Beijing Auto shells out $200m for automotive technology from Saab

Beijing/Hong Kong: Beijing Automotive Industry Holding Corp (BAIC) said it paid $200 million (Dh734.6 million) for technology from General Motors' Saab unit, allowing it to roll out Saab-based cars as soon as 2011.

The intellectual property bought by BAIC, China's fifth-largest automaker, includes the rights to three overall vehicle platforms, two engine technologies and two transmission systems, BAIC said in a statement ahead of a news conference yesterday.

BAIC, which hastily arranged the purchase after a group led by Swedish sports car maker Koenigsegg pulled out from a deal to buy all of Saab, plans to immediately start integrating the Saab technology into its vehicles.

Simple technology

"The overseas technology takeover by BAIC is not only targeted at simple technology, such as manufacturing blueprints, but also the management systems that will enable BAIC to continuously develop and produce high quality vehicles," the company said in the statement.

BAIC, which had been a part of the Koenigsegg group bidding for Saab, expects commercial production for Saab-based cars to begin as soon as 2011.

The acquisition includes the intellectual property for Saab's 9-5 and 9-3 sedans and some equipment to make them, leaving the fate of the Swedish-based automaker up in the air.

Luxury car maker Spyker was in talks to buy Saab from GM, but those negotiations broke down last week with GM saying it would close down the Swedish automaker.

But Russia-backed Spyper came back this week and said it was still interested in pressing ahead with a deal for Saab, fanning the Swedish carmaker's faint hopes for an eleventh-hour reprieve.

Development time

BAIC will launch an aggressive campaign to develop its brand both at home and overseas. BAIC said it will invest 33 billion yuan (Dh17.6 billion) in vehicle R&D over three years.

"Someone has commented that the purchase of Saab's intellectual property can help cut short the development time for Beijing Auto's own-brand passenger vehicles by 4-5 years," BAIC Chairman Xu Heyi told reporters yesterday. "We basically agree with the view."

Construction of a production facility with annual capacity of 150,000 passenger vehicles will be complete in 2011, he added.

The sales target is a bit aggressive, said Tan Kunyuan, an analyst at Changjiang Securities. "It will take at least a year for the market to recognise the brand and BAIC probably would need to modify the appearance of Saab cars to fit with Chinese market demand."

China overtook the US this year as the world's largest auto market, as sales soared after Beijing rolled out a series of incentives designed to stimulate consumer spending during the global downturn.

However, there is still a significant technology gap between domestic Chinese automakers and their global rivals, which has left Chin-ese looking for acquisitions of overseas technology and designs as the global auto industry restructures.

Xu said BAIC posted net profit of 6 billion yuan on revenue of 116 billion yuan for 2009, selling 1.24 million vehicles.

• 33b yuan to be invested for research and development
• 2011 is when production of vehicles will begin