Manufacturing

Beijing Automotive Industry Holdings Co Ltd (BAIC), China's fifth largest automaker, said yesterday it has agreed to take over some of the assets of General Motor's Saab arm as part of its plans to develop cars under its umbrella.

Saab Automobile AB said it has struck a deal with the Chinese carmaker to buy production equipment and intellectual property (IP) related to two older Saab models - the 9-5 and 9-3 including the powertrain technology and tooling.

Saab will also help BAIC to integrate the technology into future BAIC vehicles, said the statement.

However, Saab and BAIC did not disclose other details about the deal, including the financials. Reuters reported last week, citing unnamed sources, that BAIC had obtained a 20 billion yuan ($2.93 billion) line of credit from the Bank of China.

"This arrangement is excellent for both parties, now and for the future. We have developed a good relationship with BAIC and look forward to working with them to integrate the Saab technology into their future vehicles," said Jan Ake Jonsson, managing director of Saab Automobile.

Dagens Nyheter, a daily newspaper in Sweden, reported yesterday that "China is helping the Swedish car brand out of crisis".

Jia Xinguang, chief analyst with the Chinese National Automotive Industry Consulting and Development Corp, said the deal is not that significant for BAIC as the production platforms of Saab 9-5 and 9-3 have been shut down due to the old and outdated technologies and also have low efficiency and utility.

However, Jia is optimistic about BAIC acquiring Saab's powertrain systems, including turbo-charged engine and gearbox technologies, "which can fill the gap between China and global players in the transmission segment".

He also hoped that "maybe the locally produced sports cars with Saab 9-3 and 9-5's extraordinary performance will be popular among Chinese consumers".

"It's hard to judge if it is a worthy deal for BAIC at this stage," said Zhong Shi, an independent auto analyst based in Beijing. "The key is that if BAIC can finally get hold of something and use it later for itself."

BAIC is one of the few Chinese automakers not to have its own car brand and model, and also has limited production and research and development experience in passenger cars.

Zhong believes that BAIC will move the production line of the Saab 9-3 and 9-5 models to China and produce the same cars under a new brand name.
 

Chery Automobile, China's largest indigenous car maker, will basically stay away from overseas acquisitions even though it has been approached repeatedly, its chairman said on Tuesday.

"We have been offered many fancy proposals (by investment bankers). Their business is to buy and sell," Yin Tongyao said in an interview published on Sohu.com, a Chinese Internet portal.

"They want you to get married today and split the next day, this is typically what investment bankers do...and we won't be hoodwinked."

Yin also denied overseas media reports about Chery's purchase of a Fiat car plant on the Italian island of Sicily.

"I was told that foreign media said we had bought a Fiat plant. There is no such thing," Yin was quoted as saying.

Italy's La Repubblica newspaper had reported that Chery was in talks to take over the Fiat car factory.

Industry sources said that they were "bemused" and did not see it making sense for Chery, as the plant is on an island and the logistics of exporting had hampered its current owner, Fiat.

Chery executives could not be reached immediately for comment. Fiat declined to comment.

Still, many other Chinese automakers have been chasing Western brands to take advantage of a global industry downturn.

Beijing Automotive Industry Holding Co, the country's fifth largest automaker, has acquired some assets of General Motors' Saab unit as part of a push to develop its own-brand cars. Geely Automobile Holdings group has also been named preferred bidder for Ford Motor's Volvo car business.

Chery, maker of one of China's best-selling compact cars QQ, had also tried to raise its profile by cooperating with foreign automakers, but refrained from doing so to avoid risks, Yin said.

Rather than acquiring and trying to revive an overseas brand, Chinese automakers can also work their own way up to the higher end, he said in March.

Also in that month, Chery unveiled its first self-developed medium-to-high end sedan, Riich G6, which Yin and other Chery executives hope can eventually compete with Volkswagen AG's famed Audi A6.

In July 2007, Chery and Chrysler LLC agreed to manufacture compact cars under the Chrysler badge for sale in the Americas, but the plan was aborted after Nissan Motor reached a similar pact with the US automaker.

It has delayed a car venture with Fiat, which later forged a manufacturing partnership with Guangzhou Automobile.
 

Zhejiang Geely Holding Group aims to conclude the acquisition of Ford Motor's Volvo Car Corp in early 2010 and has hired consultants for restructuring and integration, sources with direct knowledge of the deal said.

German-based Roland Berger Strategy Consultants has been hired to launch a 100-day internal review and restructuring to improve Geely operations with a focus on sales of Geely's self-branded cars in China, according to a source.

"The Volvo deal sees no more hurdles," said another source.

"It is expected to be done before Chinese New Year, and then Geely will quickly launch integration," said the source, who declined to be named due to the sensitive nature of the deal.

The Chinese New Year will start on Feb 14.

A Geely spokesman was not available for comment.

Geely Chairman Li Shufu, who is also the chairman of the Hong Kong-listed Geely Automobile Holdings, has hired Deloitte Touche Tohmatsu, to work on post-acquisition integration for Volvo.

The focus will be on the integration of marketing and sales in China, network distribution, logistics and joint global operations, the source said.

"Li Shufu wants to do something like Lenovo-IBM -- have a foreign headquarters and a China headquarters," he added.

Ford has selected Geely as the preferred bidder for its loss-making Swedish unit Volvo in a deal estimated to be worth about $1.8 billion. Geely, China's largest private carmaker and the producer of such mass market models as the Geely Kingkong, is seeking at least $1 billion in loans from Chinese banks to finance the deal.

Wolfgang Bernhart, a partner at Roland Berger, told mainland media earlier this year that markets and technology were the two main drivers for Chinese automakers chasing overseas brands such as Volvo, Saab and Hummer.

"Personally, I think there is the likelihood of success of such mergers and acquisitions," he said.

China launched Wednesday a remote-sensing satellite, "Yaogan VII," from the Jiuquan Satellite Launch Center in northwestern Gansu Province.

The satellite was successfully launched into the space on a Long March 2D carrier rocket at 4:42 p.m., the center reported.

It will be mainly used for scientific experiment, land resources survey, crop yield estimates and disaster prevention and reduction, according to the center.

The satellite was developed by the China Academy of Space Technology under the China Aerospace Science and Technology Corp. The rocket was designed by the Shanghai Academy of Spaceflight Technology, also under the corporation.

The flight was the 120th of the Long March series of carrier rockets.

A Long March 2D rocket carrying the remote-sensing satellite "Yaogan VII" lifts off from the Jiuquan Satellite Launch Center in northwestern Gansu Province, December 9, 2009.