Cars

Latest BAIC deal bolsters gearbox tech in own brands

By Xu Xiao (China Daily)
Updated: 2011-02-28 14:17

Potential customer checks BAIC's first independent model, the BC301Z. The company has made a range of moves to strengthen its solely owned technology and brands. [Photo / Provided to China Daily]

Beijing - Domestic automaker Beijing Automotive Industry Corp (BAIC) recently announced that it acquired all equipment and core technologies of Weigl Transmission Plant AB, a Swedish gearbox maker, for 31 million euros ($42.8 million).

The takeover is BAIC's second overseas purchase following acquisition of the rights from General Motors in 2009 for Saab's 9-3 and 9-5 car models, turbine engines and transmissions.

The moves make BAIC the first carmaker in China to have intellectual property rights for long-torque transmissions.

Weigl Transmission's parent company is Europe's leading gearbox maker Germany's Weigl Group, which makes transmissions for Saab and GM's Chevrolet and Buick Regal models.

BAIC's announcement said the latest purchase includes technologies and production lines as well as management and training services.

The Weigl acquisition also brings rights to 34 other components that will be used in BAIC's self-developed cars, SUVs and commercial vehicles.

"The acquisition is more than worthwhile," said Ma Tongli, deputy general manager of BAIC Group.

He noted that without the acquisition, it would cost 680 million yuan ($103.36 million) for the company to build a similar production facility on their own, in addition to other needed investment in research, development, management and training.

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Wang Dazong, general manager of BAIC Group, said the purchase is an important step for BAIC to raise its core competitiveness after it acquired Saab assets.

But some experts say buying the rights is much easier than putting them into useful production.

Independent auto analyst Jia Xinguang told China Daily that the purchase alone is not too big a deal.

"The key is that you should have the ability to achieve sustainable development," he said.

"To take it over is only the very first step - one should know how to make money with it," he said.

Guotai Junan Securities analyst Zhang Xin voiced similar concerns.

"How to absorb the technology after acquisition is the key to the problem," he said.

Adapting foreign technology and equipment to actual production in China is a formidable challenge, he said.

"Whether BAIC can really apply the core technology and advanced equipment is where they should shed more light," Zhang told China Daily. "And there is still a long way to go."