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Beijing Auto to immediately start integrating Saab designs First vehicles using Saab IP available as soon as 2011

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Beijing Auto to immediately start integrating Saab designs

First vehicles using Saab IP available as soon as 2011

DECEMBER 18, 2009 11:46 CET

BEIJING (Reuters) -- Beijing Automotive Industry Holding Co. said on Friday it will immediately start integrating its newly acquired technology from General Motors Co.'s Saab unit into its vehicles.

BAIC, China's fifth-biggest automaker, plans to start production of its Saab-based own brand of cars as soon as 2011.

BAIC recently acquired the rights to vehicle platforms from Saab for an undisclosed sum. One newspaper report said that BAIC paid $197 million for the assets, which include the intellectual property and tooling for the current-generation Saab 9-5 and some IP from the 9-3.

The purchase was put together in just two weeks, after a larger deal unravelled that would have seen a group led by Sweden's Koenigsegg Group AB buy all of Saab. BAIC had been a part of Koenigsegg's bid.

"We will start integrating right away," Gu Lei, president of BAIC's technology center, told reporters at a news conference. He added that commercial production for vehicles with the newly acquired technology could start as soon as mid-2011.

BAIC President Wang Dazong said his company and Saab are also exploring other opportunities involving other technologies such as "new energy" vehicles.

"We need to have our own brand cars, and we need to grow our competency," he said. "We need to become a global company."

BAIC has made clear it has no interest in acquiring Saab's production hub in Trollhattan.

Looking to grow

The Saab-BAIC deal follows Chinese company, Sichuan Tengzhong Heavy Industry's purchase of GM's money-losing Hummer unit. Both are part of the U.S. auto giant's restructuring following a short-lived bankruptcy in the summer.

Wang would not disclose the transaction amount for BAIC's purchase of the Saab designs. But Swedish business daily Dagens Industri put the number at 1.4 billion crowns ($197 million), citing a source who was involved in the process.

China surpassed the United States this year to become the world's largest auto market, as sales soared after Beijing rolled out a series of incentives designed to stimulate consumer spending during the global downturn.

The company's production partners in China include Daimler AG and Hyundai Motor Co., with most of their joint output for sale in the domestic market.

Wang said BAIC's exports are still relatively small, at about 50,000 vehicles this year. He added it is still too early to say if vehicles produced using the Saab designs could be used for export.

"We need time to develop more plans, integrating the technology into our vehicles," he said. "Those plans are in the works."

Most Chinese automakers are either churning out foreign brand cars in tie-ups with global heavyweights such as Volkswagen AG and Toyota Motor Corp. or focused on the lower end, making cars as cheap as 30,000 yuan ($4,394).

But as wealth grows in what has now become the world's biggest auto market, many Chinese carmakers are looking to boost their profile.

The Chinese government is envisioning that half of passenger cars sold in the country to be self-developed by 2015, according to a media report earlier this week, citing government guidelines, which are expected to be released in the first half of 2010.

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