By on December 23, 2009

Hen hao! Picture courtesy flickr.com

GM netted a paltry $200m for the Saab technology it sold to China’s BAIC. So said BAIC to Reuters today, while desperately trying to keep a straight face. The money bought BAIC the rights to three vehicle platforms, two engine technologies and two transmission systems. A pittance, given the fact that developing a new car typically costs from $1b on upwards these days.

Granted, the IP for the 9-5 and 9-3, and the tooling to make them are not the newest, but you can trust BAIC to make the most of it. Interestingly, BAIC got what they desperately needed:

“The overseas technology takeover by BAIC is not only targeted at simple technology, such as manufacturing blueprints, but also the management systems that will enable BAIC to continuously develop and produce high quality vehicles,” BAIC said today at a Beijing news conference. That alone is probably worth the $200m.

Compared to BAIC’s investment plans, it is chump change. BAIC will invest $4.8bl in vehicle development and production over the next three years, Gasgoo reports.

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25 Comments on “BAIC Got Saab Technology On The Cheap...”


  • avatar
    Double97

    I wonder if I can get this kind of a deal if I buy a new Pontiac.

    • 0 avatar
      educatordan

      Buy one of the last remaining G8s at full price, recive the tooling for the Solstice FREE!!!! Come on down before 5pm today and we’ll throw in one of the last remaining Pontiac Aztecs for FREE!!!!! Never been titled!  0% GMAC financing for 72 months if you take delivery from dealer stock by December 31st!

  • avatar
    shaker

    There was a time when the unthinkable – a war with a 20 million-man (?) Chinese army – would strike terror into those who could contemplate such a thing.
    The slow dissolution of the world’s Intellectual Property rights by the Chinese Government/Business alliance could be construed as much the same – but the blood “spilled” will be economic power, which in a sense, may cause even more widespread suffering,  just spread out over time.
    For those in this country who feel that any efforts by our government to “redistribute wealth” will lower their standard of living — well, the rise of China, fueled by our consumerism and desire for cheap and plentiful goods (I’m guilty as well), will ultimately level living standards (raising theirs, lowering ours), and there’s no going back.
    The time for saber rattling is over – time to grow up and see the world as it is and what it  will be.

    • 0 avatar
      jet_silver

      You don’t get revolutions from starving people (China under Mao); you get revolutions from people who see, but don’t share in, rising prosperity.  Wealth-distribution inequality is enormous in China.  If the PRC government isn’t careful the whole thing is going to fall apart and they are right now in very deep water.   They have to make very sure there is enough improvement for everyone to keep the lid on.

  • avatar
    HerrKaLeun

    “The overseas technology takeover by BAIC is not only targeted at simple technology, such as manufacturing blueprints, but also the management systems that will enable BAIC to continuously develop and produce high quality vehicles,”
    someone pays for GM management system? Like do they have a patent on their GM-culture of lifers? :-)

  • avatar
    Rod Panhard

    BAIC will invest $4.8bl in vehicle development and production over the next three years, Gasgoo reports.
    Or about what GM was worth a few months ago. These guys in China are smart. They know that Saab’s cast-off technology is great stuff compared to what they’re making at home. Plus, they don’t really have to play “partner.”
    I also think they’re smart enough to know that Chrysler’s disappearance will happen, and at that point, it’s bargains galore!

  • avatar
    MikeInCanada

    “but also the management systems….”

    For anyone that has gone through a SAP or Oracle implementation just imagine the value to your company if you could have instead purchased a turn key ERP system – that had been tested and worked!
     
    While it’s easy to comprehend the value of physical assets, a fully functioning management, production, inventory system is just as valuable – if not more.

  • avatar
    Ernie

    It depends where the cash is coming from.
     
    Was this cash-on-hand, or is it investment capital/credit to buy something with the promise to produce?

  • avatar
    Pig_Iron

    This is very bad. Why doesn’t America see the thin edge of the wedge. The old folks say: A nation which can not make its’ own swords and ploughs, is soon defeated and starving.
    :-(

    • 0 avatar
      midelectric

      I wonder if the Chinese thought this after the British got a hold of their rocket designs.

    • 0 avatar
      Srynerson

      Uh, you do realize that Saab was a  Swedish company that got bought up by GM, right?  It’s not like Saab represents any particularly brilliant homegrown American achievement.

    • 0 avatar
      Ernie

      Well, our Subi was made in the US*, as was my Mazda . . .
      This is SAAB (and Volvo from the other thread) we’re talking about here . . . are we mourning sweden?
       
      -Ernie
       
      *By VIN -> if you don’t like the rating system, bother the gov’t about it.

  • avatar

    First they came to make nuts and bolts, and I did not speak out-because we were getting them from Mexico anyway….

    then they asked to provide simple parts, like distributor rotors, and I did not speak out for the same reason….

    then they asked to provide subassemblies, and I didn’t speak out because we’d spun off all that work to Visteon and Delphi, so we didn’t care if they took it in the neck and the Chinese price was killer good…and we were doing the design work back here….

    then they started doing their own design in addition to major components, and I began to worry…

    The design work was crappy but then the design work got better (steal from the best, buy what you can’t steal)

    now they’re making passable cars that will get better, my company is dying
    and the Chinese are eating our breakfast, lunch and dinner. …..

    But the prices were so good!

    Apologies to Pastor Martin Niemöller ….

    • 0 avatar

      And we have Union Labor to thank for that. They took every single opportunity to refuse working for realistic wages + benefits.
       
      Ex-Capitalist-Communists on one side end up feeding Ex-Communist-Capitalists on the other.
       
      The greater the osmotic imbalance(s) between theaters, the greater the pressure will be to resolve them.
       
      If I had the money, I would LOVE to pay for a bunch of Union toolbag *&%^-heads to take a tour of a few factories in China and survey the continent-sized Slave Army there, and force them to look their fate in the face if they don’t jump on fair-market-wages double quick time.
       
      Wait. That’s being optimistic.
      Who am I kidding? Corrupt, uneducated douchebags, organized by more corrupt, semi-educated douchebags, working for very educated avaricious douchebag idiots, would deny it all right ’till the end. The tools would probably just get pissed and make a few racist remarks about people being different from them.
      Governing dynamics? -Pshaw!!!

    • 0 avatar
      Kendahl

      In the 1970s, the Arabs were going to buy the entire world using the money we were paying them for oil. The worst case scenario was that they would force us to live under Islamic law or they would cut off the oil. Didn’t happen.

      The next one was that Japan would become the dominant economy in the world. For a while it looked like they were going to buy the entire United States using the money we were paying them for cars, televisions, etc. What actually happened was that they paid top price and later sold at a loss. In the 1980s, Japan was supposed to be close to perfecting computers with artificial intelligence; we’re still waiting. They did develop a high definition television system. However, it was analog and we made an end run by switching to digital.

      Fifty years ago, North America and Europe were far more sophisticated than the rest of the world. Europe was recovering from World War Two. The reason there were no Detroit auto plants in the third world was that the labor force there was too poorly educated to do the work. Now, the rest of the world is catching up. Their skills are good enough that they can build acceptable products. Because their standard of living still lags behind ours, they can undercut us on price. However, as their standard of living improves, that advantage will shrink. What the Japanese did to us, the Koreans and Chinese are now doing to them. Some day, it will be central Africa’s turn.

      Life is easy when you don’t have any competition. When that changes you are forced to adjust. Your choices are to work harder and smarter than the competition, which is difficult and not always possible, or accept a lower standard of living. What frightens me is that America, as a society, refuses to face up to this.

  • avatar
    no_slushbox

    On the cheap? GM deserves a lot of credit for getting a Chinese company to actually PAY for intellectual property. This may be the first time in history that a Chinese company has actually paid for intellectual property instead of outright stealing it or acquiring it for free through a joint-venture that the foreign partner will eventually be pushed out of.

    BAIC should be embarrassed that it paid any money at all for somewhat outdated GM platforms; Great Wall has acquired a number of Fiat and Toyota platforms for free (well, I guess they did have to pay for that laser measurement system).

    It’s kind of like if a mugger put’s a gun to your head and says “I’ll give you a dollar for that Rolex.” He’s going to get the Rolex so you might as well get the dollar.

    And “but also the management systems that will enable BAIC to continuously develop and produce high quality vehicles?” If any other auto executive said such crap people would see through it for the deal fluffing BS that it is. Great wonders Saab’s “management systems” did for GM. And there is no way that GM let BAIC in on any proprietary SAP, etc. management systems because GM doesn’t have the right to. BAIC is going to have to steal the ERP stuff from SAP on its own.

    Having legal-to-sell-in-the-West (i.e. not in violation of Western IP laws) cars will help BAIC, but what it really needed was a brand and dealer network.

    • 0 avatar
      Mr Carpenter

      How about this potential scenario:  “Old GM” sells off rights to the “Pontiac” brand (which it owns – it is NOT owned by “New GM”).  Geely uses a middle man to buy it (with “Old GM” supposing that it’s only for use on toys).  BAIC buys up the defunct Daewoo USA company in Compton, California (yes it’s still in business) – instant brand name, instant west coast parts distribution system, legal cars to sell and a few hundred “starter up” dealerships…. and start selling Chinese built Saabs badged as Pontiacs.  

      I bet more than a few ex-Chrysler and ex-GM dealers who’ve lost their franchises recently would be pleased to take on franchises in the many open areas, if they were not expensive.  

      Then, once sales increases to the point where they can do it, buy up the NUMMI plant in California and hire non-union guys and gals to turn out new Geely cars engineered on the bones of old Saabs.  If the BAIC people are going to play in the international market, once they get large enough, they should build cars close to where they are sold just like the other players. 

      A lot of women at my work (for some reason) swear by Pontiac brand… maybe it’s the local dealer?  (They are the best dealer group in the area – I myself have a different, Asian branded, US manufactured car that the same owners sell at a different store).   

      Folks who don’t think buyers might consider a “Pontiac” retailing at $15,000 to $20,000 using the technology and look of a car which until recently retailed (MSRP) for about double that, haven’t been to Wal-Mart, K-Mart, Target or other such place recently and must be living under a rock.

    • 0 avatar
      wsn

      It’s kind of like if a mugger put’s a gun to your head and says “I’ll give you a dollar for that Rolex.” He’s going to get the Rolex so you might as well get the dollar.
       
      No. It’s not like that. The sale of Saab is not forced. GM could just let Saab die. They must think it’s worth the effort to sell to BAIC.

      It’s more like an old watch that stopped ticking for a long time. The best offer is one buck from whomever. But you get the point. Either accept the buck, or throw it away or keep it.
       
      Talking about forced. The bailout of GM is forced upon Americans at the gun point. If you don’t pay tax on the bailout, you will be fined. If you don’t pay your fine, you house will be seized and sold. If you refuse to move out, police will force you out. If you defend yourself, you will be shot. So, yes, you are forced to bail out GM at gun point.

  • avatar
    mjz

    If you think that was a good deal, wait til you see GM’s after Christmas door-buster specials!

  • avatar
    TonyJZX

    let’s look at the flipside… GM are selling outdated technology from a company that hasn’t made a profit since the Reagan administration (correct?)

    they had one single buyer who put a lowball bid in

    if it was worth so much why didn’t GM get another buyer? why couldn’t they ask for more? why does GM even need $200 mil.? isn’t that like 2 weeks burn?

    And the comparison to Rolex… ridiculous… madam, I have an Rolex and you ARE no Rolex… Saab is at best a Cartier or some off brand that doesn’t sell in the bargain bin at Kmart

    in summary… old product not in demand, from a 2nd rate walking zombie company, sold by Government Motors for a pittance… bought by the 21st century superpower who really doesn’t need it but it’s nice to have anyway…

    If it was worth something Audi or one of the other FWD based makes would have bought it.

    • 0 avatar
      AccAzda

      I definately disagree..

      It has GMs filthy paws all over it, ntm Subaru.

      And any company (if you’ve noticed) that GM has tried to sell.. hasnt.

      Because the brand / company is tainted.

      SA.A.B is the remnants of some poor woman who was beaten and abused almost left for dead by her husband. Now put up to auction to live out the rest of her days.

      For people who dont know..
      They obviously dont know.

      But for those that do…
      Another BAAD pothole in the road.

      In other words..
      No one would buy Saab.. cause they are all better competitors, which is why SAAB is in this position.

  • avatar
    Kyle Schellenberg

    “Take the rest of Christmas off boys, turns out we don’t have to reverse engineer this thing after all.”
     
    Many here are missing the point.  Some have clarified that “management systems” don’t track which managers are naughty or nice, these are the program guts of how to run a company.  Getting a blank copy of the software (such as SAP) isn’t hard (purchased or pirated), it’s the analysis and customization of the product to actually do what you actually need; that can take years.  Was Saab’s operations tightly integrated with the rest of GM?  Knowing big companies (I work for one) I’d say not likely.
     
    Do these systems belie effecient methods of producing/marketing cars?  Possibly, but at the same time there’s a reason why some products have a secret ingredient because everything else about producing it is dead simple to knock off (like Coke or KFC chicken).  Getting an inside look at Saab gives BAIC a benchmark for how a major player does it, to determine what needs to change in their business model in order to penetrate all the rest of the world’s markets.  It doesn’t mean they’re going to run Saab the same way GM did.

  • avatar
    psarhjinian

    And we have Union Labor to thank for that. They took every single opportunity to refuse working for realistic wages + benefits.
     
    Oh, yeah, because participating in the managment-lead race to the bottom is such a hot idea.  For sure.  Sign me up for that sh_t.
     
    I don’t particularly like the people in organized labour, but I can at least get behind the ideology of betterment for the middle class rather than driving a huge wedge into the income disparity and cracking it open further.  Are the rich not making enough money yet?  Do we really need to thoroughly destroy all the potential that a sizable middle class gives just so we can enable them to make even more while telling us it’s our fault for making too much?
     
    I’m always amazed at how incredibly good a job the rich have done in convincing the poor and not-quite-as-poor that the problem is that some poor people are making a little more than they are.

    • 0 avatar
      shaker

      +1 — But, not to worry, as corporations are using “free trade” to systematically dismantle the middle class. But those underpaid workers can always quit and open a cheese shop* (to compete with other cheese shops) to stay “middle class”.
      *Or a Scotch Tape shop, or some other lame-ass business that will ultimately fail.

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