Youngman already cooperates with Britain's Lotus Engineering to produce the Youngman Lotus, but analysts question the prospects for a possible partnership with Spyker, another niche firm that sells just a few dozen cars a year. E Guoqing / for China Daily

Bus maker gives it another try with Holland's Spyker

After its attempts to buy Swedish brand Saab failed last year, China's privately owned car and bus maker Youngman Automobile Group Co recently agreed with Saab's former owner Spyker NV to jointly develop and produce luxury cars.

But market observers once again question the feasibility of Yongman's plans.

The Zhejiang-based automaker announced last week that it has reached a framework agreement with Spyker to acquire a 29.9 percent stake in the Dutch company and form two joint ventures with it to produce premium vehicles.

Under the terms of the agreement announced on both partners' official websites, Youngman will invest 10 million euros ($12.5 million) in Spyker, of which about 6.7 million euros will be for stock equity and the rest a shareholder loan.

The plan calls for Youngman to invest another 25 million euros for a 75 percent share of a planned joint venture with Spyker, which will contribute its trademark and technology developed for the Spyker D8 super SUV concept. The joint venture plans to produce the vehicle at the end of 2014 and might develop additional models based on the same technology.

A second joint venture that will be 80 percent owned by Youngman plans to produce luxury vehicles in both Europe and China based on Saab's Phoenix platform licensed to Youngman last year, said the statement.

Spyker previously sought help from Youngman when it tried to keep Saab afloat after General Motors divested the Swedish automaker in 2010.

The attempts finally failed and Saab went into bankruptcy last December following moves by GM to block the Youngman-Spyker deal using its preferential shares and technology ties with Saab.

In August Spyker filed a lawsuit claiming GM deliberately bankrupted Saab and asked for $3 billion in compensation.

Victor R. Muller, Spyker's CEO said in a statement that "with this framework agreement, Youngman and Spyker lay the foundation for an intense cooperation whereby we will pursue the objectives we each had in mind when we were forging our cooperation as partners in Saab Automobile AB".

"We clearly share the vision on how to shape Spyker's future as partners going forward."

But analysts are doubtful about a plan for a Chinese company to take the majority stake in Sino-foreign joint ventures and make up-market vehicles.

Uncertainties

The deals face many uncertainties before a final contract is signed, the analysts said, warning that Chinese companies should be wary of the risks in overseas acquisitions.

A major hurdle is that the Saab Phoenix platform was not sold to Youngman exclusively. After Saab went bankrupt, it was bought by National Electric Vehicles Sweden AB in June. NEVS now says it owns 100 percent of Saab's assets including the Phoenix platform.

Approval from Chinese regulators is another potential stumbling block. They have repeatedly called for consolation in China's overcrowded auto market.

Attempts to reach Youngman for comment were unsuccessful.

Youngman is a leading premium bus maker that uses licensed technologies from German manufacturer Neoplan.

Though successful in the bus segment, its car business has faltered. It cooperates with Britain's Lotus Engineering and makes cars with the badge Youngman Lotus, but sales are very limited.

Spyker is a niche manufacturer of handmade luxury vehicles, averaging sales of a few dozen vehicles annually in the past few years. Analysts question how much Youngman could benefit from cooperation with a company as small as Spyker.

"Even if the two manage to at last start operation of the joint ventures, there will still be great challenges for them to make products that the market can accept," said Simon Feng, auto analyst at Menutor Consulting.

"It's an unlikely deal," said Zhong Shi, an independent auto analyst based in Beijing.

"Youngman chose the wrong target."

 

hantianyang@chinadaily.com.cn