Saab and Volvo – made in China?

September 9, 2009

SWEDEN/At this rate it might not be long before Sweden’s once mighty Volvo and Saab car marques come with “Made in China” stamped on the chassis.

After failing in the auction of Opel, Beijing Automotive Industry Holding (BAIC) is set to take a minority stake in supercar maker Koenigsegg, which is bidding to take over all of GM’s Saab. Meanwhile, Geely Automotive’s parent company Geely Holding Group Co plans to bid for Ford’s Volvo.

Chinese carmakers have had mixed fortunes in their attempts to buy overseas brands. SAIC Motor Corp snapped up 51 percent of Korea’s Ssangyong Motor Co in 2004 but made a hash of running an overseas operation and was later forced to write down the investment.

SAIC had more success with the acquisition of the historic British MG Rover. In the case of Rover,  SAIC simply boxed up the machinery, stripped the plants and took all the technology back to China where it produces the cars of the same design far more cheaply. But in MG’s case, the sportscar continues to roll off the assembly line at the UK’s Longbridge plant.

Technological asset stripping rather than a commitment to build cars in Sweden is what some there fear will be in store for Volvo and Saab should the Chinese firms succeed with their bids. But analysts point out that in the case of Saab, the technology is owned by GM

Stockholm is doing all it can to avoid giving either of its iconic carmakers state financing. If it ends up giving any loan guarantees, it will also want to look very closely at the fine print to make sure it does not sign away its carmaking heritage and the jobs which go with it.


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Reuters have got the story wrong for the last 2 days. First reporting FAW then SAIC and now finally they are correct with BAIC – third time lucky. . .

But the point still seem sto evade. . BAIC will have a minority stake in Koenigsegg Group and not Saab. Plus actually the Swedish Government have cited previous European joint ventures with BAIC as successes.

BAIC actually sell more S-class Mercs than anywhere else in the world.

Come on Reuters, put your A-team on this story.

Posted by ANA | Report as abusive

If the Chinese buy Volvo, who’s going to buy Chinese-made cars? Even if they keep final assembly in Sweden, the “made in Sweden” label would not fool people in the know. Volvo buyers tend to be better educated and informed than average, so they’d figure the label means “made in Sweden from mostly Chinese components”. People who are willing to pay $40k for luxury European import will balk at paying even mid-$20k for essentially Chinese car. They’d rather trade up to German cars, or maybe a bit down to Japanese, but I can’t imagine current Volvo owners who’d agree to have a Chinese car parked in their driveway. Definitely not me (own XC-70, and love it – but will sell as soon as Volvo becomes Chinese brand).
The same applies to SAAB. Opel with SAAB badge already scared away many SAAB buyers, BAIC with SAAB badge will scare away the rest.

Posted by Anonymous | Report as abusive

The Chinese gov. wants to reshuffle China’s car makers, which means BAIC may be mergered bacause the yearly output of BAIC is lower than SAIC and FAW, so it must bid a foreign car cpmpany to raise the output.

BTW, C-class and E-class Benz are produced by the joint venture of Mercs and BAIC, excluding S-class.

Posted by Hurrison | Report as abusive

I think that lots of Chinese people would buy a Saab if it was produced in China and therefore cheaper than if it was exported from Sweden.

Posted by ANA | Report as abusive

I would have to agree with anonymous. I’ve owned saabs since I learned to drive. Once GM bought them the quality increased in reliability but style wise they lost a lot. To now buy a 40k+ vehicle made mostly with Chinese parts would be a big disappointment and would definitely push me off to another European brand.

Posted by BIll | Report as abusive

awake! in an already globalized car industry, who cares where it is made? it’s just capital looking for markets where profit is maximum while labor is the cheapest.

Posted by jake | Report as abusive

We cannot imagine more quality products being made in China. Already 90% of chinese made goods lack quality. Take for instance after IBM has sold there computer making unit to Lenovo quality of laptops is pretty bad laptops noy last for more than one year with loose parts, performance issues. I dont think chinese will not succeed in the world.

Perception in people has already been that Chinese goods are of low quality where people has seen many instances of lead in paint, toys with chemicals and tyres bursting in the middle of the road.

Posted by harish | Report as abusive

Given the fact that the Chinese car market is now the biggest single market in the world (and still maintaining double digit growth), Volvo & Saab will all die a slow death if not owned up by some Chinese auto firms soon. Just look at GM. All its current market growth are now coming from China. People laughed at GM when it opened up joint ventures in China. Now the JV in China is the only profitable division in the GM line up. All this talk about who outside of China will buy Chinese made cars is nothing but BS. The Chinese auto firms must be able to dominate its own home turf before venturing over seas to the developed world. For the time being, the Chinese home market is where all the real action is for both Chinese and foreign auto firms. While everyone is trying to enter the Chinese market due to increasing demand, why would domestic Chinese firms wanting to move out? The intent of all these overseas acquisitions are to beef up competitive advantage in the domestic market.

Posted by upyours | Report as abusive

[...] transferred the assembly from UK to China where the same cars are assembled at a lower cost (see this Reuters blog). GM and SAIC have a joint venture, so maybe GM has seen at first hand some of the tricks used to [...]

If the Chinese purchase Volvo. You may want to consider trading now because the market value of Volvo will drop fast. You will have a car that can be sold at Walmart. I agree people considering a Volvo are smart and it took awhile for them to understand the Ford purchase. Ford should keep Volvo and make it Lincoln or get rid of Lincoln.

Posted by shawn 850 owner | Report as abusive

I had a Volvo 850. That was a piece of crap. Many things have gone wrong with that car. No wonder Volvo is in the red and Ford is ditching it. Volvo is now just selling on their “safety image”. Many educated shoppers now realize that Volvo’s safety edge is no longer there any more. Even Hyundai have caught up with them.

Posted by I hate my Volvo | Report as abusive

I have owned Volvos since I moved to Sweden 35 years ago. Quality and safety pure and simple, but I´ll stop buying them if the chinese are involved. Even if they limit their involvment to financing the purchase from Ford the mere thought of them as owners will sink their reputation (and value.)

Posted by I love my volvo | Report as abusive

Shame on Ford!! if you think I’m switching to Ford…. think again. While we are happy with our Ford Explorer it will be the last one,too.
What a terrible deal for such a classy brand!!

Posted by blondie28461 | Report as abusive