By on May 16, 2011

Victor Muller is getting desperate. Hard up for cash, he is willing to sell 24 percent of Saab to a car dealer in China. It’s not any car dealer, but Pangda, one of the larger chains in China. According to a Spyker press release, Pangda has “over 1100 dealerships nationwide”, according to Pag Da’s own profile (see below) is has about half of that. Be it as it may, it is a dealer group, not a larger automaker. Not even a smaller one.

According to the Spyker press release, Spyker, Saab and Pangda signed a Memorandum of Understanding today. The MoU “includes a strategic alliance consisting of a 50/50 distribution joint venture and a manufacturing joint venture (MJV) for Saab branded vehicles as well as for an MJV-owned brand (the so-called ‘child brand’) in China. Saab Automobile will have up to 50 percent in the MJV, with Pangda and a to-be-selected manufacturing partner owning the remaining shares.” Great. They don’t even have a manufacturing partner yet, but are already creating Chinese brand which are all the rage in the Middle Kingdom,

Spyker and Saab hope that “Pangda shall make a EUR 30 million payment for the purchase of Saab vehicles and is expected to make an additional EUR 15 million for the purchase of more Saab vehicles within 30 days subject to certain circumstances. Additionally, Pangda will take an equity stake in Spyker for a total amount of EUR 65 million at EUR 4.19 per share (the weighted average of the ten last trading days), representing 24 percent of Spyker on a fully diluted basis.”

Here is some unsolicited free advice for Mr. Muller: Don’t spend the money yet. If you need quick cash, don’t look to China. Here is why:

  • In China, a MoU is part of the flirtations that may or may not lead to doing business. But it is of zero value.
  • A contract, signed and “chopped” by all parties involved comes closer to doing business.
  • Even after the contract is signed, the bargaining usually does not end.
  • Unless Pang Da has € 30 million sitting around in a bank account somewhere outside of the country, there is no way in hell this money will be flowing fast. Even if it is payment for cars, the payment needs to be approved by the government. Cars need to actually change hands. They need to be available and certified for the Chinese market.
  • I wouldn’t do a deal with anyone in China if they know that I am desperate for money.

The press release warns that “some of the transactions following the MoU are subject to agreement on definitive transaction documents and certain conditions, which include consents from certain Chinese governmental agencies, the European Investment Bank, GM and the Swedish National Debt Office.”

That’s a lot of people that have to say yes. GM and the Chinese government probably won’t be on the same page when it comes to the intellectual property of Saabs.

Victor Muller was dreaming when he (according to Reuters) “said the fact Pangda is a distributor, not a manufacturer, meant it would not need approvals to buy Saab cars for sale in China.” Pangda may not need approvals to buy cars, but it needs approvals to import them, to sell them, to make them street-legal, and most importantly for Mr. Muller, to wire the €30 million in payment. If a government wants to be ornery, the car business offers ample opportunities to do so.

Pangda recently made headlines by dropping 23 percent on the day of its IPO on April 26. The nearly $1 billion the company raised were worth $770 million. The IPO had unfortunate timing: It came days after China had announced disappointing sales for April and a big downdraft at the Shanghai stock exchange.

According to listed information, “Pangda Automobile Trade Co Ltd is principally engaged in the distribution, repairing and maintenance of automobiles. The Company distributes cars under 49 brands, including Benz, Audi, Subaru, Volkwagen, Honda, Toyota and Hyundai; trucks under 15 brands, including Auman and Jiefang; mini coaches under 10 brands, including Wuling, Hafei and Jiabao, as well as agricultural vehicles under six brands and engineering machinery vehicles under six brands. As of June 30, 2010, the Company had 501 automobile exclusive agencies, 176 automobile markets, as well as eight specialty automobile markets, located in China and Mongolia.”

Pangda is located in bucolic Tangshan, Hebei Province.

PS: CarNewsChina has a whole dossier on Pangda.

PPS: On the positive side, Pangda preserves an endangered piece of Chinese culture: Chinglish. Their website has such gems as “Pangda Initially Publicly Issue the A-share to Officially Launch the Stock Markets of Shanghai,” or “Pangda Group Boosts the Closing Ceremony of the Tangshan’s Third Session of Television Calligraphy Competition Completely.”

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22 Comments on “Saab’s Survival Depends On A Chinese Car Dealer...”

  • avatar

    I have about $2.35 left over from yesterday’s shopping spree. Do you think Victor would be interested in letting me have a majority share of SAAB? I don’t need government approval to make the deal, so he could have the cash now.

    As the spokesman for Western Sky financial says on TV: “Sure, the money’s not cheap, but you don’t need collateral and I can give you the cash now.” See for yourself.

  • avatar

    Sounds to me like it’s time for Saab to say bye-bye, unfortunately. When a product won’t sell itself, you have a big problem, and for any potential buyers, not knowing if the company has a future, why would you buy something that may be an orphan? This isn’t the same as buying a Saturn, Pontiac or Oldsmobile, as they are backed by GM, which appears will be sticking around for awhile.

    At one time I really wanted a Saab, especially after seeing my cousins, who owned a sedan and convertible – his and hers – but that was in 2004 and I already bought my Impala.

  • avatar

    Dead brand walking: SAAB at this point looks like MG Rover, after its spin off from BMW. Tha Chinese at this point can wait and purchase whatever tooling becomes available at fire sale prices.

    • 0 avatar

      Actually, and depending on how GM wrote the contracts, if ownership and use of the tool is predicated on also having, or paying your GM IP license fees, those tools might be going back to GM, or the smelter… In other words, it could be that the tools belong to GM, and SAAB only rents them.

      • 0 avatar
        SVX pearlie

        This wouldn’t surprise me at all, which is probably why Great Wall and the previous buyers all walked – all Saab is selling is their name, no tech.

  • avatar

    Visitation please to for laughness exemplary of chinglish

  • avatar

    Smells like theatre, intended to fool the Big Dumb Money (a third party, yet to be named) into giving the Saab “investors” real cash. Then the cash is sucked out, and the husk of Saab collapses. The lure of the proportedly unstoppable Chinese marketplace is the bait on a very sharp hook.

  • avatar

    Here’s why this is a good deal for Saab, and even better than the failed deal with Chinese automaker, Hawtai:

    –This is not some car dealer. This is one of the largest Chinese car dealer networks with ~1100 dealerships. It provides an expansive dealer network without a partnership with a Chinese manufacturer. Think of it as a Chinese CarMax x10.

    –There is an initial order of vehicles worth 30-mil Euros, and a follow-on buy of 15-mil Euros. That’s a huge vehicle order (for Saab), something Saab desperately needed.

    –An additional 65-mil Euro will be invested into Spyker. Again, the largest dealer network in China now has a vested interest in the Saab company.

    If the deal goes through, this would open up Saab to a huge market with an established dealer network pushing their product. I agree that the past month has been a huge blow to confidence. I also agree, that an MOU is far from a firm deal, but dismissing this agreement before it’s given a chance to succeed is sadly the type of bias I came to this site to avoid.

    • 0 avatar

      Why would Chinese purchase these crappy cars? They are uncompetitive on the western markets, I doubt they would be competitive on the Chinese market.

      And if they are not built in China, there are significant customs would that would eject the car from the market

      • 0 avatar

        Crappy cars? I think the 9-5 will do well in China. It’s quite a long car with an impressive back seat (apparently a must in China), and it’s on the same platform as a Buick. Basically, it’s a sportier European Buick, they’ll do fine.

    • 0 avatar

      We will start voicing opinions on an agreement once we have an agreement. There is none. MoUs are a dime a dozen in China. Non-binding.

      I have lived, worked, and done business in China for 7 years, and I know a little how things work here. Muller needs money like yesterday, and in China, you can’t simply walk down to your bank and wire €30 million. Again, if the money is elsewhere, say, in Hong Kong, the matter would be different. But then, nobody will just wire €30 million. Are the cars ready for shipment? Are they CCC approved? Is there an import license?

      Also, I am sick and tired of the four letter word bias. Whenever we don’t fall on our knees in awe, we are accused to be biased. This is Thetruthaboutcars, and the truth is: This is not the way it works in China. Also, I owe it to my initials to call BS when I see it.

      • 0 avatar

        What part of Saab’s press release offended you? The part where it says that “…transactions following the MoU are subject to agreement on definitive transaction documents and certain conditions…,” or is it the fact that they are actually trying to stay alive. I believe some are calling the second fact “pathetic.” Pathetic that a publicly-traded company is fighting for survival on its own, without the help of a government czar or politician.

        I agree that the future is questionable, but to dismiss every action that the company takes IS a form of bias. Opinion is very different than truth. And there’s nothing wrong with opinion, but don’t call it truth and journalism.

        Lastly, thank you for the reminder that you live in China. I live in New Jersey. If you need an expert on the casino/hairspray/pharmaceutical sectors, please let me know.

      • 0 avatar

        GMLCountry: Nobody is saying Saab doesn’t have the right to fight for survival. Bertel is simply skeptical about its chances of survival, and he makes a strong argument for his skepticism. You’re welcome to share why you are optimistic about Saab’s chances, but you’re not welcome to discuss TTAC’s editorial policy in our comments section. Such criticisms and comments should be directed to our contact form.

  • avatar

    How much lower could they drop?

    This is pathetic.

  • avatar

    Having owned a gaggle of great Saabs over the years, I am one of their biggest fans/apologists. But this is getting silly. Just end it and be remembered for the pure joy embodied in the 900 SPG, 9000 Aero and 9-3 Viggen (among others). Pathetic indeed.

  • avatar
    Domestic Hearse

    Herr Schmitt,

    If the Chinese government put the kibosh on the last Saab wedding, what chance do you see on this union being blessed? 20 to 1? 100 to 1?

    Looks like the Penske flirtation with Saturn, writ internationally.

  • avatar
    Robert Fahey

    * Dealer will make an offer for Saab.
    * Saab will whip out a report showing it’s worth much more.
    * Dealer will say it doesn’t use KBB.
    * Saab will say the dealer up the street offered more …

  • avatar
    George B

    Would the Saab brand have any (small) value to BAIC? They own the tooling for the old 9-3 and 9-5 models which had passed 1st world safety and emissions standards.

  • avatar

    Who’d have thought we’d end up feeling nostalgic for GM-era SAABs, cracked Opel/Vauxhall bulkheads and all?

  • avatar
    Paul W

    Bertel, what do you have to say about Muller’s claim that the money is already on its way? Utter bullroar?

  • avatar

    Here is another truth, the truth of the market from Bloomberg:
    “Pang Da Automobile Trade Co. (601258 CH), China’s biggest listed auto dealer, advanced 3.4 percent to 35.17 yuan, its biggest gain since its listing in April. The company said it agreed to buy a 24 percent stake in Spyker Cars NV.”

    And about the money: it’s been recieved yesterday, I think this is a quite encouraging truth.

    I agree that the hole story is exceptional but there are also exceptional circumstances and Saab has never been a “normal” brand.

    I don’t know where this is heading, unfortunately I can’t predict the future but I know, that Saab deserves to persist, it’s a brand with soul and a loyal community.

    Victor Mueller is a charismatic car guy and not an accountant, this is a good thing to me. I’d like to remind on Apple 13 years ago, nobody would bet on them, but a charismatic leader turned it around, hopefully this will happen again.

    Griffin up!

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