China eager to get behind wheel of western marques

China’s automakers are showing a renewed appetite for gobbling up foreign automotive assets to satisfy resurgent demand at dealerships across the nation. But analysts warn not every takeover attempt will end in a deal because of government meddling and a lingering skepticism toward Chinese buyers, as General Motors Co. is finding out with its sale of Hummer.

Swedish-based high-performance sports-car maker Koeningsegg Group AB said Wednesday it signed a partnership deal with Beijing Automotive Industry Holdings Co. under which the Chinese auto manufacturer will become a minority owner in the Swedish group. Koeningsegg had been searching for an investor to help finance about $460-million toward its planned acquisition of Saab, GM’s Swedish unit.

That deal came just hours after privately owned Chinese automaker Geely Automotive Holdings Ltd. said it would bid for Volvo if Ford Motor Co. decides to unload it. Geely said it could not afford a purchase on its own, adding it would team up with a government-backed investor to execute the estimated $2-billion purchase. Geely’s own market capitalization is about $2.12-billion.

“By getting aligned with someone like Volvo, it does give you a fairly significant level of legitimacy on the world stage,” said Joe Phillippi, an analyst with Auto Trends Consulting in Short Hills, N.J. “In many cases, [Chinese vehicles really aren’t] ready for prime time.”

The developments represent an awakening of China’s car manufacturers, which had retrenched earlier this year amid a slowdown in the economy. Beijing has since implemented a US$585-billion stimulus measures that, when paired with record bank lending, has fuelled a recovery. New car sales have defied forecasts week after week, punctuated last month by a 90% year-over-year gain.