Pangda’s CEO reveals Saab plans in interview
Published May 19, 2011
Chinese Car News | CCTMay 19, 20117:00 pm
The sudden buy into Saab by a relatively unknown Chinese car dealership group took the automotive world by storm earlier this week, the deal was announced just 11 days after Saabs sudden marriage to Hawtai broke down after Hawtai were unable to satisfy Saabs demands. It appears that Saab hammered out a deal with Pangda in extra fast time, but at the end of the day it appeared that Pangda were more interested in gaining products to sell rather than taking over Saab, Pangdas CEO and founder Mr. Pang Qing Hua talked about his plans for Saab in a recent interview with the Chinese website, Auto Sohu.
Translation by China Car Times
Sohu: When did you start talking with Spyker? And what level are you at now?
Pang Qing Hua (PQH): We first started talking after the collapse of the Spyker-Hawtai deal. We went through foreign channels to further understand Saabs problems, we recognised that their underlying issues were sales based, they didnt sell enough to cover their costs. Now the Chinese government is slowing down on joint venture deals, so first we will sell cars in China to slowly enter China, this way there will be less problems.
On the day Hawtai and Saab ended their agreement Spyker came to Beijing to talk business. In the end we talked about prices, Hawtai and Saab said 4.88RMB a share, but we talked about 4.19rmb a share.
During the talks everyone was aiming for the same outcome. Ive personally been involved in many different deals and negotiations and I have to say this was the smoothest one yet. Mr. Muller also has great foresight, whatever problems we have we can work them out. They need finances, but we need a product to sell, everyone is a winner here. I dont want to talk majority ownership with them, and they just want to sell cars in China, so this is great deal.
Everybody knows, Pangda is a well respected company, on Monday we signed a contract, on Tuesday we were preparing to send them 30 million Euros, and now it has already been sent. Saab has promised to restart production within the week and we will go and visit them to carry out inspections.
Sohu: Does Pangda have a time frame in mind for this project, what needs to receive government approval, and when will you build a factory?
PQH: Time is important, as Saab has suspended production for three weeks, according to the contract both parties will aim to set up a sales joint venture within three months and we will set up a production company within the year, within two years we will see Chinese production of Saab vehicles.
Sohu: When dealing with overseas companies, most Chinese companies will undergo multiple rounds of inspections and checks on their proposed partner, but it appears that Pangda has not yet done this and has paid 30 million Euros before carrying out an inspection. Is this not a dangerous game, what will happen if there is something that does not meet Pangdas expectations?
PQH:With regards to the deal, I am very happy. As soon the deal was signed we sent them 30 million Euros, Spyker promised to restart production in 7 days, as soon as this starts Pangda will create a team to carry out checks. The board of directors will create a framework of cooperation. If we hear from our team that Saab has kept upto its promises we will put forward a proposal to the NDRC (National Development and Reform Council) for approval. As soon as we receive approval we will start to looking for a partner, or the NDRC will recommend one to us. The next round of investment for this project relies on the report from our team, if it is not upto expectations then Pangda has the right to terminate further investment plans.
Until now, the information we have been receiving is very good, firstly on the day that Spyker announced the deal Spykers share price sky rocketed. Secondly, Mr. Antonov wants to buy into Saab, and thirdly the Swedish government has come out in support of Saab. These things added together are great pieces of news for Saab.
Sohu: What made Pangda strike up a deal with Saab so fast?
PQH: Pangda is not willing to change their identity, we are a car dealership group and always will be, we only approached the possibility of producing cars to make sure that we can protect our market share.
Now the manufacturers have a bigger voice than the dealers, so if we didnt come up with a strategic production plan we would have been pushed out of business by the manufacturers. So now we are starting to infiltrate the production side of things, but when we do start making cars we wont be a major partner in the company, we will just take a small share enough to understand the factory, so I stick to my words, Pangda will always be a car dealership group, we wont wade into the car making business too deeply.
Pangdas policies are quite clear, anything we say, we do. Pangda is based in the car selling business, if we jump into the car making business or other areas we still need to protect our corer interests.
Sohu: So we could say that this round of investment copies the Subaru method?
PQH: (background: Subaru and Pangda were in talks to produce Subarus in China, but with the added twist of Pangda offering to buy into them)
The Saab method is likely to be more stable than the Subaru method. Subaru-Pangda is just a simple car dealer, but one day Subarus will be made in China. The problem with working with Saab and Spyker is that is that we hope we can be the main sales company, we want to protect our sales rights.
Sohu: Then what is the standard for working with Saab on localized production in China:
PQH: Until now, Pangda has not thought about this problem. We need to wait for the report from our new team and the NDRC have given approval, we will then search for a partner factory. Our standard for a partner is basically , whoever understands Saab, whoever is proactive in making Saab vehicles work for China, then we will choose them. So on this issue, we really need to wait for that preliminary report from our team before we can think about this issue. One other thing regarding the choosing of a partner, in the contract we have Saab it stats Pangda have the right to choose and suggest a partner but Saab has the right to refuse a partner, but Saab has no right to choose a partner, to put it basically if any Chinese company wants to produce Saabs in China, they have to go through Pangda.
Sohu: When a joint venture production company is set up, what will the ratio be?
PQH: I personally think Pangdas share wont be more than 20%, with regards to other shareholders specific share I think we will need to wait until the talks have ended before we can comment further.
Sohu: Previously Saabs sales in China were very bad, when Pangda brings in Saab again they will be looking at some serious risks, are you worried about these?
PQH: When Pangda started working with Subaru, we didnt sell a single vehicle! But now I think that Saab are in a better position than when Subaru entered China.
When weve sold a batch, well pay for a batch, our cooperation is really quite simple, by selling cars in China we will help them with their production issues, as soon as they see car buyers are waiting for their cars they will produce faster, and the Swedish Government has also offered support to Saab so I think our risk is currently very low.
I look at sales and production as a pair of sisters, one cannot leave the other. So the products strength is mated with the sales strength, one cannot be without the other.
Sohu: Previously Saab set up a deal with China Automobile Trading Company (CATC) to import Saabs into China, where is this deal now?
PQH: When we signed with Saab we also thought about this issue, CATC signed a deal with Saab for three year distribution rights, we have good relations with CATC, Im good friends with their General Manager, but business is business. The deal that Saab and CATC signed can be cancelled at the end of this year, we will take over the importation from 2012 onwards.
Sohu: What is Saabs goal for a dealership network in China? What do you think of the brands prospects?
PQH: I think that Saab first of all needs to restart production, then we will begin to think about the layout for the dealerships. Perhaps the cars we are bringing in will set out quickly, but if anything out of the ordinary happens to further delay production then we cannot comment, this is why we are going to look at Saab soon.
Sohu: When Pangda gets hold of the rights to sell Saabs in China, will it have a monopoly on the dealerships?
PQH: According to the contract, Pangda will own 50% of the Saab dealerships in China, the other 50% will be independent dealerships, we have the right to choose the other 50%, these will include the 8 former Saab dealers.
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- dragin says:May 19, 2011 at 8:53 pm
The days of the simple foreign JV are obviously over. Thanks CCT for helping enlighten us as to the ongoing radical changes in the state of the industry.
We are waiting to see who this key partner will be.
- Paul says:May 21, 2011 at 8:04 am
Saab made demands? Like Saab had anything to offer Hawtai?
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