Visitors checking out a Saab vehicle at the Shanghai Auto Show in April this year. The Swedish brand is selling some of its assets to the Chinese car maker as part of a deal reached on Monday. [China Daily]

Beijing Automotive Industry Holdings Co Ltd (BAIC), China's fifth largest automaker, said on Monday it has agreed to take over some of the assets of General Motor's Saab arm as part of its plans to develop cars under its umbrella.

Saab Automobile AB said it has struck a deal with the Chinese carmaker to buy production equipment and intellectual property (IP) related to two older Saab models - the 9-5 and 9-3 including the powertrain technology and tooling.

Saab will also help BAIC to integrate the technology into future BAIC vehicles, said the statement.

However, Saab and BAIC did not disclose other details about the deal, including the financials. Reuters reported last week, citing unnamed sources, that BAIC had obtained a 20 billion yuan (US$2.93 billion) line of credit from the Bank of China.

"This arrangement is excellent for both parties, now and for the future. We have developed a good relationship with BAIC and look forward to working with them to integrate the Saab technology into their future vehicles," said Jan Ake Jonsson, managing director of Saab Automobile.

Dagens Nyheter, a daily newspaper in Sweden, reported yesterday that "China is helping the Swedish car brand out of crisis".

Jia Xinguang, chief analyst with the Chinese National Automotive Industry Consulting and Development Corp, said the deal is not that significant for BAIC as the production platforms of Saab 9-5 and 9-3 have been shut down due to the old and outdated technologies and also have low efficiency and utility.

However, Jia is optimistic about BAIC acquiring Saab's powertrain systems, including turbo-charged engine and gearbox technologies, "which can fill the gap between China and global players in the transmission segment".

He also hoped that "maybe the locally produced sports cars with Saab 9-3 and 9-5's extraordinary performance will be popular among Chinese consumers".

"It's hard to judge if it is a worthy deal for BAIC at this stage," said Zhong Shi, an independent auto analyst based in Beijing. "The key is that if BAIC can finally get hold of something and use it later for itself."

BAIC is one of the few Chinese automakers not to have its own car brand and model, and also has limited production and research and development experience in passenger cars.

Zhong believes that BAIC will move the production line of the Saab 9-3 and 9-5 models to China and produce the same cars under a new brand name.

(China Daily December 15, 2009)