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MG and 'Rover' set to re-join forces

Tue, 03 Jul 2007

By Keith Adams

Motor Industry

03 July 2007 01:29

Reports in China suggest that Shanghai Automotive Industry Corp (SAIC) is once again in talks with Nanjing Automobile Corp (NAC), the owners of the MG marque and the Longbridge factory.

The deal is being backed by Chinese government, which wants to see more cars sold in export markets. Are we looking at the creation of a latter day MG Rover based in the Far East? SAIC, which pulled out of a joint venture with MG Rover in its dying days, is keen to join forces with NAC as part of a concerted export drive. SAIC sells a Ricardo-developed facelift version of the Rover 75, called the Roewe 750. NAC-MG builds a lightly revised version of the MG ZT from tooling taken from the Longbridge factory in 2005. The Shanghai-based company has local government backing in its plan to bid for its rival – in a move that will unite the two companies, which produce almost identical cars.

According to the China Daily newspaper, SAIC Chairman Hu Maoyuan told a shareholders' meeting that both SAIC and NAC hope to join forces to make better use of their resources. Hu also said both Shanghai and Nanjing governments have supported the move. Shanghai vice-mayor Hu Yanzhao led a delegation to Nanjing two weeks ago to work it out. The central Chinese government, which has been pushing for consolidation of Chinese auto makers, has approved the merger. NAC chairman Wang Haoliang, announced that the door was always open to SAIC, but rather than a straightforward takeover, he would prefer to set-up a joint venture company. However, such a move would not strengthen either company, and in terms of a global strategy, could prove counter-productive. NAC-MG recently confirmed to businessmen in China that production of the MG7 (nee MG ZT) would not resume in Longbridge, leaving the Birmingham factory to concentrate on the production of sportscars – possibly under the Austin-Healey as well as MG brand names.

The merger would make sense, and could see the end of two companies producing near-identical cars powered by the same cloned K-Series engines (independently built) – and medium car development would be concentrated on the Roewe 450, which is closely related to the ill-fated MG Rover RDX60 prototype, which was finally shelved when that company collapsed into administration in 2005. Currently, NAC-MG is testing prototypes of the MG ZR, but exports of that to Europe could prove tricky given that it has been around since 1995. Still, it hasn't stopped the Chinese restarting MG TF production. Industry analysts agree the merger would be good for both companies, both in terms of finances and efficiency – and the MG brand is a far more saleable prospect in overseas markets than the rather contrived effort from SAIC, Roewe…

By Keith Adams