Beijing Automotive Joins Koenigsegg’s Bid to Buy GM’s Saab Unit

Beijing Automotive Joins Koenigsegg’s Bid to Buy GM’s Saab Unit

By Niklas Magnusson and Toby Alder
 

Sept. 9 (Bloomberg) — Beijing Automotive Industry Holdings Co. Ltd., the fastest-growing car manufacturer in China, joined Koenigsegg Group’s offer to buy Saab Automobile from General Motors Co. to propel model development and sales growth.

Beijing Automotive will become a minority shareholder in the team bidding for Trollhaettan, Sweden-based Saab and help the unprofitable GM division find opportunities to expand in China and other markets abroad, the group, set up by sports-car maker Koenigsegg Automotive AB, said in a statement today.

Chinese carmakers have been looking at investing in Europe to gain sales and technology. Geely Automobile Holdings Ltd. said yesterday that its parent is involved in a possible bid to buy all of Ford Motor Co.’s Volvo Cars unit in Sweden. Beijing Automotive, which had also expressed interest in GM’s Opel and Vauxhall brands, may start sharing technology with Saab, said Christian von Koenigsegg, the sports-car company’s founder.

“Wherever synergies can be found that are beneficial to both parties they should be looked upon, and I’m sure we can find a lot of good mutual benefits in the future,” von Koenigsegg said in a telephone interview today. “We plan to utilize the distribution channels given by BAIC in China.”

China’s gross domestic product may increase 9.5 percent in 2010 after an 8.3 percent gain in 2009, according to a Bloomberg survey of 22 economists conducted the week ending Aug. 28. Full- year vehicle sales in China, the world’s most populous nation, may rise 28 percent to as many as 12 million units, the country’s top planning agency said Sept. 5.

Carmakers’ Deliveries

Saab sold fewer than 100,000 cars worldwide last year. Beijing Automotive forecasts it will deliver 1.13 million vehicles in 2009, according to Koenigsegg.

“China is the biggest market in the world,” von Koenigsegg said. “It is bigger than the U.S. and Japan together, and given that Saab has no presence there at all, it should change things rapidly” to enter the market.

Saab would retain production in Sweden, while it may follow other automakers in building assembly lines or starting partial production in China to avoid tariffs on imported vehicles, von Koenigsegg said. The Trollhaettan plant’s production capacity is 200,000 cars a year, he said.

GM sought a buyer for Saab when the Swedish unit, which has been unprofitable for most of the two decades that the Detroit- based company has owned it, was granted protection from creditors in February. GM reached an agreement in June to sell the division to Aengelholm, Sweden-based Koenigsegg.

Team Members

The bidding group is led by Augie Fabela, a U.S.-based co- founder of OAO VimpelCom, Russia’s second-largest mobile-phone company. In addition to closely held Koenigsegg Automotive, the 15-year-old maker of the $1.2 million CCXR high-performance sports car, the team includes Baard Eker, a Norwegian industrial-design entrepreneur.

Saab said yesterday that Koenigsegg had raised the funds needed for the purchase after a new investor helped fill a $400 million financing gap. Completion of the sale to the Koenigsegg team is tied to Saab getting $600 million in funding from the European Investment Bank backed by Swedish state guarantees, as well as transitional assistance from GM.

“China is a big market and previous partnerships with Chinese companies have been good experiences,” Swedish Industry Minister Maud Olofsson told reporters in Stockholm today. “We will make a strict assessment of the business plan” for the Koenigsegg transaction.

The GM division traces its origins to Svenska Aeroplan AB, an aircraft maker founded in 1937. The aerospace company, which builds the Gripen fighter jet, is now a separate corporation known as Saab AB after GM took over the carmaking operations in two stages starting in 1990.

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