China has a booming car market, the biggest of the world. Their car exports on the other hands, of which the world is dead afraid, are a joke: China exported a trifling 190,000 vehicles in the first seven months of this year, down 58 percent from 2008. Adding insult to ingrained rivalry, India out-exported China in the first half of 2009. China is mad as hell and won’t take it anymore. They do what they have to do: Buy foreign brands in earnest. Today: Saab and Volvo.
China’s FAW will help Koenigsegg to come up with the money to buy Saab, Sweden’s Dagens Nyheter reports via Reuters. GM signed a deal last month to sell its Saab car business to Koenigsegg. Eyebrows went up over the financial wherewithal of tiny Koenigsegg, and the raised brows haven’t come down since. Time for some shuteye: FAW, better know as the Chinese joint venture partner of VW and Toyota , can solve Koenigsegg’s troubles out of petty cash.
We wouldn’t be surprised if FAW has been in the background all along. They have lots of experience with western companies, and could have used Koenigsegg as a stalking horse. FAW is also a fierce competitor of SAIC, also a VW joint venture partner. FAW could get some GM technology via Saab, and get even with SAIC. SAIC is deeply involved with GM. However, “a source with knowledge of the situation” told Reuters that SAIC might also pitch in and take a passive stake in Saab. Are FAW and SAIC together on this one? Or competing as usual? Mysteries of the Orient ….
But it’s most likely all wrong, because our own Leif Eriksson reports from Sweden: “According to Dagens Industri, a Swedish business paper, Christian von Koenigsegg has now confirmed that it is BAIC who will take a minority post in Koenigsegg Group (KG). KG will own 100% of Saab Automobile. This will solve KG’s problem with financing the deal without trying to hassle an (extra) loan from the Swedish government. Next step is to get approval for loans from the EIB (European Investment Bank) and a guarantee for these loans from the Swedish government.” BAIC is most likely still reeling from getting shunned during its attempt on Opel. Getting it’s hands on Saab will be some consolation. We know, “BAIC, SAIC, it’s all fawking Chinese to me.”
As if on cue, Geely confirmed that they are seriously bidding for Ford’s Volvo. Their petty cash is a bit pettier than state-owned FAW’s. Privately owned Geely “may need help from a state-owned investment firm.” Gasgoo writes.
Gui Sheng Yue, CEO of Geely, said that Geely wants full ownership of Volvo. He confirmed that they are too small to go it alone and will likely team up with a state-owned investment company. Gui said the Volvo deal would offer a good opportunity for the Geely Group to expand its international profile and overseas sales growth. He’s right on that.
The Chinese buying Volvo and SAAB would actually be quite interesting from an ethical standpoint.
Most of buyers of Swedish cars are liberals who are read “The Observer” and shop at the “Co-Op”. Which is a good thing, by the way. We should all take an interest in helping one and other.
So how will they reconcile the fact that their favourite cars are owned by a country with, shall we say, slightly dodgy human rights?
If they are half as ethical as they say, then, they’ll almost certainly migrate to a different brand (Toyota, Honda or Ford?), which means, the market for SAAB and Volvo will disappaear and render the companies completely pointless.
Worth a thought….
I have yet to see concern for slightly dodgy human rights impact a buying decision. Walmarts would be empty, people would go barefoot instead of wearing Nikes, and they would talk on ye olde AT&T phone instead via the iPhone.
The only people who make a consistent issue out of human rights abuses and products are the unions, or their supported politicos. Their concern for human rights is a fraud: Would we listen to them and stop buying the products made in the alleged sweatshops, the people there would have no jobs and die hungry.
Bertel Schmitt is right about the level of concern for human rights when it comes to purchasing decisions. However, it is fun to tweak the liberals around here (Ann Arbor, MI) about these things.
“Every time someone buys an Volvo, another Michigan child goes hungry”, for example.
Of course, I surrendered the moral high ground when I bought myself a BMW. But my wife still has a Ford.
Bob
Latest rumor is that it’s BAIC that’s moving in, not SAIC or FAW.
Seems like nobody really knows what’s going on, and most Swedes are occupied giggling at BAIC, which is on letter from the Swedish word for “shit”.
I’m not sure that the generalization about Saab and Volvo buyers being lefties is correct. I’ve known plenty of drivers of both who ain’t lefties and for chrissakes, don’t look in the glovebox to find out.
The Chinese would be very wise to forget about either of them.
They can see the problems of Mr. Ratan Tata who insisted that his Conglomerate buy Jag and L-R:
Enjoy this from “On the Table” in today’s Autpextremist:
“What part of “these frickin’ car companies don’t make any money” did you guys not understand? Tata Motors, India’s largest vehicle maker, lost 3.29 billion rupees ($67.4 million) for April-June because of Jaguar and Land Rover. Why did they do the deal to begin with? Let’s review: A longing for global respectability? Check. Desperately wanting to be a premium market player? Check. Unbridled arrogance? Absolutely. And judging by their public statements surrounding these dismal numbers, they still don’t get it either. Memo to Charmian Ratan Tata:
It doesn’t matter how many swoopy Jaguars or zooted-up Land Rovers you crank out, you made a huge play for two brands that will do nothing but hemorrhage money for years to come. Get used to it.”
The Chinese hate to lose $ much more than the more philosophical Indians ever will. I am sure they will act wisely.
relton :” However, it is fun to tweak the liberals around here (Ann Arbor, MI) about these things.”
I must have lived here for too long (over 2 decades), but I can assure you that these familiar types you describe do not make th ebest stand-up comics.
“Every time someone buys an Volvo, another Michigan child goes hungry”, for example.
If they actually say that, they are major league hypocrites, because I do not know ONE of them that drives a so-called “Domestic” (such as a MExican Fusion or FOcus or a Korean Aveo..LOL)
Talk about “Do as I say, not as I do!”
“Of course, I surrendered the moral high ground when I bought myself a BMW. ”
The above clowns put pressure on me to buy a small fuel efficient Pontiac back in the 80s, which lasted 11 yrs but only 65k miles when it dropped dead in the Siberian bitter cold of Jan 1994. Similar to what we had last Jan for a week or so. Then I “upgraded” to an Accord coupe 5 speed, which, although it got less MPG than the tiny pontiac 1.8 5-speed, it felt like a huge move up. Then in 05 I finally took a risk and bought a 98 “Magnificent 7” with all the options, for peanuts, ($10.5k in perfect shape) from its owner. So far, it has proven far more reliable than COnsumer Reports would like you to believe. And I plan to keep this superb Bondmobile (See “Tomorrow Never Dies” 1997, Bond’s rental in Hamburg) for another 10 years or until it reaches 200k miles, whichever comes first. And it is not half bad on the highway at 22-24 MPG at high speeds.
Bob
I have yet to see concern for slightly dodgy human rights impact a buying decision. Walmarts would be empty, people would go barefoot instead of wearing Nikes, and they would talk on ye olde AT&T phone instead via the iPhone.
Not a lot of Saabs and Volvos in the Wal Mart pparking lot though.
@Bertel Schmitt
You are wrong. What you mean to say is that you personally do not think this type of concern affects buying decisions and/or do not know of or know people who do.
I personally do not shop at Walmart because of the way they treat their employees and neither do I buy Nikes.
If I am the only person you know who allows this type of concern to affect his buying decisions, then A.) you are not nearly as observant as you might wish yourself to believe or B.) your social circle is very limited, indeed.
“I have yet to see concern for slightly dodgy human rights impact a buying decision. Walmarts would be empty, people would go barefoot instead of wearing Nikes, and they would talk on ye olde AT&T phone instead via the iPhone.”
This is true, but you’ve completely missed the point.
In my original assertion, it’s the demographic who buy Saabs and Volvo who WILL pay attention to human rights abuses, unethical behaviour, etc. As mkirk, succinctly puts it “Not a lot of Saabs and Volvos in the Wal Mart pparking lot though.”
Sheeple who do what they always do, buy from the cheapest vendor and not worry about the REAL cost of the product (funding oppressive regimes, exporting jobs, losing domestic manufacturing).
For the record, I don’t mind the Chinese, but that’s not what we’re talking about here.
Paul W:
Latest rumor is that it’s BAIC that’s moving in, not SAIC or FAW.
Would make sense, after having been rebuffed in the Opel saga, they could get Ersatz-Opels with Saab.
Most people know Volvo is Swedish, Volvo make safe cars. What proportion of current Volvo buyers are even aware it is a Ford subsidiary? Or where engines are sourced?
Perception matters more than reality and so long as Volvo’s new owners continue to build/assemble some models in Sweden they can market on that basis.
I agree with Bertel that most people don’t know or care about the socioeconomic or ecological impact of coffee or whatever that they buy but the choices better informed consumers make do eventually filter through to the mass market.
According to Dagens Industri, a Swedish business paper, Christian von Koenigsegg has now confirmed that it is BAIC who will take a minority post in Koenigsegg Group (KG). KG will own 100% of Saab Automobile. This will solve KG’s problem with financing the deal without trying to hassle a (extra) loan from the Swedish government. Next step is to get approval for loans from the EIB (European Investment Bank) and a guarantee for these loans from the Swedish government.
One of the huge barriers to buying a Chinese car is fear of death in a car crash. Seems to me that especially the Volvo brand would help with the safety image.
China could learn a lesson or two from the Koreans.
When Korea started developing its auto industry, they lookea dround and understood that the best mid-priced auto producers were the Japanese, so they got extensive help from them, initially many of their engines were 100% Japanese imported ones. They also got help in styling later from the best italian studios, and to summarize, korean cars, even tho these is still none that I burn to buy, have improved significantly.
Now China tries to develop world class cars. Should it ask VOlvo and Saab for advice? WHY? Give me a break. They probably do not need to ask the Japanese for help, since 1. The WW II wounds from Japanese Atrocities still burn in China, and 2. Their friendly Koreans are much closer to them and can provide a lot of help in lessons learned and all other kinds.
Volvo S80s priced like Toyota Camries would sell like hotcakes. Only a small minority of American consumers care about human rights or anything else which doesn’t obviously affect them personally and directly.
BTW, South Korea and China are not exactly best friends.
How do free-market ideologues square the success of China’s government run industries with the belief that anything government touches always fails?
So, let’s sell these two companies to them.
Flashback to the early 80s. All of our money went to Japan for stuff we couldn’t live without so then we sold them real estate in America to repatriate the dollars. Lots of overpriced real estate (like Rockefeller Center). Then the market collapsed and we bought it all back for 20 cents on the dollar.
Only problem this time is that the auto market is not at its zenith…….
When will the Detroit companies learn that sometimes its better to put companies to sleep rather than sell them (Saturn, Opel come to mind) to others who will then become competitors.
@autosavant
Japanese atrocities committed during the Second World War were not limited to China. Korean resentment towards Japanese occupation and war crimes runs just as hot, if not hotter than the Chinese. The Japanese-Korean national/cultural rivalry is flat out cliche in terms of bad blood. This didn’t prevent technology transfers from taking place in the 70s to the 90s.
Chinese-South Korean relations are not exactly friendly, either, with constant tension surrounding the PRC support of North Korea.
That said, cooperative Korean->Chinese will be made more difficult by Ssangyong being as badly burned as it was during it’s joint Chinese venture. The Japanese were never as badly burned by the South Koreans.
Signal11 :
September 9th, 2009 at 10:17 am
@autosavant
“Japanese atrocities committed during the Second World War were not limited to China. Korean resentment towards Japanese occupation and war crimes runs just as hot, if not hotter than the Chinese. The Japanese-Korean national/cultural rivalry is flat out cliche in terms of bad blood. This didn’t prevent technology transfers from taking place in the 70s to the 90s.”
I am well aware of the Japanese atrocities in Korea as well, but there seem to be several significant differences between China and S. Korea:
1. Korea and Japan were ALLIES after WW II, and probably encouraged under the US umbrella to cooperate.
2. On the COntrary, China’;s relations with Japan were icy cold, and the chinese people voted with their wallets and preferred the unsung Buicks to the outstanding Corollas that were far better suited to the average chinese driver.
“That said, cooperative Korean->Chinese will be made more difficult by Ssangyong being as badly burned as it was during it’s joint Chinese venture. The Japanese were never as badly burned by the South Koreans.”
I agree with all that, but there arre many other things to consider:
1. Japan itself may not be willing to help CHina, after seeing how successful the Koreans were, after they transferred Japanese Tech in their autos.
2. IF China’s ambition is to succeed in the US market, it cannot start by competing with the Civics and COrollas andf Accords and Camrys. It just is too difficult for them. BUT they can easily produce a Kia-like vehicle and sell it for a few $1,000s less in the US at the beginning.
3. Note that the Japanese did not invade the US car market with the Lexus LS 400, but 30 years earlier with far more modest offerings. Even the Accord and the Camry followed a decade after the Civic and the corolla.
My point, overall, is that the CHinese can benefit from the Korean Success far more than from the Swedish Failure. Especially since by the end of this year there may be zero Swedish Auto industry, as both Saab and VOlvo are in their death throes.
There is another lesson for all automakers. Be yourselves, and do not abandon your past strengths. VOlvo should have continued to build no-nonsense square wagons that are as safe as they look, and Saab should have never diluted its brand by being a clone to Opels and LAncias (even in the 90s, the Saab 9000 shared platforms with these and other lower-class EUro cars)
The Japanese-Korean national/cultural rivalry is flat out cliche in terms of bad blood. The Japanese-Chinese cliche likewise. The TV is full of old war movies where bad Japanese rape and pillage China. This doesn’t keep the Chinese from buying Nissans, Hondas, and Toyotas. .
Actually, there is this new wave of Chinese brands of consumer goods that adopt a “Japanese” look (or what they think it is.) My (Japanese) wife always laughs about the pseudo Japanese on the packaging. Friends of ours often ask us to bring this or that Japanese product from japan, and in Japan nobody has ever heard of it.
Careful with the old popular wisdom. The world changes very fast.
“Of course, I surrendered the moral high ground when I bought myself a BMW.”
That’s the work of union brain washing.
Please explain to me why a consumer, with his own money, buying the product that he deems best suits his needs and budget, in a capitalist economy, is losing the moral high ground.
On the COntrary, China’;s relations with Japan were icy cold, and the chinese people voted with their wallets and preferred the unsung Buicks to the outstanding Corollas that were far better suited to the average chinese driver.
This is missing a crucial detail. The reason why Buicks are so immensely popular in China is because that’s what the heads of state have always driven.
@autosavant
Good points, but I wouldn’t go so far as to say that Korea and Japan were allies. They belonged to the same bloc by both being allied to another interested pole but they were never allied in either the traditional or formal sense. Not even in the Greek/Turk sense. :)
@Bertel Schmitt
The conventional wisdom is CW for a reason. And neither do things change that fast. For every Korean wave, there’s an accompanying counter manga.
Last year, I had an eye-opening and amusing experience in Cambodia. I speak both Korean and Japanese natively so when traveling alone as a tourist, I’ll often (discretely) crash guided Korean or Japanese tour groups. I usually go for the ones with more women. Anyway, the mob us-vs-them mentality is real and isn’t going away any time soon.
Just because Japanese folks love their Korean soap operas and Koreans kids are inseparable from their Nintendo DSs means squat, especially the moment Japanese military history is brought up in a mixed group.
Katie, your Swedish car buyer stereotype is a decade or two out of date. The vast majority of the folks you describe long ago abandoned Volvo for Subarus, Toyota Priuses, Smarts and others.
mkirk wrote:
Not a lot of Saabs and Volvos in the Wal Mart pparking lot though.
That may be true, but it has more to do with the fact that there aren’t a lot of Saabs and Volvos in any parking lot than the conclusion you reached.
If a brand is immensely popular in China, then it’s Volkswagen. Have a look at the chart. The two VW JVs, added together, nearly outsell GM China 2:1 . As you can see, the Japanese aren’t so shabby either.
# Bertel Schmitt :
September 9th, 2009 at 11:36 am
If a brand is immensely popular in China, then it’s Volkswagen. Have a look at the chart. The two VW JVs, added together, nearly outsell GM China 2:1 . As you can see, the Japanese aren’t so shabby either.
I was in Shanghai on business in May-July 2006 and saw a whole lot of these 4-door Passats. These were really old designs, probably 3 or 4 generations before the current ones, much smaller and very uncomfortable as Taxis, virtually no legroom, and even no elbow room if you gave up and sat next to the driver, who wore white gloves (!) and was enclosed in a plastic bubble that went well into the passenger seat.
I was in Shanghai on business in May-July 2006 and saw a whole lot of these 4-door Passats.
Autosavant: Those weren’t Passats, those were Santanas. Still kindof based on the old 85 vintage model. Very popular with Shanghai taxi drivers (and nobody else.) (Beijing taxi drivers like their Jettas.) Shanghai VW makes the Passat, based on the B5 platform. VW wanted them to switch to the newer B6 platform, they refused. So VW sold the B6 platform to their other joint venture, FAW, who sell the B6 Passat under the “Magotan” name.
Production of the Santana is said to end in 2012.
” Bertel Schmitt :
September 9th, 2009 at 12:18 pm
I was in Shanghai on business in May-July 2006 and saw a whole lot of these 4-door Passats.
Autosavant: Those weren’t Passats, those were Santanas. Still kindof based on the old 85 vintage model. Very popular with Shanghai taxi drivers (and nobody else.)”
Sure they were called Santanas, but, as both you and I mentioned, they were really old Passats, maybe as old as the 85s you mention. Their interiors sure looked like the lousy 80s cheap hard plastic interiors.
” Shanghai VW makes the Passat, based on the B5 platform.”
I saw far more shiny black buicks on the streets there than more modern passats. Even some big BMWs and LS400 lexi, but not many modern Passats.
” VW wanted them to switch to the newer B6 platform, they refused. So VW sold the B6 platform to their other joint venture, FAW, who sell the B6 Passat under the “Magotan” name.
Production of the Santana is said to end in 2012.”
Vielen Dank for the extra info!
> John Horner :
> Volvo S80s priced like Toyota Camries would sell like hotcakes. Only a small
> minority of American consumers care about human rights or anything else
> which doesn’t obviously affect them personally and directly.
S80 are already priced like Toyota Camrys. People do not buy them anyway.
Sure they were called Santanas, but, as both you and I mentioned, they were really old Passats, maybe as old as the 85s you mention. Their interiors sure looked like the lousy 80s cheap hard plastic interiors.
That’s the problem when one’s worldview is based on a short visit. When I first arrived in the USA in 1976, I thought all American cars look like Checker taxis. And when I moved to Virginia a few years later, I thought, all Americans drive S-10 stepside pickups with at least three shotguns in the rear window, and 3 dawgs in cages in the back.
Have a look here if you want to know what is really selling in China.
Bertel Schmitt “That’s the problem when one’s worldview is based on a short visit.”
I can’t believe you are referring to me? You must not have read the rest of my post, where I detailed all the other cars I saw in Shanghai.
In addition, I was not there as a tourist for a week, as I said, I was there on Business for more than a month, may-July 2006.
KatiePuckrik :
September 9th, 2009 at 6:43 am
So how will they reconcile the fact that their favourite cars are owned by a country with, shall we say, slightly dodgy human rights?
———————————————–
Like invading Iraq, rape and kill their girls? Or, tap innocent citizens without the permission of law? Or, set up secret prisons, torture suspects and detain them forever with absolutely no concrete evidence against them.
That explains why GM is in such a mess.
wsn, please allow me to make some corrections. As Katie is from the UK, so that absolves them of wire tapping at least, maybe the other stuff too. They have demonstrated quite a bit of human compassion to the Lockerbie bomber. Lastly, GM is not their problem, their automotive industry happens to be thriving.
“Like invading Iraq, rape and kill their girls? ”
Sounds like somebody from the “Arab Street” who also believes in assorted WTC consporacy theories…. FACT: It was the brutal Saddam Hussein that had the rape rooms in his prisons, which themselves were nothing compared to his brutal Killings of dissidents by throwing them in industrial-sized meat grinders. Give me a break, this is not the place for mindless Anti-americanism.
“Or, set up secret prisons, torture suspects and detain them forever with absolutely no concrete evidence against them.”
There is as much “secret” aboput th elocation of Guantanamo as to the claim that waterboarding, which I experienced from a playful friend in shallow water at the beach, while fooling around and wrestling back in 97, and emerged utterly unscathed, of course, is ‘torture’…LOL.
That explains why GM is in such a mess.
Con’d
“That explains why GM is in such a mess.”
THAT explains it? LOL… Unless Hell freezes over, Aristotle would not buy that.
How do free-market ideologues square the success of China’s government run industries with the belief that anything government touches always fails?
Wow – you really don’t know much do you?
http://en.wikipedia.org/wiki/Chinese_economic_reform
How do free-market ideologues square the success of China’s government run industries with the belief that anything government touches always fails?
Isn’t this precious.
First of, free markets and free trade WORK, they generate peace AND prosperity that Mao-styled Commies cannot even DREAM of. China was a basket case under Mao, but under the realist, common-sense PRO Market DENG, it porospered.
And even today, which are the few failing Chinese Businesses? All of them are state-owned large dinosaurs where nobody has any incentive to be efficient and succeed.