Beijing Auto Woos Volvo

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.