China Buyout Watch: SAIC Sets Sights On Saturn

by Bertel Schmitt

December 12th, 2008 7:52 AM

china buyout watch saic sets sights on saturn

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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Brush on Dec 12, 2008

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Pch101 on Dec 13, 2008
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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