Automaker Youngman Lives in the Fast Lane
Chinese auto firm wants to become an auto industry giant the quick way – by working with established brands – but it faces significant barriers on its road to success
By staff reporter Wu Jing and special correspondent Tian Yongqiu
(Beijing) – China Youngman Automobile Group Co. Ltd. is racing down the development road. Whether it will crash or become a leading Chinese auto firm is anyone's guess.
On August 27, the Zhejiang-based manufacturer said it would buy a 29.9 percent stake in Spyker NV for 6.7 million euros. It will also offer another 3.3 million euros as a shareholder loan to the Dutch car maker.
The companies will establish two joint ventures: Spyker P2P BV and Spyker Phoenix BV to produce Spyker's premium sport utility vehicle and a range of models based on the Phoenix platform. The latter is technology that Youngman bought from Saab last year.
However, Youngman would appear to have significant hurdles to overcome to make the JVs work.
First, Spyker has been unprofitable for years. Second, Youngman acquired only nonexclusive rights to a part of the unfinished Phoenix platform, which industry insiders estimate still requires investment of 100 million euros.
Youngman, a newcomer to the passenger car industry, doesn't intend to follow in the path of fellow Chinese firms Chery Automobile Co. Ltd. or BYD Automobile Co. Ltd. to develop its own brands.
It hopes to enter the fast lane through foreign acquisitions, even though it failed in a bid to take over Saab in May.
Spyker's Struggles
When the deal is finished, Spyker's largest shareholder will still be its chief executive officer, Victor Muller, who holds 47.1 percent of the company.
Earlier this year, Muller started looking for short-term loans to maintain the company's business. In May, it issued US$ 9.99 million in bonds to a U.S. venture capital firm. In the first half of this year, Spyker lost 1.4 million euros.