Saab's Survival Depends On A Chinese Car Dealer

Bertel Schmitt
by Bertel Schmitt
saab s survival depends on a chinese car dealer

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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2 of 22 comments
  • Paul W Paul W on May 17, 2011

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

  • Juerg_u Juerg_u on May 17, 2011

    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!

  • Jeanbaptiste Any variant of “pizza” flavored combos. I only eat these on car trips and they are just my special gut wrenching treat.
  • Nrd515 Usually for me it's been Arby's for pretty much forever, except when the one near my house dosed me with food poisoning twice in about a year. Both times were horrible, but the second time was just so terrible it's up near the top of my medical horror stories, and I have a few of those. Obviously, I never went to that one again. I'm still pissed at Arby's for dropping Potato Cakes, and Culver's is truly better anyway. It will be Arby's fish for my "cheat day", when I eat what I want. No tartar sauce and no lettuce on mine, please. And if I get a fish and a French Dip & Swiss? Keep the Swiss, and the dip, too salty. Just the meat and the bread for me, thanks. The odds are about 25% that they will screw one or both of them up and I will have to drive through again to get replacement sandwiches. Culver's seems to get my order right many times in a row, but if I hurry and don't check my order, that's when it's screwed up and garbage to me. My best friend lives on Starbucks coffee. I don't understand coffee's appeal at all. Both my sister and I hate anything it's in. It's like green peppers, they ruin everything they touch. About the only things I hate more than coffee are most condiments, ranked from most hated to..who cares..[list=1][*]Tartar sauce. Just thinking about it makes me smell it in my head. A nod to Ranch here too. Disgusting. [/*][*]Mayo. JEEEEZUS! WTF?[/*][*]Ketchup. Sweet puke tasting sludge. On my fries? Salt. [/*][*]Mustard. Yikes. Brown, yellow, whatever, it's just awful.[/*][*]Pickles. Just ruin it from the pickle juice. No. [/*][*]Horsey, Secret, whatever sauce. Gross. [/*][*]American Cheese. American Sleeze. Any cheese, I don't want it.[/*][*]Shredded lettuce. I don't hate it, but it's warm and what's the point?[/*][*]Raw onion. Totally OK, but not something I really want. Grilled onions is a whole nother thing, I WANT those on a burger.[/*][*]Any of that "juice" that Subway and other sandwich places want to put on. NO, HELL NO! Actually, move this up to #5. [/*][/list=1]
  • SPPPP It seems like a really nice car that's just still trying to find its customer.
  • MRF 95 T-Bird I owned an 87 Thunderbird aka the second generation aero bird. It was a fine driving comfortable and very reliable car. Quite underrated compared to the GM G-body mid sized coupes since unlike them they had rack and pinion steering and struts on all four wheels plus fuel injection which GM was a bit late to the game on their mid and full sized cars. When I sold it I considered a Mark VII LSC which like many had its trouble prone air suspension deleted and replaced with coils and struts. Instead I went for a MN-12 Thunderbird.
  • SCE to AUX Somebody got the bill of material mixed up and never caught it.Maybe the stud was for a different version (like the 4xe) which might use a different fuel tank.