Pangda, partners to set up Saab JV in China this year

Pangda Automobile Trade Co, China's largest listed auto dealer, aims to set up a manufacturing venture with Spyker Cars and a partner in China this year, a Chinese executive said on Thursday, as it moves to turn around the famed but money-lossing Swedish marquee.

Spyker, the Dutch owner of Saab, unveiled an initial deal with Pangda last week which it said would secure Saab's medium-term funding needs and allow production to resume within days.

"The plan is to start making Saab in China within two years but the exact time table will be decided by several factors, including regulatory approval," Wang Yin, Pangda's board secretary said in a phone interview.

The Pangda tie is the second pact Spyker CEO Victor Muller has struck in China this month after a deal with Hawtai Motor Group fell through.

According to the agreement, Pangda which handles Mercedes-Benz, Audi, Volkswagen among others, will open 50 sales outlets for Saab only in the country this year, Wang said.

The annual China sales target for imported Saab is 10,000 units this year, depending on Saab's output level at home, Wang said.

Amsterdam-listed Spyker bought Saab from General Motors a year ago but the money-lossing Dutch firm has struggled to turn it around, and scrambled to find new sources of funding in order to restart production.

The latest deal involves an agreement by Pangda to buy Saab vehicles in two tranches. An initial purchase worth 30 million euros is already underway and a further sale worth €15 million will follow.

Pangda, which raised nearly $1 billion in its initial public offering last month, will also take a 24 per cent equity stake in Spyker for a total of €65m, €4.19 per share.

The Panda tie marks another Chinese rescue of a fading Swedish brand following Geely's $1.5 billion takeover of Volvo from Ford Motor in August.

While Volvo has already started to gain traction in China, the fate of Saab is still hanging in the air for now.

Pangda will not make the final commitment until it finishes due diligence. And the deal could go ahead only if it can secure regulatory approval in China and elsewhere, executives had said.

Pangda, based in the northern city of Tangshan, near Beijing, has 926 outlets, mostly in north China, handling 83 global and domestic car brands, including Honda, Toyota, Hyundai, and Mazda.

It also has the exclusive rights to sell Fuji Heavy Industries' Subaru in eight northern provinces, running 102 Subaru outlets currently.

In 2010, Pangda a total of 470,000 vehicles, up 31 per cent from a year earlier, basically in line with a 32 per cent gain of China's overall vehicle market.

Despite a cooldown of auto sales in China, Pangda will still open about 400 outlets this year, mostly in smaller cities in mid and western and central China which are replacing the eastern coast as the major industry driver.

Despite its agreement to team up with Spyker in a three-party manufacturing tie, Pangda will stay focused as an auto dealer not a car maker, Wang said.

"We have no intention to be deeply involved in the manufacturing side. We are only interested in being a minor shareholder in the future JV so as to better adjust our strategies in accordance with output levels" he said.