SAIC acquires Nanjing Automotive.
December 28th 2007
in Chinese Motor
Industry Boosts MG Prospects
major deal has been struck (Shanghai, December 26th) that
could see the MG brand’s fortunes strengthened considerably
and, according to Reuters, do for the marque what BMW did
for the Mini.
deal, valued at a reported £144 million, saw China’s
premier motor manufacturer, Shanghai Automotive Company,
acquire the vehicle and core auto parts operations of Nanjing
Automotive, the fellow Chinese car manufacturer which purchased
the MG brand in 2005. In doing so it re-unites the names
of MG, Morris, Austin and Austin-Healey, acquired by Nanjing,
with that of Rover and the intellectual property rights
to the MG Rover designs, which SAIC bought from BMW for
some £65 million.
a stock value of around £12 billion, Shanghai Auto,
backed by parent SAIC, is ranked in global terms alongside
such giants as Europe’s Fiat Group and Hyundai of
South Korea. The SAIC Motor Corporation has joint ventures
with General Motors and Volkswagen in China, but has also
developed its links with the defunct MG Rover organisation
by introducing the Roewe 750 to the Chinese market. Based
upon the Rover 75, this image (right) illustrates
just how much the car owes to its MG Rover heritage, even
down to the shape of the badge.
Auto revealed the extent of its own plans for the MG marque
when it rolled out its first MG sports cars and saloons,
manufactured in China, in April 2007. Retaining rights to
the MG name and badge assured Nanjing of a ready market
and a rich history, not to mention a special connection
to motor sport that has been maintained at the highest levels
these past three years by RML’s own involvement with
the brand. Nanjing’s plans centred upon returning
the name of MG to international prominence and making it
fashionable among China's emerging middle class.
last year Nanjing Auto completed its first run of British-built
MG TF sports cars, seeing production return to the famous
Longbridge assembly plant after a two-year gap.
resuming production, particularly in Britain, Nanjing intended
to revive the marque internationally through sales in Europe
and the Commonwealth, where the MG brand remains a household
name. However, the project demanded considerable investment,
way beyond the £53 million paid initially for the
brand, and this looked set to stretch Nanjing both financially
and logistically. Zhang Xin, general manager, stated in
2007 that the company was actively seeking outside investors
and would consider parting with as much as 50 percent of
itself in order to fund the project. In the end, the Nanjing
corporation retains less than 5% of the new, merged company.
Auto is reputed to have sold 3,000 examples of its MG 7
model (based on the MG ZT, right) since August
2007, out of almost 80,000 vehicles built by the company
last year. This compares with some 1.25 million sold in
total by SAIC. China is the fastest growing automotive market
in the world, with over 35 million cars on the roads but
where less than 2.5% of people own one (compared to 50%
in Europe). Sales of private vehicles are projected to be
over 4 million this year.
Automotive is not widely known outside its native China,
and has been working hard over recent years to establish
toeholds beyond its national borders. However, with the
exception of a majority stake in South Korea’s SsangYong
Motor Company, the acquisition of Nanjing, and thereby the
names of MG, Morris, Austin and Austin-Healey, represents
its first serious step towards making a name for itself
word-wide. As part of the announcement on Wednesday 26th
December, SAIC president Chen Hong revealed that the Longbridge
facility would serve as a platform for the firm to tap into
foreign markets, centred upon the MG brand. This must be
good news for the future of the once-vibrant plant and suggests
the possibility of further investment.
China, however, the outlook for the MG brand is more complicated.
With SAIC promoting the Roewe 750, based upon the Rover
75, the model is positioned in direct competition with the
MG 7 saloon produced by Nanjing. It even shares much of
the same technology and styling, making it possible that
the same marketing difficulties that thwarted MG Rover’s
sales of two very similar vehicles might be repeated in
China. "The next thing we will be focusing on is to
clarify the market position of the Roewe and the MG, and
differentiate the brands accordingly," said Liu Ningsheng,
spokesman at Nanjing Auto.
is one of a whole string of eminent British motoring names
that have been forced to call upon foreign investment in
recent years, including the likes of Rolls-Royce, Bentley,
Jaguar, Aston Martin and Lotus. India's Tata Motor Company
looks likely to acquire Jaguar from Ford, while Volkswagen
owns Bentley, BMW has Rolls-Royce, Lotus belongs to Malaysia's
Proton company, and Aston Martin is in the hands of a consortium
headed by Prodrive’s David Richards but largely Kuwaiti-backed.
In this context, the transfer of MG from one Chinese manufacturer
to another represents little change in the overall scheme
of things, but with SAIC having substantially greater resources
than Nanjing, the future for MG does looks appreciably brighter.
Reuters items on 28th