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Got a mid to large sized automobile manufacturer to sell? Preferably with the latest technology and know-how? Want to unload a portfolio of established brands? Drowning in debt? Then call +86 10 67699888 and talk to Xu Heyi at Beijing Automotive Industry Corp (BAIC). You may find an attentive listener.
China’s Geely is expected to make a formal offer for Volvo within the next few days, if the Wall Street Journal is not mistaken. The offer “is anticipated to be around $2 billion.”
Geely is one of China’s top 10 passenger-car brands, it is also one of the China’s few independent companies, building cars without foreign joint venture partners. Industry watchers believe that Geely will export its models to the US or Europe within three to five years. To do this successfully, owning a Western brand with Western technology and a stable of safety-tested and homologated cars is indispensable. Geely is keenly aware of this. Says the WSJ:
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As little known Tengzhong itches to buy Hummer for reasons unknown, the two Chinese regulators who have to chop (put a big red stamp under) the deal can’t agree whether it’s a great or a dumb idea, Reuters reports. Chop the deal or chop off the head?
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China has become the biggest producer, consumer and exporter of electric vehicles in the world. But China’s people are facing huge problems buying and driving them.
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China’s passenger-vehicle sales skyrocketed a frightening 48 percent in June, the most stratospheric ascent since February 2006. According to Bloomberg, this “helped the nation extend its lead over the U.S. as the world’s largest auto market this year.” The car-nage in Bloomberg’s own words: Read More >
But will it be accepted? As reported yesterday, China’s BAIC has handed in a better offer for Opel. This gave everybody a reason to pause. Magna called off a board meeting that had been scheduled to give the go-ahead for Opel. GM and the German government are reading intently what BAIC proposes. BAIC proposes export of Opels to China. For a while, at least.
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Fiat never had much luck in China, one of the few remaining growth markets on the planet. Neither had Chrysler. One word fits both: “Orribile!”
“Never say die,” says Sergio Marchionne (or in Italiano to that effect.) Today, he will try again. At a ceremony in Rome, flanked by China’s President Hu Jintao and Italy’s President Silvio “Daddy” Berlusconi, Sergio will sign a deal for joint venture with China’s Guangzhou Automobile Industry Group, Reuters reports. Hu Jintao is in town anyway to attend the G8 meeting. And what will they build together?
The power struggle between Wendelin Wiedeking of Porsche and Ferdinand Piech of Volkswagen has attracted other suitors. The German magazine Focus reports that three additional bidders are interested: two sovereign wealth funds (read: goverments which are tired of investing their money in T-bonds) and a hedge fund. The nationalities of the sovereign wealth funds are interesting. One is the Russian fund and the other is Chinese, says Focus. The identity of the hedge fund is unclear.
The way it looks, China will severely trounce the USA as the world’s largest auto market in 2009. From January to June, Americans bought 4.8m units, a drop of 35.1 percent. China had sold more a month earlier.
China isn’t giving up its quest for distressed and desperate Western auto assets.
On the Opel front, Magna reportedly has hit a rough patch. Reuters says that RHJ International, a former bidder for Opel, is back in the running and may be close to a deal. Financial Times says that BAIC will also hand in a formal bid. The news wire cautions that the sudden bidding activity may be just “a ploy to pressure Magna to reach a final agreement by a mid-July deadline on terms acceptable to GM.”
At the same time “China’s Beijing Automotive Industry Holding Corp (BAIC), rival Geely, and at least one Western industrial group remain interested in Ford Motor Co’s Volvo car unit,” says Reuters, citing the industry’s prime source, the “person close to the situation.”
China’s National Development and Reform Commission (NDRC) is unhappy with Tengzhong buying Hummer. The agency “is likely to reject Sichuan Tengzhong’s bid to buy the Hummer brand from bankrupt General Motors Corp,” Chinese state radio said today according to Reuters. Chinese state radio, being Chinese state radio, usually doesn’t report stuff that runs contrary to Chinese government intentions.
Representatives of China’s BAIC are on their way to Frankfurt, where they will pile in limos with the proper branding and go to nearby Rüsselsheim. There, they will receive entry to the inner sanctum of Opel: The due diligence room.
Opel will open wide and BAIC will be able to inspect books, trade secrets, business plans. The next step will be a binding offer, the Frankfurter Allgemeine Zeitung [sub] reports. In the coming weeks, BAIC Chairman Xu Heyi himself will land in Frankfurt and will present his plan to unions in Rüsselsheim and politicos in Berlin. Xu knows how to deal with the Germans. His company has a successful joint venture with Daimler.
Two items become apparent:
China Daily, widely regarded as the (English-speaking) voice of China’s central government is appalled:
All bankrupt US carmaker General Motors Corporation needs from the proposed sale of its Hummer brand to Sichuan Tengzhong Heavy Industrial Machinery is money, with experience and expertise in making vehicles not an issue in the deal.
“All I need is cash,” Hummer CEO Jim Taylor told China Daily in a recent telephone interview.
In a wild orgy of he-said-she-said-it-whispered, Chinese media, from China Daily, to Shanghai Daily, to car186.com, all the way to Motor Trend (with the help of the ever-so-reliable Google Translate), the MSM are busy reporting yesterday’s news of Geely buying Volvo. However, it’s no surprise of the connoisseur of the Chinese news cycle . . .
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