RICK KRANZ

For Saab, China's rosy future is the ticket

Rick Kranz is product editor for Automotive News.
UPDATED: 5/16/11 3:53 pm ET

To understand Victor Muller's obsession with China, you need to understand where that market is headed.

The rosy outlook for China's light-vehicle sales is not a secret, but it varies from forecaster to forecaster.

Muller is CEO of Spyker Cars NV, the owner of cash-strapped Saab Automobile AB.

After a proposed partnership between Saab and China's Hawtai Motor Group Co. was terminated this week, Muller quickly returned to China.

And it didn't take long for him to find another Chinese suitor.

Earlier today, China's largest listed car distributor agreed to come to Saab's rescue in a deal worth as much as 110 million euros ($155 million). Spyker's deal with Pangda Automobile Trade Co. is supposed to secure Saab's medium-term funding needs.

It is easy to understand why Muller and other automakers say "China is the future."

The country has quickly passed Japan, Germany and the United States to become the world's largest new-car market.

Last year, 11.6 million light vehicles were sold in the United States. U.S. sales peaked in 2000 at 17.4 million vehicles, according to the Automotive News Data Center.

By comparison, 12 million cars and light-duty vehicles were sold in China last year, according to J.D. Power and Associates.

And by 2020, it is expected to dwarf the United States by a wider margin as the living standard of China's 1.3 billion residents climbs.

"They're talking 32 million to 40 million (sales) annually in 2020," Muller says.

For Saab, long a small automaker, those buyers are worth chasing.

Reuters contributed to this report.

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