Motoring From US via Sweden to China.

18th September 09 – Motoring from US via Sweden to China

This is a credit crunch tale that started way back, is still motoring and may yet take an unexpected turn. It is anchored on the data that Chinese car sales surged 90% in August 09 year-on-year. For the whole of 2009, sales of vehicles in China could reach 12 million and if so, it will attain the top spot as the world’s biggest auto market, taking the crown from the US.

This diary has reported earlier about the impending fate of the quality, design-led Saab marquee on the back of the demise of the US’s General Motors who drew the brand away from Sweden some years ago. Now it could return home. A Swedish “supercar” maker called Koenigsegg is on the cusp of buying Saab via a consortium. The consortium includes Beijing Automotive Industry Holdings. And this is where the circle forms.

GM, newly emerged form Chapter 11 bankruptcy, is doing very well out of the Chinese vehicle sale boom using its joint ventures where sales are up 40% this year. So, GM ditches one to benefit with another. But, that is not the end of the Swedish tale.

Ford owns Volvo, the second and more safety conscious if less designer Swedish brand. Where is Volvo being driven? You guessed it, China of course. Geely Automobile Holdings is apparently working with Chinese state investment companies on a bid for the whole of Volvo. Volvo manufactures in both Sweden and Belgium but the US is its biggest market.

The draw back of big luxury cars in the US is not a problem for the emerging middle-class of China. The real evidence for this is Buick, retained by GM but now sold to those affluent Chinese gentlemen.

US to China via Sweden seems an improbable outcome of the credit crisis, but it could happen.

Pearl of the week

“Customers want a choice, they do not all want small cars – and neither do they all want big cars.”

Ian Robertson, BMW’s head of sales