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Nanjing Confirms MG Future. Issued July 17th 2006

MG Future Assured by Nanjing Automobile Group

Reuters News Agency released a news item on 12th July stating that China's Nanjing Automobile Group, which took control of MG Rover last year, will resume manufacture of MG-branded cars again in 2007.

Production will be based at three separate locations; the now-closed Longbridge assembly plant near Birmingham in England; at an all-new plant to be built in Nanjing, China; and at a third assembly plant to be built in Ardmore, Oklahoma, in the United States.

The MG brand, which was discontinued in April 2005 after financial collapse, would first be relaunched in the UK in 2007. A key priority will be to supply the American market, and models are expected to start arriving in U.S. showrooms in May or June of 2008, company executives have stated.

The company said it plans to offer a full range of MG sports cars and saloons, including its TF roadster and a new TF Coupé. Three saloon models are earmarked for manufacture at Nanjing's facilities in China, while the MG TF roadster would be built at the original factory in Longbridge. An all-new coupé version of the TF is scheduled for the Oklahoma facility, where 500 new jobs will be created.

Duke Hale, previously at Volvo, Mazda, Isuzu and Lotus, has been appointed the new company's president and chief executive officer. Nanjing has confirmed that Hale will be responsible for the revival of the MG brand in Britain and Europe, followed by the relaunch of MG in North America. Hale has said that the company decided to build a U.S. plant to differentiate itself from other Chinese automotive companies, several of which are planning to export Chinese-manufactured vehicles to the U.S. market. Generous tax breaks have also made manufacturing in the United States competitive. "We may have tax advantages in Ardmore that will allow us to build the car, believe it or not, almost as competitively as China," Hale said, going on to confirm that the company plans to export the Oklahoma-made TF Coupés to Europe.

A press conference is scheduled for Monday July 24th, when the investment plans will be unveiled by Nanjing's Managing Director Yu Jianwei.

The American Connection

Nanjing plans to locate its headquarters for American MG sales, marketing and distribution in Oklahoma City, 90 miles north of Ardmore, while research and development would be done in Norman, near Oklahoma City, at the University of Oklahoma, a spokesman said. Called MG Motors of North America, construction of Nanjing's Oklahoma plant is scheduled to begin early next year, with production starting by late 2008. Speculation within the industry currently favours the idea that the new coupé could be based on MG's own concept for such a car, illustrated above. The initial capital investment required for the American venture will be in the region of $2 billion, with some funding from state and local governments in Oklahoma, the state's development agency and private investors.

Nanjing Automobile Group is one of several Chinese car makers, including Geely Automobile Holdings Ltd. and Chery Automotive Co., hoping to crack the global car market amid a slowdown in demand at home. If their plans come to fruition, the opening of a new MG plant in Oklahoma will make Nanjing the first of these actually to progress through to assembly and manufacture within the United States, although several others are already investigating the export and sale of motor vehicles to the U.S. Nanjing currently has a small joint venture successfully up-and-running in China with Fiat of Italy.


Nanjing Automobile, one of China's oldest auto makers, surprised the motoring world when it outbid top Chinese car maker Shanghai Automotive Industry Corp. to buy MG Rover out of bankruptcy for £53 million pounds in mid-2005. Earlier this year, it took a 33-year lease on the former MG Rover plant at Longbridge, where Transport and General Workers Union representatives have been quick to respond to the news that Nanjing will be making MG cars in the United States. "There have been some concerns about Nanjing revising its plans downwards in respect of Longbridge," said Dave Osborne, the union's national secretary for the car industry. "Taking these together, the T&G is calling for an urgent meeting with the company to find out exactly what they are now planning for car making in the UK."

This contrasts somewhat with the optimism that met February's announcement that Nanjing had signed a new lease on the factory. At the time the deal was welcomed by the Transport and General Workers Union (T&G), with an announcement that Nanjing's business plan could lead to the production of 100,000 cars a year and create 1,200 jobs. Nanjing's UK chairman, Wang Hongbiao, said he was delighted to have reached the deal with the site's owner, St Modwen Properties."This means that we can move forward with our business plan to build cars at Longbridge," he said.

The lease requires that Nanjing pays about £1.8m a year for the South Works section of MG Rover's former Longbridge premises. The 105-acre area, which includes two car assembly plants, a paint shop and offices, accounts for about a quarter of the old site. Richard Burdon, the Labour MP for Birmingham Northfield, which includes Longbridge, said people needed to understand the scale of the deal. "We are not talking about Rover's return here, we're not talking about the return of mass car manufacturing," he said. "We're talking about a relatively small, but significant, sports car manufacturer . . . that could lead to a broader regeneration of the area." St Modwen and local authorities have wider ambitions for the Longbridge site, which would see up to 10,000 jobs created through a mixture of housing, retail and industrial developments.

MG, but not Rover

Nanjing's acquisition only included the rights to use the MG brand. The Rover brand is still owned by Rover Group's former parent BMW, and the Rover marque is now for sale. It is believed that Ford will be given first refusal to buy the marque, under an agreement entered into when the American car maker acquired Land Rover from BMW in 2000.

Source: Reuters items on 12th July 2007 and 17th July 2006.