea – it is one size up from the Aveo, of course).

    Potentially, Saturn could have an all-new lineup within 12 months and could actually be viable.

    It just wouldn’t be American. However, it might actually allow “some” company (SAIC) to actually turn a profit and ensure that at least one of the better US dealer organizations survives the probable demise of GM.

  • avatar

    Sounds like plastic Saturns could be making a comeback.

  • avatar
    John Horner

    If SAIC buys Saturn and imports a Chinese made good-enough Corolla sized car that retails for $9,999 with automatic transmission & air conditioning they will sell plenty.

    GM, Ford and Chrysler selling the missing pieces of the puzzle to Chinese owners makes long term sense for the Chinese and short term sense for the ‘mericans. Hmmm, that means it will probably happen.

  • avatar
    Richard Chen

    Ssangyong Saturn Rhodius?

    It could be the new Outlook.

  • avatar
    porschespeed

    I wonder of they’ll start putting repair bays in Harbor Freight stores…

  • avatar
    tedward

    Sounds pretty good to me, GM gets to keep up the brand engineering (in the short term at least) but offloads the risk of actually selling the things to a foreign interest. I’d be really interested to see what a Chinese or Indian company does with Hummer. We might even get the small, diesel powered light pickups and off-roaders that Jeep is too stupid/cautious to give us.

  • avatar

    aunt jemima : So besides the brand name, dealers, and maybe some marketing and engineering staff, what do the Chinese get?

    That’s exactly what they want. They need the inroads, as the American consumers don’t take Chinese nameplates seriously (with good reason). Think Hyundai in the 80s.

  • avatar
    DweezilSFV

    There is nothing of Saturn to sell. Nothing.No dedicated plants, products etc etc etc.

    You nailed it RetardedSparks.

    Unlike MG Rover which had tangible assets the Chinese could actually use : dies, assembly lines,engines, etc, Saturn produces, engineers, designs nothing that isn’t all GM all the time.It has no “Saturn” factories. Spring Hill is now GM Spring Hill Manufacturing. It builds the Chevy Traverse.

    Unless the tools and dies for the S Series space frame and polymer panel molds are still extant in a warehouse somewhere, there’s nothing exclusive to Saturn for purchase. The ION ceased production in March 2007.

    Nanjing and SAIC have pretty much merged. The MG cars are already being sold in South America.

    Now if someone is suggesting selling the intellectual property and the patents for the S Series, the only thing the subsidiary produced independently of GM proper, perhaps there is actually something tangible to sell. What the value of a 20 year old platform, an oil burning engine and self destructing transmissions would be is questionable. I have read on the MG Rover Org site that the K Series engine’s head gasket problems have finally been by the Chinese.

    I guess they could do the proper fixes with the S Series for some emerging market….

    Even if the Chinese do have deep pockets, Nanjing and SAIC have their hands full relaunching the MG brand

    Dealers are independent franchises are they not? As such they cannot be “sold” out from under the franchisee can they ? Can someone explain how that would work ?

    Do the Chinese really want a 411 day supply of Astras, a Pontiac G6 derived Aura built in the same plant as the Malibu and G6 and the blue prints for a primitive econo box ? If GM can’t sell those cars, why would the Chinese want to try ?

    Maybe they plan on relaunching the ION……

  • avatar
    Pch101

    There is nothing of Saturn to sell. Nothing.

    Not true. They have a dealer network, a brand and a logo. To a company that has zero US presence and an unrecognizable brand, that can have some value. Maybe not much value, but some.

  • avatar
    DweezilSFV

    PCH101: wouldn’t that dealer “network” have to agree to be sold, since each dealership is individually owned ?

    “Saturn” doesn’t own those dealerships.And there are differing franchise laws in every state that would make a sale of the dealer ‘network’ costly or impossible. They would each have to be bought out wouldn’t they ?

    As I said, perhaps there is “intellectual property”,to sell but that is it.Saturn is so integrated into GM now it’s sort of like what happens to Vauxhall if Opel and it’s workers secede from GM as reported here on TTAC ?

    How GM and SAIC would untangle this snarl would wind up being as time and money intensive as closing Saturn down, I would think

    Saturn has nothing that has not already been absorbed by GM. Even the special union contract Saturn had with the UAW died as of Jan. 2005.

    They’d be better off waiting for Chrysler to implode. More bones to pick.

  • avatar
    brush

    SSangyong: All last generation Mercedes-Benz diesel technology, ugly by asian standards but solid rugged vehicles. Even still have cassette deck with cd players!
    check out the aussie range and the prices
    http://www.ssangyongaustralia.com.au/

  • avatar
    Pch101

    wouldn’t that dealer “network” have to agree to be sold, since each dealership is individually owned ?

    I haven’t read the franchise agreement, but probably not. The franchise agreement is between the dealer and some entity related to the parent company (which in this case is Saturn Corporation, a GM subsidiary.) If someone else takes over that entity, the agreement should be intact.

    In any case, you are taking an overly linear approach to this. Put yourself in this situation — if you were a Saturn dealer who was stuck with a big chunk of land, a dedicated cluster of buildings with limited uses, and a service department committed to serving a dead brand, and someone came along offering you a chance to survive, wouldn’t you take it?

    You just might. And that saves a company that wants to enter the US market a lot of trouble of getting a network set up.

    Take the long view. This is an attractive market for car makers. Chinese companies have a taint, so they would be particularly interested in getting an established US brand, even if that brand itself has substantial flaws.

    Buying Saturn is not a perfect way in, and the price would reflect that. But for someone in their shoes, it could be a preferable alternative to starting from scratch.

    They can get the R&D for their cars from who they want, so that isn’t a factor.

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