US: GM reportedly talking partial Saab sale to BAIC
- GM reportedly discussing partial Saab sale with BAIC
- Other Saab bidders will have to show financing
- BAIC could use older Saab tooling for China production
General Motors is talking to China's fifth largest car maker, BAIC, about a partial sale of assets associated with its Saab brand, including tooling and technology, sources "with direct knowledge of the discussions" have told a news agency.
Beijing Automotive Industry Holding Group made clear it has no interest in acquiring Saab's production hub in Trollhattan, Sweden, according to the anonymous Reuters sources.
Under the proposed deal, BAIC, which lacks its own car brand, would set up production in China based on an older generation of Saab vehicles, including the 9-5 and 9-3 models, the sources said.
Swedish media reports last Friday said Saab had already sold the production equipment for the outgoing 9-5 models to BAIC.
Sweden's Ny Teknik newspaper, quoting unnamed sources, reported a deal had already been struck between Saab and the Chinese automaker for the production tools for the old 9-5 sedans, Reuters said on 4 December.
The reports said Saab had begun dismantling the production line for the old sedans in October as part of a plan to send the equipment to China and make way for its new 9-5 line due to go into production early next year. Saab itself had declined to comment.
Todays Reuters report said the partial sale of Saab technology to BAIC would likely clear the way for a liquidation of other assets held by the brand, including its headquarters, and could threaten more than 3,000 jobs in Sweden.
At the same time that GM is talking with BAIC, it is also vetting several other bidders that have expressed an interest in buying all of Saab, the sources told the news agency.
BAIC and GM both declined to comment.
Reuters noted that BAIC had said it remained interested in Saab as part of an industry-wide push by Chinese carmakers to upgrade their technology and expand production.
GM has said it will not discuss any Saab negotiations because of confidentiality agreements with potential bidders.
Reuters sources added that GM's board wants to see that any potential bidder has financing lined up by the end of December and will set a strict time limit for any deal.
Although the Swedish government could still intervene to tip the balance, those tough conditions and the fast timetable make it more likely that a partial sale of Saab to BAIC will be the only viable option for GM, one of the sources said.
It was not immediately clear if any Saab-derived models built by BAIC would be sold in a way that showed their association with the historic brand, one source said.
The valuation of the intellectual property BAIC would be buying also was not immediately known.
GM's board has said it will take until the end of December to consider whether it can conclude a deal to sell Saab.
Last week, BAIC obtained a US$2.93bn line of credit from the Bank of China, the report added.
Beijing-based BAIC has Chinese joint ventures with Daimler and Hyundai Motor.
Dutch specialty car maker Spyker Cars and privately owned Renco Group, backed by US financier Ira Rennert, have both also expressed interest in Saab.
Reuters noted that US automakers have offered tooling for outdated models to car companies in emerging markets before.
Earlier this year, when it was still owned by private equity firm Cerberus Capital Management, Chrysler tried unsuccessfully to sell the tooling for its once-popular PT Cruiser to a range of Chinese automakers, executives said.
GAZ builds an updated previous-generation US Chrysler sedan line in Russia, selling it as the Volga Siber.