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Nanjing Announces Investment. Issued August 29th 2006

Nanjing Invests £118 million in Development

Reuters reports today, Tuesday, that the Nanjing Automobile Group has set up a £118 million (1.8 billion yuan) unit to oversee the development of its own-brand cars based on technology bought from British car maker MG Rover.

Nanjing Auto will hold 22.22 percent of the new subsidiary, which is set to roll out its first self-developed car by March 2007. The Shanghai Securities Journal has suggested that six other firms, all Chinese, will share the remainder.

Nanjing Auto, based in eastern China, took over MG Rover last year, outbidding China's largest domestic manufacturer, Shanghai Automotive (SAIC Motors) for the brand. The much smaller organisation then ruffled more feathers in July this year by announcing plans to build China's first car plant in the United States. This facility, based in Oklahoma, will be responsible for manufacture and assembly of a wide range of models, including an all-new MGTF Coupé. The firm also confirmed its intent to resume assembly of cars, including the TF convertible, at Rover's Longbridge plant near Birmingham, as well as introduce manufacture of saloon cars at a new plant being constructed at its home base in China. (For details, see our earlier news item here)

Meanwhile SAIC, which enjoys a close relationship with General Motors in America and Volkswagen AG in Europe, has committed 1.71 billion yuan towards the development of its own-brand cars based on the acquired Rover 25 and 75 platforms, with an eye on developed markets, including Europe. This follows rumours, yet to be confirmed, that SAIC has acquired rights to the Rover name from current owner BMW for a reported £11 million. Ford is believed to have had first refusal on the brand following the American company's earlier purchase of the Land Rover marque, and is said to have been given a period of some 90 days in which to exercise that right before the deal with SAIC can go through.

Source: Reuters items on 23rd August 2006 and 29th August 2006.