IMPORTANT NEWS: National Electric Vehicle Sweden has agreed to buy the assets of Saab Automobile and the sale is expected to be finalized during the summer.

Tuesday, June 14, 2011

More details on China deal

China Car Times today published some more details on the joint venture between Saab Automobile, Pang Da Automobile Trade Co and Youngman Lotus Automobile Co. As reported yesterday, in the joint venture for distribution and sale of Saab cars in China Saab and Youngman will each own 33 % of the shares and Pang Da 34 %. According to China Car Times the joint venture’s registered capital will be 50 million yuan (approx EUR 5.3 million) , and its total investment will be 125 million yuan (approx EUR 13.3 million). The venture's board will consist of three directors, with each party naming one director. The validity of the future contract will be 30 years.

Also as reported yesterday, the joint venture manufacturing will be owned 45 % each by Saab and Youngman and 10 % by Pang Da. The registered capital and total investment will be determined after negotiation among the three parties. The board will have five members, two named by Saab, two by Youngman Lotus, and one by Pang Da. The validity of the future contract will be 50 years.

Since China's National Development and Reform Council (NDRC), which is China's top economic planning body, will have the final say if Pang Da and Youngman's investments into Saab will be allowed, there are of course still uncertain if this deal will be finalized. We all remember how the deal with Hawtai collapsed only 10 days after it was entered. But it is worth noting that Youngman has been negotiating with Saab for several months and the company has been very eager to become partner with Saab. In fact so eager that the company filed an application with the NDRC even before Saab made the deal with Hawtai. The NDRC has made it clear that the company which has filed an application will have the prioritized right to invest in Saab. There can only be one application filed with the NDRC at a time. Already back in 19 May CEO and founder of Pang Da, Pang Qing Hua, said that the NDRC could recommend a manufacturing partner for Saab and Pang Da. In other words, it is very likely that both Pang Da and Youngman have been in talks with the NDRC and received their advice to partner up during the process that ended with the deal with Saab and Pang Da.

Board secretary of Pang Da Group, Wang Yin, said according to China Car Times that they believe the deal with Saab could get approvals from the concerned authorities successfully.

I am an optimist and believe that this deal will be finalized.