NEVS to build Saabs in China for sale in China?

It’ll be interesting to see if there’s any official response or comment to this report from China Auto Web:

Qingdao Qingbo Investment Co. Ltd., State Power Group Co. Ltd. and its Swedish branch signed an agreement on January 7 to build Saab cars in Qingdao, Shandong, according to the city’s newspaper, Qingdao Daily. State Power Group Co. Ltd., based in Beijing, is a sister company of National Electric Vehicle Sweden AB (NEVS), which bought Saab Automobile AB in June 2012. Both are subsidiaries of National Modern Energy Holdings, founded and controlled by Jiang Dalong (Johan Kai Jiang), a Chinese with Sweden citizenship.

According to the report on Qingdao Daily, the three sides of the agreement pledged 10-billion-yuan investment for the construction of a vehicle factory designed to roll out 400,000 Saab cars a year. In the first phase, half of that planned capacity will be installed with a spending of 4 billion yuan. Both traditional and alternative-fuel vehicles carrying the Saab brand will be produced. Besides the vehicle factory, Saab China’s R&D, sales, and procurement centers will also be built in Qingdao, a harbor city in northern China.

That’s not official, of course, but it contains a hell of a lot of detail for a report with no substance.

I took a reasonable beating for suggesting that building Saabs in Sweden for sale in China wasn’t a feasible idea. I took a reasonable beating for suggesting that electric was too niche.

To those who were happy to hand out that beating – if you’re questioning a business plan that doesn’t make sense, it doesn’t mean you’re a “naysayer”. It means you’re realistic and you want the situation to make sense for your friends and former colleagues who have an interest in the future of the company.

Right now, it’s making slightly more sense than it did before.

400,000 capacity in China and an additional 190,000 capacity in Trollhattan still doesn’t make sense, but then neither would building a smaller factory in China with whatever money they might seek from the authorities there as part of the investment. If you’re going to do it, you may as well do it big.

Wait and see, now, for something official on the issue.

——

ADDENDUM:

20 minutes after posting this article, I got the following advice via email:

Nordstrom

Screw you, Nordstrom.

It’s only my opinion, of course, but never has there been one man who did so much to destroy Saab in the eyes of the Swedish public (whilst making money on the side from it, too, by way of his Muller book).

You give the press a bad name.

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19 Comments

  1. Since Saab hasn’t made cars in those numbers ever, it would seem to be a bit of a stretch to sell them, given the recent history. There would need to be either a huge improvement in the engineering or a cut in the price, or both, and then it will take years to get to those production numbers.
    I would welcome any new production, however .

  2. So there going to build over half a million cars a year?

    First Maserati declares they’re going to build 50,000 cars a year in 3 years – and now this. What’s going on?!

  3. Two points:
    a- 400,000 capacity doesn’t mean that they plan to build that many cars. That’s the maximum they could possibly build while running multiple shifts and using all of the floor space. If they were planing on building 400,000, they would announce a million in capacity.

    b- GM US sold over 100,000 cars that are based directly on Saab designs and technology in 2012 (SRX, Verano, XTS). Two of these three lines are still ramping-up. There’s nothing wrong with Saab’s engineering. There’s also no reason why NEVS can’t hit their targets if they promote and distribute the cars well.

  4. How long before the machinery , or most of it, moves from Trollhattan to china?

    Making Chinese market cars in china makes far more sense than making Chinese market cars in Sweden.

    Making a 400000 unit capacity factory for a brand that is defunct, and a car that is either old, or doesn’t exist seems wishful thinking at best, and seems to imply that all the other existing brands are doing little or nothing in terms of investing in electric vehicles.

    I still think that the

    1. …. (Pressed post accidentally)….

      I still think that the Swedish part of the equation will be a few people doing R&D to make it appear that the brand is Swedish.

      They will blame any non restart in the traditional sense on “unforeseen supplier issues” , thus we tried.. But it can’t be done.

  5. Simon, much as I love Saabs in many respects, having spent a lot on mine fixing marque-wide issues that were never recalled, I am not sure how much of a good name remained. Had it been good, customers may have kept buying in greater numbers.

    As regards the announcements, I share a degree of cynicism regarding the likelihood of such numbers ever materialising and doubt the cars will resemble the Saabs we know. On the other hand, I am enthusiastic about electric propulsion, particularly if we can find efficient means of generating electricity and hope they succeed on that basis. I am sure there was much nay-saying about motor cars when they first appeared, regarding speed and infrastructure as there is today regarding a wholesale change in propulsion etc. In time I hope that such changes can and will occur.

  6. If you look at the recent reports of the Chinese car market it (a) made and sold more cars than Europe, and that was including Russia and Turkey into the mix (I have no idea why they did that) and (b) no one made any money because there are hundreds of small car companies.

    Which goes to scale and the main advantage NEVS has. If they can make sure that there is a link between the cars they build and a European brand then they might be able to pull it off by charging higher prices than their local competition. The average number of cars made by these smaller Chinese companies is between 70-120,000 (which is why they don’t make money).

    There’s bound to be consolidation over the next few years as its unsustainable for China to have so many companies not making money.

    One other point, 2012 was the first year China exported more than a million cars abroad. Mainly cheap cars to places like Bulgaria and Iran.

  7. Steve, I think its a bit early for you to give up your present job and book a ticket back to THN. But I have no doubt that somewhere in the not too distant future, NEVS is going to come looking for you.

  8. Here’s what I think (IMHO) :

    At the end of the day NEVS plan is to sell SAAB cars in China. Period. These cars will be manufactured in China, as common sense woul dictate. Period.

    However, to compete on an overly competitive chinese market, NEVS’ cars need to be more upmarket versus what the chinese car industry is producing today. And for that it needs European track record. That’s where THN comes into play.

    I think they will build cars in THN to sell in Europe – not huge volumes – but enough to establish the brand as premium in the eyes of the chinese consumers. Once that is achieved and the brand has euro-credibility, they will start selling them as a premium chinese brand, built locally, but to EU specs.

    So Europe is no end, just a means to achieve the goal : selling SAAB as a premium brand in China. They are not the only chinese manufacturer that has come to this conclusion. 2013 will see the emerging of at least one other new chinese brand that has exactly the same strategy (starts with a “Q”).

    Now, whether the fact that selling in Europe is merely a passageway to achieve the final target, selling in China, is a good or a bad thing for Europe is open for debate. It’s a bit like Europe is a neccessary pain to achieve the final goal : China.

    If that means the SAAB brand gets another shot at life in Europe, albeit as a secundary market, maybe that’s a good thing.

    2T

  9. If Jens B Nordstrom is not the definition of a “parasitic” opportunist i don’t know who is. I remember the idiotic efforts he made at SU writing comments as a anonymous disgruntled “saablover” to plug his book. The sad thing is even if the book might have sold badly(?) other automotive journalists like Robert Collin based a whole articles on slander they fond in the book.
    What even only half decent man would ever get the idea to speed write a book full of slander about the the guy trying to do his best to save a small and beloved company with its belly up? I would say none, it takes a lowlife to even think about this as a opportunity to make money.

  10. We know that Beijing Automotive Group (BAIC) bought the production rights of the old 9-5 and 9-3, and is building models of their own based on these old Saab models.

    http://en.wikipedia.org/wiki/BAIC#Saab_technology_transfer says:
    “Cars based on Saab technology should go on sale in 2012; the first will be the C70G or 绅宝, which may be translated as “gentleman’s treasure”.”

    To those who doesn’t know, the words 绅宝 (pronounced “Sun Po” in Cantonese) have long been the official Chinese transliteration of the Saab brand adopted in the Hong Kong market.

    In my view, using another car maker’s brand name as the name of your own model is passing off and unconscionable.

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