European Auto Businesses Are Too Mind-Blowing For The Chinese

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Chinese automakers eyeing acquisitions of the Swedish automakers Volvo and Saab should think twice before bidding say analysts interviewed by Reuters.

The Chinese bidders–Geely Automotive for Volvo and Beijing Automotive Industry Corp for Saab–should build their own cars and their own brand rather than taking on the headaches of western automakers. The Chinese aren’t ready for the challenges that await them if they pick up these new companies:

“Getting involved in European companies is likely to bring a complexity of personnel management that will blow their minds,” said Graeme Maxton, a Europe-based independent auto industry analyst, noting Chinese companies’ poor track record of managing their businesses.

“It’s no surprise China’s auto industry wants to go international,” said Klaus Paur, director of global industry consultant TNS’s North Asia Automotive division.

“But I have the impression they are getting too ambitious. “There are a lot of question marks here as they don’t even have a solid brand in their home market.”

…”The temptation for them is obviously quick access to technologies, brands and mature markets,” said a China-based senior executive with a major U.S. automaker, who asked not to be identified due to the sensitivity of the issue.

“But I’m not sure they can handle a brand like Volvo and turn it around.”

It’s not just the Chinese. Most auto acquisitions end poorly. That’s why Saab and Volvo are up for sale in the first place. The most successful auto brands–Honda, Toyota–grew on their own without adding on another brand.

 

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