But in an industry saddled with overcapacity, even Saab is losing its youthful shine as its model portfolio ages. Sales in Europe and North America plunged 59 percent and 62 percent year on year, respectively, in the first 10 months of 2009.

GM began searching for potential buyers for its Saab, Saturn and Hummer brands in early 2009 as part of a drive to pare down its product portfolio as it braced for bankruptcy protection. But after a recent collapse in negotiations with the Swedish luxury sports car company Koenigsegg Automotive, GM stated in late November that it would close down the 60-year-old Saab if a suitable buyer could not be found by year end.

BAIC was one of Koenigsegg's initial supporters in the earlier Saab acquisition plan, having agreed to provide financing in return for access to the Saab brand and technologies. But Koenigsegg bowed out of negotiations, leaving the fate of Saab up in the air. Koenigsegg blamed the failure on risks and uncertainties caused by delays in closing the deal.

Though far from a guarantee for a full recovery, the deal comes as a much needed boon for the future of Saab.

The deal with BAIC would inject urgently needed cash into the loss-making company and deliver a boost to its appeal for potential bidders, said Gunilla Gustavs, a spokeswoman for Saab, in a statement.

"We will give support for BAIC to manufacture its own brand models based on Saab technologies, and are looking forward to a closer tie-up with the Chinese company," said Saab Managing Director Jan KeJonsson.

BAIC's expansion efforts

"We plan to use Saab's technologies to develop three to four vehicles and three turbo engines over the next three years," said BAIC.

Even though the two acquired models are outdated, it is still important for BAIC to obtain core technologies—the turbo charge engine and auto transmission in particular, said Jia Xinguang, a senior analyst with the China Association of Automobile Manufacturers, in a report.

BAIC has been one of the few Chinese auto manufacturers without a strong self-owned brand, a bottleneck that is casting an ominous shadow over its growth prospects as the company gears up to double overall sales to 2 million units by 2011.

In April 2008, the company unveiled its first self-developed car model at the Beijing International Automotive Exhibition, but its mass production has stagnated due to technological barriers.

In an eager pursuit of advanced technological prowess, the company began searching for possible asset deals. In August, BAIC reached an agreement with the Fujian Motor Industry Group Co. (FjMotor) to pay up to $117 million for a 40-percent stake in FjMotor's commercial vehicle venture with Daimler A.G. in Fuzhou, capital of southeast Fujian Province. The deal was expected to deepen relations with the German auto titan and give BAIC access to Daimler technologies.

BAIC's path toward overseas expansion has not been without setbacks. In July, it made a bid for a stake in the German car brand Opel, owned by GM, and outlined plans to build Opel's first factory in China. Regardless of the generous offer, GM rejected the bid, citing disagreements over intellectual property.

Wang Wanshun, an independent auto analyst, believes simply acquiring the Saab technologies would be much safer for BAIC than a complete acquisition of the Swedish automaker.

The remarkable cross-cultural differences in market understanding and management methods could put post-merger integrations at stake.

Since BAIC only acquired part of Saab's assets, Saab said in a statement that it would continue separate talks with other potential bidders over the remainder of its assets and press ahead with the development of new versions of the 9-3 model. But it is unclear whether BAIC is interested in assuming control over the entire Saab operation, based in Trollhattan, Sweden.