* BAIC aims to sell 100,000 self-developed vehicles in 2011
* Spending heavily on product development after Saab buy
* Plans IPO, but no details yet
* Dutch Spyker Cars remains interested in Saab assets
(Adds Spyker comment in paragraphs 19-21)
By Michael Wei and Alison Leung
BEIJING/HONG KONG, Dec 23 Beijing Automotive
Industry Holding Corp (BAIC), China's fifth-largest automaker,
will launch an aggressive campaign to develop its brand both at
home and overseas, after buying car designs from General
Motors' [GM.UL] Saab unit.
BAIC said it will invest 33 billion yuan ($4.8 billion) in
vehicle R&D over three years, after paying $200 million for the
Saab technology, including the rights to three overall vehicle
platforms and two engine technologies.
"Someone has commented that the purchase of Saab's
intellectual property can help cut short the development time
for Beijing Auto's own-brand passenger vehicles by 4-5 years,"
BAIC Chairman Xu Heyi told reporters on Wednesday.
"We basically agree with the view."
The Chinese car maker plans to immediately start
integrating Saab technology into its vehicles with an aim to
sell 100,000 self-developed passenger vehicles in 2011, Xu
Construction of a production facility with annual capacity
of 150,000 passenger vehicles will be complete in 2011, he
The sales target is a bit aggressive, said Tan Kunyuan, an
analyst at Changjiang Securities. "It will take at least a year
for the market to recognise the brand and BAIC probably would
need to modify the appearance of Saab cars to fit with Chinese
China overtook the United States this year as 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.
However, there is still a significant technology gap
between domestic Chinese automakers and their global rivals,
which has left Chinese looking for acquisitions of overseas
technology and designs as the global auto industry
Homegrown car maker Zhejiang Geely Holding Group, parent of
Geely Auto (0175.HK), is in talks to buy Ford Motor's (F.N)
Volvo unit, and Sichuan Tengzhong Heavy Industrial Machinery is
buying GM's Hummer brand.
Xu said BAIC posted net profit of 6 billion yuan on revenue
of 116 billion yuan for 2009, selling 1.24 million vehicles.
The Beijing-based automaker is in production partnership
with Daimler (DAIGn.DE) and Hyundai Motor (005380.KS), with
most of their joint output for sale in the domestic market.
BAIC, which has a 20 billion yuan line of credit from Bank
of China (601988.SS) (3988.HK), is also making plans for an
initial public offering, Xu said, though he declined to give
details, including where the company would list.
Morgan Stanley (MS.N) advised BAIC on the Saab deal, but it
was unclear whether the investment bank is also involved in the
BAIC -- which hastily arranged the Saab purchase after a
group led by Swedish sports car maker Koenigsegg pulled out
from a deal to buy all of Saab -- said it was buying technology
such as manufacturing blueprints and the management systems
that will let it continuously develop and produce high quality
Besides exporting its vehicles directly, BAIC also plans to
set up joint ventures overseas to facilitate sales, Xu said.
The company will roll out two new models of its own-brand
vehicles next year and will develop new energy cars in tandem
with the new models of its self-developed vehicles.
The Saab acquisition includes the intellectual property for
Saab's 9-5 and 9-3 sedans and some equipment to make them,
leaving the fate of the Swedish-based automaker up in the air.
Dutch-listed luxury car maker Spyker Cars SPYKR.AS was
still in talks to buy Saab from GM despite BAIC's development
plans, a Spyker spokesman said.
"I have no information that this would affect the interest
of Spyker in the Saab business," he said, adding it was
positive that a Swedish metal workers' union backed Spyker's
bid for Saab. The spokesman declined to comment on reports of a
billionaire supporting Spyker's takeover plan. [ID:nNLDE5BL0D]
(Additional Reporting by Jason Subler in BEIJING and Gilbert
Kreijger in AMSTERDAM)
(Editing by Doug Young and Ian Geoghegan)