DealZone

Eastbound Traffic

September 9, 2009

Was there ever any doubt that China, having donned the overalls of the world’s manufacturer, would ultimately emerge as a top bidder in the race for sputtering global auto assets? Not only does the country have the labor force to build the automobile of tomorrow, but increasingly it has the consumer class to buy it.

So it would seem natural for Swedish luxury sports car maker Koenigsegg to tie up with China’s BAIC to help finance its purchase of Saab from General Motors. And news that the parent of China’s Geely Automotive wants to bid for Ford’s Swedish brand, Volvo, is as much a confirmation of a trend as it is evidence of a tectonic shift in the industry.

Like its neighbors Japan and South Korea before it, China has the tools to revitalize the auto industry by applying its low-cost muscle. The trick will be to nurture these imported brands and their technological expertise so they can survive the transition. China has never been known as a paradigm of consumer safety – at least not in a way befitting Volvo.

Japan and South Korea were able to grow their own intellectual capital in the auto industry. But perhaps what the struggling industry needs now, rather than innovation and cutting-edge research, is simply a place with both a production and a consumer base in which to ply its trade.

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