Beijing Automotive Seeks Strategic Alliance

Alliance that is modeled on the partnership between France's Renault and Japan's Nissan Motor

Beijing Automotive Industry Holding, through indirect part-ownership of Sweden's Saab, plans to create a strategic alliance modeled on the partnership between France's Renault and Japan's Nissan Motor - reported THE WALL STREET JOURNAL, quoting one of Beijing Auto's top executive.

Wang Dazong, president of Beijing Auto, said: The model we want to pattern after is Renault-Nissan. It is an alliance that uses each other's strength to benefit both.

Mr. Dazong continued that Beijing Auto and Sweden's Koenigsegg Group, aims to increase efficiency by sharing technology and other resources, through an alliance of addition, not reduction, focusing on growth rather than on reducing headcounts and shuttering plants to save money.

Previously, the company has signed a deal to take a minority stake in Koenigsegg and support it close the funding gap it needed to buy Saab. Beijing Auto operates manufacturing and sales joint ventures with Hyundai Motor and Daimler in China.

The company's linkup with Saab would be an even closer one, since the government-owned Chinese auto maker would have an indirect equity interest in the Swedish car maker through Koenigsegg. Saab sold less than 100,000 vehicles world-wide in 2008 and has negligible presence in China, selling 836 imported vehicles last year through around 20 dealers.

The company seeks help from Saab in vehicle-engineering and manufacturing technology and know-how. Currently, under the little-known Beijing brand, the company sells aging SUV models through a chain of around 100 dealers but with limited success. In 2008, Beijing Auto sold around 50,000 such SUVs, said the company.

Mr. Wang said that Beijing Auto's first of a series of cars and SUVs for the brand are expected to be displayed in the showrooms by the end of 2010, and the company plans to increase the number of dealers to 300 to 500 over the next five years.

In medium-term, Beijing Auto plans to improve its Beijing brand in China with annual sales reaching 300,000 vehicles. The company plans to reveal as many as five different platforms to develop its relaunched brand with ample offerings of sedans and SUVs of different sizes. The company is developing its own SUV platform technology and is also turning to its joint-venture partners for help.

Mr. Wang informed that Saab and Beijing Auto, which has recently formed an alternative-fuel-vehicle division, would also jointly develop new energy vehicles, such as all-electric battery cars and electric plug-in hybrids with a small gasoline engine on board to charge batteries. Beijing Auto, including operations with its join-venture partners, seeks to sell a total of 1.13 million vehicles in 2009, and to sell 2 million by 2011.