By on May 16, 2011

Rick Kranz, product editor at Automotive News, had an epiphany: “To understand Victor Muller’s obsession with China, you need to understand where that market is headed,” Kranz wrote. Ok, enlighten us, sensei. Where is it headed?

“It is easy to understand why Muller and other automakers say ‘China is the future.’ The country has quickly passed Japan, Germany and the United States to become the world’s largest new-car market.”

What a revelation! So how many cars do those Chinese buy, pray tell? Kranz told us a day ago:

“Last year, 11.6 million light vehicles were sold in the United States. U.S. sales peaked in 2000 at 17.4 million vehicles, according to the Automotive News Data Center. By comparison, 12 million cars and light-duty vehicles were sold in China last year, according to J.D. Power and Associates.”

Hmmm. Didn’t someone mention higher numbers?  Indeed, J.D. Power said on Feb 15, 2011 that in 2010, “China’s light-vehicle sales were up by more than 30 percent from 2009, to 17.2 million passenger cars and light commercial vehicles sold.” According to China’s Association of Automobile Manufacturers (CAAM) total motorvehicle sales  in China were 18,061,900 in 2010, an increase of 32.37 percent over 2009.

If a product editor of Automotive News is confused by the Chinese market and off by 5 or 6 million cars, we can forgive Mr. Muller for thinking that the Chinese are just waiting for imported Saabs.

Muller should turn to Chrissie Thompson of the Detroit Free Press. She just wrote:

“When Chinese locals think of luxury, they think of German brands — Audi, Mercedes-Benz and BMW; Chinese customers consider Cadillac a step down.”

Someone should give Mr. Muller the Freep where Thompson writes:

“Imagine paying at least $77,000 for a five-seat Cadillac SRX crossover. The price includes a 25% import duty, a 12% tax based on the engine size and a 17% value-added tax.”

Trust me, in a market with more than 100 car brands, nobody in China is salivating to buy a Saab 9-5 at obscene import prices, if they can buy the car as a domesticated Buick LaCrosse at Chinese prices.

The value of a Saab brand for China is not in imports, but in exports. This is the reason why Geely bought Volvo. By buying the brand and (write that down) the technology, a Chinese manufacturer buys access to foreign markets. He buys cars that have been tested, certified, that are approved for sale in export markets. This is where the value is.

However, this is what Muller cannot sell. Most Saab technology is licensed from GM. It can’t simply be licensed again to a Chinese joint venture without the approval of GM. Which GM will be reluctant to give. Anybody delusional enough to assume that GM will alienate SAIC in order to save Saab?

In the meantime, the Saab-story makes for great PR for a dealer group nobody had heard of.  Honestly, had you ever heard of Pangda, or “Pang Da,” as the Spyker press release insists on calling them? Chinese companies have long learned that the cheapest way to get endless coverage the world over is to say that they are interested in buying a western carmaker.

Remember Tengzhong? See, you do.

 

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14 Comments on “Why China Does Not Need Saab...”


  • avatar
    gslippy

    The ‘obscene import prices’ would make Saab even more of a loser than it already is. US Saab prices are already obscene. This dog just can’t be profitable.

    By the way, what is ‘Saab technology’? I can’t imagine they have much worth protecting. If – as you say – most of Saab’s technology is licensed from GM, then Saab has little intrinsic value, and GM is never going to go for a Saab/China deal.

    Anyway, Saab lost its appeal when they moved the ignition key away from the center console. Now they’re just like everyone else.

    • 0 avatar
      SVX pearlie

      Not that Saab had that much appeal making a 30-year-old car when BMW, VW and the rest of Europe moved forward…

      • 0 avatar
        Tosh

        30 years ago was 1981, so I’m not sure what you meant, SVX? But the 1991 9000 Turbo was the fastest (0-60) EPA Large car in the world. And then GM happened along….

      • 0 avatar
        SVX pearlie

        The Saab 900 was in production for 30 years when GM foolishly saved Saab.

      • 0 avatar
        CJinSD

        The 900 was only about 11 years old when GM bought Saab. It was based on the 99, which went into prodution ten years earlier.

        1968 – first 99 sold
        1978 – first 900 sold
        1989 – living dead Saab bought by GM

        pre-GM Saab fleshed out their lineup in various markets with the rebadged Lancia Delta(Saab 600) in 1978 and reskinned Fiat Croma(Saab 9000) in 1985. There only ever were two Saab platforms, the first was a reverse engineered DKW and the second was conceived with input from Triumph. The more you know about Saab, the more mysterious the existence of Saab fanatics is.

    • 0 avatar
      gt40fan

      Saab owns the Phoenix platform, eXWD, IQon, etc. GM does not. Want facts? Read SaabsUnited.com

  • avatar
    dreadnought

    “It can’t simply be licensed again to a Chinese joint venture without the approval of GM. Which GM will be reluctant to give. Anybody delusional enough to assume that GM will alienate SAIC in order to save Saab?”

    I agree and wrote about this on an earlier thread.

    But why was Ford willing to give up their technology to Geely (after all the new S60 is built on a Ford platform, same with the S80, etc.).

    Meanwhile GM was in a big hurry to sell off the tooling and rights to the 9-3 and old 9-5 to BAIC, before they tried to find a suitor for Saab, pretty much preempting Saab linking up with any other Chinese company. Raised my eyebrows at the time – I said to myself, “guess GMs going to shut Saab down, too”.

    It was pretty obvious all along that Saab’s only possible salvation was going to be in China, as it was for Volvo. Nobody could really thing that somebody like Spyker or Koenigsegg would be able to run a small independent car company and stay alive. Not for long.

    GM precluded any Chinese interest by selling off Saabs IP before they sold the company. Pretty cynical move by GM, (and perhaps the US government), it looks to me.

    • 0 avatar
      SVX pearlie

      GM sold off the *previous* generation 9-3 and 9-5 tooling, not the current 9-3 and 9-5 tooling. *Big* difference.

      • 0 avatar
        Athos Nobile

        My educated guess is that along that tooling went some license contract.

      • 0 avatar
        dreadnought

        Yes, I know. The point is: Ford didn’t sell off any previous Volvo tech to any Chinese company before they tried to sell off the rest of the company. GM did.

        It seems that part of the problem with Saab trying to partner with another Chinese company now, is that their old models have already been sold off to the Chinese.

        Furthermore, The S60 is built on the same chassis as the current Ford Mondeo. So Ford was even willing to license current IP that was their’s. GM apparently isn’t.

        GM cannibalized Saab before they tried to sell them off. Ford didn’t do the same to Volvo.

        The question is: why did Ford do things so differently compared to GM?

    • 0 avatar
      tekdemon

      Those platforms stayed with Volvo because Ford based many of their platforms off of originally Volvo platforms. The Taurus is underpinnd by the older S80 platform not the other way around. So I’m guessing that the Volvo subsidiary still held mostof the IP rights.

      • 0 avatar
        dreadnought

        You’re thinking of the old P2 platform, developed by Volvo and used in the old S60, old S80, Ford 500, current Taurus.

        Current Volvo S60, Volvo S80, Land Rover Freelander, Ford Mondeo are all on EUCD platform. Used since 2006-Not a Volvo developed platform I believe. So I don’t think that explains the difference. Hell, there are Tata-owned products using EUCD.

  • avatar
    dreadnought

    It can’t simply be licensed again to a Chinese joint venture without the approval of GM. Which GM will be reluctant to give. Anybody delusional enough to assume that GM will alienate SAIC in order to save Saab?”

    I agree and wrote about this on an earlier thread.

    But why was Ford willing to give up their technology to Geely (after all the new S60 is built on a Ford platform, same with the S80, etc.).

    Meanwhile GM was in a big hurry to sell off the tooling and rights to the 9-3 and old 9-5 to BAIC, before they tried to find a suitor for Saab, pretty much preempting Saab linking up with any other Chinese company. Raised my eyebrows at the time – I said to myself, “guess GMs going to shut Saab down, too”.

    It was pretty obvious all along that Saab’s only possible salvation was going to be in China, as it was for Volvo. Nobody could really think that somebody like Spyker or Koenigsegg would be able to run a small independent car company and stay alive. Not for long.

    GM precluded any Chinese interest by selling off Saabs IP before they sold the company. Pretty cynical move by GM, (and perhaps the US government), it looks to me.

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