SAIC merges with Nanjing

Published: 28 December 2007

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…

What will that mean for MG and Longbridge?

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.

So will we see Rover again?

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…