Beijing Auto Woos Volvo

Bertel Schmitt
by Bertel Schmitt

Beijing Auto, a.k.a. BAIC, is not giving up on its aspirations for owning a western brand. They came a little late in the race for Opel, and were used as bogeymen to pressure everybody into an 11th hour deal ( which is in doubt). Just two days ago, BAIC was rumored to covet Saab. What else is for sale? Ah, yes, Volvo. The WSJ has it on good authority that BAIC “has expressed interest in acquiring Volvo, becoming the second Chinese company to eye the Swedish unit of Ford Motor Co.” The first Chinese company wooing Volvo of course is Geely—maybe.


According to the WSJ, Geely has already done due diligence, inspected plants and books, and Geely is considered as the front runner in the Volvo Open. However, Geely denied it is bidding for Volvo. Geely said in a notice to the Hong Kong stock exchange in mid-May that “the company has not submitted, and has no plans to submit, any bids concerning the takeovers of ‘Volvo’ or ‘Saab’ as stated in recent press articles.”

As far as BAIC goes, they are going to Gothenburg. The WSJ has it that “a team of executives from Chinese government-owned Beijing Auto was expected to visit Volvo’s Swedish headquarters as early as Thursday to meet with its executives and tour its research-and-development and manufacturing facilities.” Tsk, tsk: BAIC is not owned by the “Chinese government.” It belongs to Beijing’s government, as in the municipality of Beijing. Can get confusing sometimes, we know.

Beijing Auto is experienced in working with foreigners. In 1983, they entered a joint venture agreement with AMC to build the Jeep Cherokee. They beat out SAIC and VW by a few months for the title of the first joint venture with a foreign car company. The Jeep JV, which is still on-going, led to a JV with Daimler to make Mercedes C-Class and E-Class cars. They also have a JV with Hyundai.

Bloomberg picked up the story later, adding, “Ford is seeking about $2 billion for Volvo, less than a third of what it paid for the maker of sedans and station wagons a decade ago.” Bloomberg calls BAIC “closely held.” Closely held they are.

Volvo’s JV partner in China of course is Changan, which may or may not still be in the race. Should either Geely or BAIC get Volvo, then Changan would have to JV with the successful bidder. The Chinese auto industry, which sports some 100 automakers, 14 of them considered serious ones, is supposed to consolidate, as per the wish of the Chinese government. One of these consolidations may as well condense around Volvo. Or not, as they say around here.

Bertel Schmitt
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.

More by Bertel Schmitt

Comments
Join the conversation
2 of 6 comments
  • Iamwho2k Iamwho2k on Jun 11, 2009
    BTW, this possibility is why Ford would be strategically foolish to sell Volvo to a Chinese buyer. +1 Don't do it, Alan! You think you might need the few (hundred?) million dollars selling Volvo right now, but think of the billions you will be losing in the future by giving the Chinese an engineering gift of this magnitude. If you have to sell, however, don't settle for less than the $6 billion Jacques Nasser paid for the company PLUS every cent Ford has so far lost on Volvo. Don't sell to the Chinese!! Figure out a way to lure Renault into the bidding, as they also wanted Volvo a few years back.
  • Jconli1 Jconli1 on Jun 11, 2009

    come to think of it... why hasn't Volvo AB stepped up to buy it back at a firesale price?

  • 28-Cars-Later I guess Santa showed up with bales of cash for Mitsu this past Christmas.
  • Lou_BC I was looking at an extended warranty for my truck. The F&I guy was trying to sell me on the idea by telling me how his wife's Cadillac had 2 infotainment failures costing $4,600 dollars each and how it was very common in all of their products. These idiots can't build a reliable vehicle and they want me to trust them with the vehicle "taking over" for me.
  • Sobhuza Trooper Like fusion power, the I.D. Buzz is only 30 years away.
  • Lou_BC "respondents between 18 and 80 years old" Basically anyone deemed an adult who might be allowed to drive.
  • Lou_BC They will do fine if they come up with some cool sedans ;)
Next