Why China Does Not Need Saab
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.
Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.
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"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.
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.