China Grope: Desperate Saab Wants to Be a Sino-Swedish Carmaker

Saab is once again on the brink. After running out of money earlier this year, it has turned to a variety of financing sources to stay afloat. For a while, it looked as if it might receive a cash infusion from Vladimir Antonov, a Russian businessman of dubious repute. Then the Chinese entered the picture. Now more Chinese have expressed an interest -- as Saab runs ought of dough again! And that means that Saab eventual destiny, if it survives, will be far different than anyone thought.

What will Saab become?
Saab has a reputation for quirkiness and semi-luxurious quality that traditionally appealed to bohemian preppies on the U.S. East Coast. General Motors (GM) drove most of that out in an effort to turn Saab into a BMW competitor. When Saab was sold to Spyker, a Dutch supercar maker, there was brief speculation that Saab might become a "design" brand, along the lines of MINI.
But now the CEO, Victor Muller, appears to have a whole new concept in mind -- driven as much by prospective Chinese partners as his own ambitions, which frankly have been reduced to keeping Saab from dying off.

There are two Chinese firms in the picture: Zhejiang Youngman Lotus Automobile Co. and Pangda Automobile Trade Co. The former is a manufacturer, the latter an operator of dealerships in China. Together, they would assume a 55 percent stake in Saab. But would they build sell Saab as we have come to know them?

A Saab by any other name...
In the short term, probably yes. At any rate, they would manufacture the 9-5 sedan, which has garnered some positive attention in the West. But one car does not an car company make -- and right now the other two vehicles that Saab sells are pretty long in the tooth.

What would eventually happen is that the Sino-Saab consortium would construct some vehicles in Sweden, but begin to use Western design, engineering, and industrial management talent to develop vehicles that could be built and sold in China. The cars would trade on Saab brand reputation and appeal, at least superficially, to a near-luxury buyership. But it's an open question whether they'd be real Saabs.

And then there's the Chinese government
The biggest hurdle for Muller and proposed merger is of course the Chinese authorities. They appear to be very skeptical about new Western joint-ventures, given that they want to radically reduce the automaking capacity that has exploded in China over the past decade.

We're talking 90 percent here -- that's the fraction of carmakers that China wants to phase out. It sounds ridiculous, but the government believes it can establish an environment in which there may be less innovation but also less needless competition.

Here's a quick take on the core problem, from Bloomberg:

Saab's branding as a niche and luxury product may work against the bid, said Yale Zhang, managing director at Autoforesight in Shanghai. This brand positioning would restrict production at the Youngman-Saab joint venture to fewer than 100,000 units a year, less than the minimum number needed to convince the authorities to approve the tie-up.

But you have to hand it to the guy. He keeps pulling crazy rabbits out of hats. If Saab survives, it will be this kind of madness that made it happen.

Related:

• Saab Is Broke -- but Maybe Russian Money Could Save the Swedish Brand
• Saab Story: A Bailout -- and Russian Moolah -- Looms for the Quirky Automaker
• Auto Comebacks: What Kind of Shape Is Saab Really In?