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SAIC merges with Nanjing

Fri, 28 Dec 2007

By Keith Adams

Motor Industry

28 December 2007 15:27

Is the Chinese car industry learning to rationalise?

Absolutely. In order to attack world markets, China’s government and its largest automotive players have been getting cute. There’s a rush to merge or combine in order to compete in international markets. In the short term, that has resulted in Beijing having a very big say in the latest chapter of the long-running MG Rover saga.

Shanghai Automotive (SAIC), the owners of the Roewe brand and producer of the faux-Rover 75 known as the 750-Series, has grabbed control of smaller domestic rival Nanjing Automotive (NAC) – the company which owns the MG marque and the Longbridge factory. The deal was inked on Boxing Day, creating a company with a capacity to produce 1.6 million cars per year.

Although billed as a merger, it’s essentially a takeover; SAIC has full control of NAC-MG – and the smaller company will take a 15 percent holding in its Shanghai-based rival. That means that MG’s ownership changes for the fourth time in seven years, and we’ll end up with the awkwardly named MG-Roewe…

SAIC is cash-rich, and its huge bank balance should have a very positive effect on MG. It already owns Ssangyong, has joint ventures in place with Volkswagen and GM, and has been developing a convincing-looking three-car model range under the Roewe umbrella.

However, Roewe as a brand would be all-but unsaleable in Europe and North America (especially if pronounced the Chinese way ‘wrong way’) – and until the acquisition of NAC-MG, a real dilemma when it comes to marketing its UK-developed and engineered cars.

For fans of Longbridge, the deal should not affect NAC-MG's plans to re-start production of the MG TF roadster in 2008, which has recently been subjected to a number of delays. The takeover will also free funds for NAC to press on with its plans to develop and refurbish the site, and possibly build a new design centre.

Currently SAIC’s engineering is undertaken at Leamington Spa at Ricardo's site, and NAC’s R&D is operated on a shoestring from the old Product Development Centre at the Longbridge factory.

That marque name was purchased from BMW by Ford in 2006 for an estimated £10m, and is thought to be included in the upcoming Jaguar/Land Rover sale.

The preferred bidder is looking increasingly like Indian Automotive giant Tata – and that raises the rather bizarre possibility that the dormant nameplate could make a return on the nose and tails of export market versions of the forthcoming Indica V3 supermini…

This car will be the replacement for the V2 – a car which was sold in the UK as the CityRover. Strange times in the motor industry…

By Keith Adams