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Category: Saab

Global Insight: GM likely to veto any BAIC deal for Saab

Saab looks likely to die because the one remaining tie-up possibility, the China option, would involve the transfer of technology and intellectual property that would be unacceptable to General Motors, according to IHS Global Insight.

The sale of Sweden's Saab from GM fell through when supercar maker Koenigsegg said it was backing out of the deal.

Beijing Automotive Industry Corp. (BAIC), which has expressed an interest in expanding internationally, had taken a minority interest in Koenigsegg to help the company's takeover of Saab, and the spotlight turned to BAIC as a possible buyer.

According to Global Insight analyst Paul Newton, this isn't going to happen.

"The problem is that Beijing will be interested in the one thing it is unlikely to get its hands on - the technology from GM - and is therefore unlikely to reach an agreement and prevent the Saab brand from disappearing from the automotive landscape," Newton said.

Saab's new 9-5, set for launch in the New Year, is based on GM's new Epsilon 2 platform, which is also used in the Opel Insignia and Buick LaCrosse. The Saab 9-3 uses the old Epsilon platform.

"BAIC no doubt wanted access to this technology and crucially planned to open up Saab distribution in China, where GM has an extensive and highly successful joint venture with BAIC's rival, Shanghai Automotive. GM sells large numbers of both platforms in China under the Buick brand and it is unlikely that GM would view BAIC's involvement as positive in this light," Newton said.

Newton said GM's newly strengthened position after the U.S. bailout explained its decision to hold on to Opel, and means it will likely resist a deal with BAIC.

"New GM is not prepared to sell its intellectual property to all-comers for the sake of some short-term gain," Newton said.