On May 2nd, Saab announced that it had come together with Hawtai to form an alliance that would see the Saab 9-3 produced in China and Hawtai make some serious investments in Saab’s European operations that would help to keep the wolf from the door. A hastily organised press conference was announced for May 3rd, the first day back at work for China after the extended weekend. From start to finish, Saab management spent 9 days on talking with Chinese partners, they talked with Greatwall, Youngman and Jiangsu Yueda, of course Hawtai won out in the end as the dark horse, but notably Saab’s friends at Beijing Auto were not interested in the deal this time around.
Prior to Hawtai’s buying into Spyker and thus Saab, a quick succession of senior management walked out of Hawtai’s doors never to return. Hawtai CEO Mr. Liu Zhi Gang and also Vice President Mr. Xu Chao, left their posts at Hawtai in recent weeks for reasons that are still unclear, however the pair of them leaving at a critical time for the company, Hawtai are aiming to move from being a small time SUV maker into a high end sedan manufacturer with a series of new sedans.
Looking over the Hawtai list of CEO’s is quite the task, Hawtai Group have been in the automotive business for 11 years, but during that 11 years they have had 6 people take the CEO position at Hawtai Auto and all have left after averaging 2 years on the job. But the CEO is not the only person to have jumped ship in the past few weeks, the auto sales company general manager, the vice manager, and the director have all left their positions, looking over at the Hawtai Group that owns Hawtai Auto is a similar story – the group CEO, as did his immediate subordinate and director, even the holding company director has left.
The B11 sedan was supposed to be Hawtai’s big game plan to revitalize the company and move them from their Hyundai based SUV’s and into the high end sedan market, the B11 launched in December but early sales indicate that the car is not moving as fast as expected, January saw just 450 B11′s sold, but sales picked up in march at 868 units sold and dropped slightly in April to 860 units sold. The B11 launch was spearheaded by former CEO, Liu Zhi Gang, it is possible that poor sales of the B11 are what pushed him out of a job.
Liu Zhi Gang came to Hawtai from Brilliance, his predecessor at Hawtai who also walked out after two years in the captains chair was a Mr. Tong Zhi Yuan. Mr. Tong jumped from the Hawtai ship to help Geely with the Volvo takeover, but prior to his leaving he was heavily involved in negotiations with Saab when GM were considering selling Saab to Beijing Auto Industry Corporation. BAIC were deep in talks with GM, they wanted the Opel brand, the technology, the IPR and the factories, but only the first and the last of these things were on the table. BAIC’s rival, Shanghai Auto Industry Corp, were a little uneasy about their northern neighbor getting their hands on Opel, especially as they already produced the Opel Insignia and Astra in China under the Buick name, having to do a deal with BAIC would have beenÂ uncomfortableÂ to say the least. Later theÂ National Development and Reform Commission (NDRC), the government department that is charged with overseeing all overseas investments over 100 million USD shut down the BAIC-Opel deal as there was clearly nothing valuable on the table, the Chinese government wants its state owned car companies to acquire technology, not overseas factories and worker liabilities. It’s hard to see how this situation has changed at all, Saab’s 9-5 sedan rides on top of the Epsilon II platform which is of course shared with the Buick Regal in short wheelbase form and long wheelbase form for the larger Buick Lacrosse.
On the surface, it looks like Hawtai are going to have a hard time selling their case for investment in Saab, the only notable point that Saab could bring to the table would be a 50:50 joint venture partnership in China to produce the Saab 9-3 for the Chinese market, but even that might not able achievable until 2013 as the factories and supply chains need to be set up, also the Saab dealership network in China is now closed after GM announced that they would shut down the business by the end of 2010. Hawtai’s vice president, Zhang Rui Jun appears confident that Hawtai can sell 100,000 to 200,000 Saab’s in China.
Recently the Chinese Government has been very strict towards foreign joint venture companies entering into the Chinese market or even contemplating expansion. Chang’an Mazda, Guangzhou Mitsubishi and Chang’an PSA have all encountered difficulties in getting their plans approved, and these are big state owned car companies, even FAW-VW had issues with pushing forward for their expansion in Southern China, local authorities have approved them in many cases but the NDRC have put pressure on them to provide more figures and estimates. Its unclear as to how a small auto company despite its powerful parent, is going to persuade the NDRC that its investment into a loss making company such as Spyker is going to be a financially viable plan. It appears that even the Swedish embassy in Beijing has its doubts about Hawtai’s ability to lead a world famous auto brand when its own auto brand is barely a toddler in the world automotive business and has only just released its own branded cars.