Top Chinese sport utility vehicle maker Great Wall Motor is continuing to talk with Dutch luxury car maker Spyker Cars about a potential tie-up, a source told Reuters on Thursday.
"The two sides have never stopped talking and have been in touch with each other despite the Hawtai/Spyker deal," the source, a person with direct knowledge of the discussions, told Reuters.
Last week, Spyker signed a deal with Chinese Hawtai Motor Group, which had agreed to invest €150-million ($222-million U.S.) in return for shares, providing funds that would have enabled Saab to pay overdue bills and resume production.
But Spyker said earlier on Thursday that its deal with Hawtai Motor had been terminated, because Hawtai was not able to obtain all necessary approvals.
A Great Wall spokesman declined to comment. The source, however, did not rule out chances for a partnership between the two.
"It could be mutually beneficial if Great Wall and Spyker team up eventually. The Chinese partner has the cash that Spyker needs, while Saab's technologies and its network in Europe are valuable for the Chinese side," said the source.
Great Wall is among a growing rank of ambitious Chinese auto makers hoping to emulate the global success of Toyota Motor , Honda Motor , Hyundai Motor , among others.
Its Hover X240 SUV got a 4-star rating in a crash test last year conducted by Australia's ANCAP, a test authority, the highest global recognition for a made-in-China model ever.
Great Wall, already selling Hover X240 in Australia and Italy, aims to expand into other western European markets in two to three years and eventually to the United States, company executives had said.
The company, one of several independent Chinese auto makers, had also explored ties with other foreign brands, including Fuji Heavy Industries' Subaru as well as Jaguar and Land Rover, owned by Tata Motors .
Still, Great Wall must win the endorsement of the Chinese government for any foreign tie-up, a process that has caused some deals to collapse, including Sichuan Tengzhong Heavy Industrial Machinery's bid for GM's Hummer in 2010.
Beijing follows a strict and price - sensitive policy when it comes to outbound acquisitions. Deals are also subject to China's typically slow bureaucracy, though Beijing has moved recently to streamline M&A approvals .
Loss-making Saab has veered towards collapse in recent weeks after running out of cash to pay its bills. Several suppliers stopped delivering parts, halting production at Saab's Trollhattan plant for most of last month.
Spyker has struggled to turn Saab around, producing only 31,700 cars last year. It set a sales target of 80,000 vehicles for 2011, but last week said it would fail to meet that.
Like most Western auto makers, Spyker also wants to boost sales and explore production in fast-growing emerging markets, including China and Russia, as well as Brazil and India.
Other potential Chinese partners Spyker had contacted in China include Jiangsu Yueda Group and China Youngman Automobile Group.
State owned Chinese auto maker Beijing Automotive Industry Holding Co (BAIC) paid $200-million in 2009 to buy technologies from Saab, previously owned by General Motors Co , and has set up a 12 billion yuan ($1.8-billion) production base for upscale cars in Beijing. At the time, BAIC was part of a group that made an unsuccessful bid to buy Saab.
BAIC president Wong Dazong told Reuters late last month the company was not in talks to invest in the ailing Swedish car brand.