Saab Partnership Deal With Chinese Automaker Hawtai Collapses
2011 Saab 9-3 2011 Saab 9-5 |
The Saab story continues to offer more twists and turns than the plot line of a typical soap opera with new revelations this week that the Swedish automaker's planned partnership with Chinese car company Hawtai Motor Group has fallen through. Presented as a done deal just one week ago, according to The Detroit News talks between the two organizations have reached an impasse.
Hawtai had been announced as a new and significant investor in Saab in a plan which would see the company purchase 29.9 percent of the company at a price tag of $172 million. Hawtai, a large concern which produces 1.5 million automobiles a year for sale exclusively in China, had been keen on achieving a technology-sharing relationship with Saab that would, as described in an article published by Automotive News have seen Saab eventually offering Chinese-built cars in North America.
According to Saab chairman Victor Muller, the brand's dealership network ''¦is the biggest asset not on our asset sheet, and [Hawtai] buy into it for free.'? Muller pointed out that the financial investment and time required to build a reliable network of dealers in the United States was daunting to any overseas automaker seeking to penetrate the American market, and that Hawtai would be able to take advantage of Saab showrooms to sell ultra-low price vehicles.
What deep-sixed the seemingly solid deal that had been hammered out between the two car companies? As with many business ventures between western companies and native Chinese organizations, approval from Hawtai's stakeholders was required to move forward with the planned investment, and that go-ahead was ultimately impossible to achieve. Although Saab is making an effort to resurrect negotiations with Hawtai, it has publicly backed away from the idea of an exclusive partnership between the two brands, with Saab stating that it is examining all of its Chinese investment options at the current time.
Although the failure of the Saab / Hawtai deal might seem like a setback for the struggling European car company, the strategy of partnering with a corporation determined to sell lower quality, sub-$10,000 automobiles in the United States might not have been the best position for the automaker to take. For starters, the brand confusion that could have resulted from ultra-entry-level cars sharing showroom space with Saab's premium-oriented models would not see to be a positive step for a brand that is fighting to re-establish its identity in the United States. Even more alarming were comments made by chairman Muller regarding the potential safety issues surrounding the Hawtai vehicles destined for import. Muller characterized them as products that would use low prices to overcome buyer concerns about safety, stating that shoppers in that segment would not 'worry about a five-star [crash rating]'? because the cars would 'look good.'?
Saab has historically been associated with a carefully-cultivated image that projects the values of technological sophistication, performance and safe motoring. To seemingly cast that aside in favor of a partnership with a low-end automaker willing to sacrifice safety for sales numbers could be major turn-off to brand loyalists which have stuck with the quirky car company through stormy financial times.