News : April 2008

News digest

Compiled by CLIVE GOLDTHORP

1) SAIC Motor/MG and Roewe

SAIC bosses fly in to assure MG workers at Longbridge
Duncan Tift, Business Staff, Birmingham Post 25th April, 2008


A car similar to this speculative rendering of a new MG-badged sports hatch might just be the model to
revitalise production at Longbridge. (Picture: Michael Wren)

THE Chinese owner of MG Rover has assured workers at Longbridge that the plant has a long term future. Senior managers from Shanghai Automotive (SAIC) – including president Chen Hong – visited the factory on Thursday to make a presentation to workers and to reassure them about their jobs.

The delegation has also held talks with Birmingham council leader Mike Whitby to assure him of the company’s intentions. Mr Chen said the purpose of visiting Longbridge was to make sure that everything was on track for the resumption in production of the MG TF sports car. Mr Chen, speaking at the Beijing motor show at the weekend, said that production of the TF would resume in July and would be ready for delivery the following month.

Attending yesterday’s presentation was MP Richard Burden (Lab: Northfield), who said he had been impressed by what the Chinese had had to say. “They we aware of all the speculation surrounding the plant but there was no ambiguity in what they said – they were clear that Longbridge had a long term future with them and that they were still looking to resume production of the TF in the summer,” he said.

“They were upbeat and quite realistic and I came away impressed by what I had heard.” The MP said the company had also told him they were looking at a strategy for the future development of the site beyond 2010. The sports car was only ever likely to be produced in small volumes but this was always the intention of Nanjing Automotive (NAC) when it originally beat SAIC in the race to acquire MG Rover three years ago.

SAIC is a larger company and now it has successfully integrated NAC following a merger at the end of last year, it is looking at things on a larger scale and one of the proposals is thought to involve using the UK as a regional manufacturing/research and development hub for the global business. This could possibly involve spare capacity being utilised at Longbridge for the manufacture of cars for distribution to the UK and European markets.

There has been speculation over the past week that this could see a European version of the Roewe 550 – originally conceived by MG Rover as a replacement for the Rover 45 – being made at the plant. The car has gone on display in China this week and has been attracting a lot of positive comment. As far as the UK supply network is concerned then things are not so positive.

Mr Burden said the company had told him that local suppliers were receiving no guarantees about future work as SAIC had made it clear they would source components globally in order to get the best deal. “We have to ensure that we retain strong links with the company and so the onus is on suppliers to ensure that they can provide quality products at the right price,” said the MP. Speculation over the future of the plant flared when body-shell supplier Stadco announced two weeks ago that it was pulling out of a deal to supply panels for the TF, putting 30 jobs at risk.


Nanjing refuses to meet unions
Jon Griffin, Birmingham Mail, 24th April 2008

NANJING has refused to talk to unions about the long delayed Longbridge MG project for nearly six months, because the HR manager is on maternity leave. The Chinese car firm has rebuffed all requests for meetings from senior Unite UK car industry negotiator Dave Osborne since last November.

Union bosses today revealed that the reason cited by the Chinese is that HR Manager Louise Lane is absent on maternity leave. Gerard Coyne, regional secretary for the T&G arm of Unite the union, said today: “It’s utter nonsense. She is on maternity leave, and the response has been that ‘we cannot discuss anything until she returns’.

“This is not about HR matters. It’s about the strategy, it’s about what the future holds for Longbridge. They clearly are struggling to operate in a democratic environment. We are not talking about individual workplace issues here, but the HR Manager is having a baby, so we cannot have a meeting with them. “Dave Osborne sent them several letters since SAIC took over and he wrote to them again relatively recently. He has not had any response at all. You kind of get the feeling that nobody is in a position to make any statements. The media’s experience of Nanjing is mirrored by ours. We are as much in the dark as is humanly possible.”

Mr Coyne said unions were anxious for answers to key questions following Nanjing’s joint decision with parts specialist Stadco to scrap the body shell assembly at Longbridge, with the potential loss of 30 jobs. “There are bigger questions that flow from this decision. Will there be manufacturing? Will there be research and development facilities? Or is it just going to be screwdriver assembly?”

Mr Coyne said Nanjing should relinquish its land for regeneration – and potential new jobs – if volume production was no longer on the cards. Nanjing’s UK Director of Communications Eleanor De La Haye could not be contacted for comment.

(Editor’s Note: AROnline understands that NAC MG UK Limited’s Corporate Communications Manager, Eleanor De La Haye, was, in fact, working in China last week)

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News digest

Compiled by CLIVE GOLDTHORP

1) SAIC Motor/MG and Roewe

Hopes rise for MG production at Longbridge
Duncan Tift, Business Staff, Birmingham Post 22nd April, 2008


MG version of the Roewe 550 to be produced at Longbridge?

Fresh hopes have emerged that car production at Longbridge does have a future. Shanghai Automotive (SAIC), which took over Nanjing Automobile at the end of last year, has announced that production of the MG TF sports car will be relaunched in July and on sale in August – 11 months later than originally planned.

After weeks of speculation about the future of the sports car project – doubts being fuelled by the withdrawal of body-shell manufacturer Stadco from an agreement to supply panels and a lack of comment from China – SAIC used the launch of the prestigious Auto China 2008 exhibition in Beijing to announce that it would resume production of the TF in China at the end of this month and follow it up some three months later in Longbridge.

Industry experts and suppliers have welcomed the move although they are still cautious about the amount of British involvement in the project. In a statement to support the TF’s appearance at the motor show, SAIC said the model had “remarkable significance” and that it was the first genuine sports car [by Chinese standards] to represent the “brand personality of MG – Release, Passion and Fun”.

SAIC also said that 2008 represented a fresh start for the company – indicating its integration of Nanjing. Yang Junhu, vice general manager of MG, said: “MG TF is the best symbol to represent MG brand, because of its high-end market position, passionate and stylish design concept, and its long racing history. MG TF will certainly make positive and deep influence on the Chinese sports-car market.”

SAIC said it had delayed the project in the UK because it wanted to reassess it following its merger with Nanjing at the end of last year and because of concerns about the quality of some of the components being shipped over from China. The Chinese commitment would appear genuine and has been reinforced by comments from Conservative MEP for the West Midlands, Malcolm Harbour, who met SAIC president Chen Hong in a private meeting at the end of March.

“Mr Chen had asked me to keep the details of the meeting secret until now but he told me that the intention was to relaunch production in the summer with the cars being offered for sale shortly afterwards,” he said. Mr Harbour, who worked at Longbridge for many years, added that he “warmly welcomed the news”. He also confirmed the suggestion that SAIC had delayed relaunching production because it was unhappy with some of the quality aspects of the project.

“He [Chen Hong] explained that the delay in announcing the start of MG TF build was to ensure that he was personally satisfied that the quality of the relaunched car would be fully competitive,” he said. Rachel Eade, programme manager for automotive supply chain agency Accelerate, said she was pleased with the announcement because of all the recent speculation about the project. “What we need to look at is how big a role the West Midlands supply chain will play in the production of the cars and this is something we are keen to explore with the Chinese,” she said.

Professor David Bailey, of Birmingham Business School, said: “There are still concerns about the manufacture of the cars and it would appear there are going to be far fewer linkages with the local economy than we previously expected. “It rather looks like its going to be a case of just screwing together bits brought over from China.”

He also said doubts had to remain about whether the car was still a viable concept for the European market, bearing in mind stricter emissions legislation and competition from rival manufacturers.

SAIC has not given any details on production levels or costings, other than to say that the price would be “competitive”.


PWC chief optimistic for future of Longbridge
John Duckers, Business Editor, Birmingham Post

Longbridge could still have a future under its Chinese owners, according to the Midland boss of the accountancy firm which handled the fallout from the crash of MG Rover. David Waller, PricewaterhouseCoopers’ regional chairman and Birmingham senior partner, said he wanted the city to reach out to SAIC/Nanjing and offer it positive encouragement.

He did not spell out exactly how, but is thought to favour a major incentives package to persuade the Shanghai partnership that Longbridge could yet be a success even if it does not involve full car production. “There is still every possibility of a big win/win,” insisted Mr Waller. PwC were the administrators of MG Rover; indeed the administration is not yet at an end even though the group went down in 2005.

On Saturday The Birmingham Post revealed SAIC’s global partnership with Volkswagen had led industry analysts predicting the Birmingham plant will be pushed further down the Chinese carmaker’s list of priorities. Mr Waller told The Post: “We should be saying to SAIC – whatever your strategy we can help you be a gateway into the European market.”

But he believes it could ultimately mean Longbridge plays a somewhat different role to what has been outlined to date. The MG TF line still exists at the plant, offering hope that production might resume eventually. He said: “I think the Chinese want to get into the volume market. But if they want a presence in the market place then they have to have a physical presence.”

Wherever the components are made, in China or in the Midlands, he suggested they could still be shipped into Longbridge and screwed together in final model assembly. And if that was not a runner, then there could be opportunities in terms of technical development and at the very least as a parts, servicing and repairs operation.

“I think things could still happen at Longbridge but perhaps not in the way we thought they would,” said Mr Waller. “As a region we have to persuade them that there is a way forward.” He believes to that extent there is a major role for Birmingham City Council and regional development agency Advantage West Midlands to play. It all depended on whether there was a strategic will to make something happen.

“We need to talk to SAIC and be positive about the way we can support them.” But he accepted that SAIC appeared to have a different strategy to Nanjing. “They are more heavily focused on rapid development in the local Chinese market which means overseas investments would not be as high on the priority list.”

But they still should be encouraged to consider the West Midlands even though for the moment there were Government constraints making it difficult for Chinese firms to expand abroad. Those constraints would eventually ease. And, just as India has started investing overseas, highlighted by Tata’s purchase of Jaguar and Land Rover, and previously steel maker Corus, so would come the day when the Chinese followed suit. And it would not just be the automotive sector in the West Midlands which would prove attractive to them – so would areas like medical equipment, engineering and ceramics.


SAIC may base European research at Longbridge
Duncan Tift, Business Staff, Birmingham Post 23rd April, 2008

Shanghai Automotive (SAIC) could be preparing to make Longbridge its major European centre for research, development and car production – guaranteeing the long term future of the plant. Fresh from announcing it is to resume production of the MG TF from July, the Chinese company has led observers to believe it is planning further developments for the Birmingham factory.

SAIC is believed to want to follow the model of Tata, which is in the process of acquiring Jaguar and Land Rover from Ford, and use the West Midlands as a base for European operations. When SAIC originally failed to acquire the former MG Rover company – losing out to Nanjing Automotive (NAC) – it set up a research wing with Ricardo at Leamington Spa, taking with it 300 of the best minds from Longbridge.

Following the merger with NAC at the end of last year, SAIC has said it is now keen to develop European exports. Rumours have persisted in recent weeks that a new car project was being developed for Longbridge to make use of spare production capacity. This could see UK production of the company’s new Roewe 550, which was under development in the final days of MG Rover as a replacement for the outdated Rover 45. The mid-range saloon has gone on display in China and has already attracted positive comment.

The link-up with Longbridge has been given credence by comments from Conservative MEP for the West Midlands Malcolm Harbour, who had a meeting with SAIC president Chen Hong at the end of last month. Mr Harbour, who has only now been cleared to divulge the results of the meeting, said: “I am confident that, if the MG TF launch goes well, SAIC will make Longbridge their major European centre for research, development and production.

“They are investing in new models for their Roewe brand, and I was given a confidential briefing of their future plans.” He said that the Leamington Spa-based engineers were already working on some of the new designs. “Mr Chen assured me that, following their acquisition of NAC, Longbridge would be part of their long term strategy of developing their own car brands and increasing sales outside China,” added Mr Harbour.

He said what had to happen now was that all agencies associated with Longbridge needed to work together to develop a sustainable regional economic strategy that would ensure SAIC had everything in place it needed to develop a successful operation. MP Richard Burden (Lab: Northfield) said: “We need to identify opportunities and work with SAIC to show them what we have to offer. “People have to accept that Rover is gone and it’s not going to come back – the only thing to do is move forward.”


2) TATA Motors/Jaguar and Land Rover.

Strong international sales and technical expertise have resulted in Land Rover winning not one but two Queen’s Awards for Enterprise.
Land Rover Press Release 21st April, 2008

Land Rover has received the award for International Trade for an outstanding performance in increasing export sales by 52 per cent to nearly £4bn a year, an increase of £1.3 billion in three years. Land Rover also won the award for Innovation for its patented Terrain Response System. Available on all Land Rover models, apart from Defender, Terrain Response sets up the vehicle’s engine response and traction to maximise performance on all surfaces. It is the electronic equivalent of having an expert instructor next to the driver.

Phil Popham, Land Rover’s Managing Director, said, “To win not one but two Queen’s Awards is a considerable achievement and a testament to Land Rover’s relevance and modernity in its 60th anniversary year. It demonstrates we are building and selling desirable and technically advanced cars around the world and generating significant wealth for Britain.”

Land Rover exports over 75 per cent of the production of its Defender, Freelander 2, Discovery 3, Range Rover Sport and Range Rover vehicles to 147 countries around the world. Land Rover achieved a third successive year of record sales in 2007, with a total of 226,395 sales, versus 192,511 in 2006 and 185,120 in 2005.

This represents a 17.6 per cent increase on the previous year. Sales for the first quarter of 2008 are 57,859, up 13% on the same period last year. Emerging markets are helping to drive sales – Russia is currently running 176% ahead of last year with 4,690 sales and China is ahead by 224 per cent with 3239 sales.


Tata gets US antitrust OK for Jaguar, Land Rover
Reuters, Automotive News Europe 24th April, 2008

WASHINGTON (Reuters) — U.S. antitrust authorities have cleared India’s Tata Motors Ltd.’s purchase of Jaguar and Land Rover from Ford Motor Co.

Antitrust authorities completed their review of the $2.3 billion deal without taking any action to block it, the U.S. Federal Trade Commission said in a notice issued on Wednesday. In March, Tata announced it would buy Jaguar and Land Rover, giving the Indian automaker a line-up of products ranging from the world’s cheapest car to some of the most expensive.


3) India Watch.

Pininfarina plans R&D centre in India
Staff Report, Automotive News Europe 24th April, 2008

TURIN — Pininfarina plans to establish a research, design and engineering centre in Pune, India, this year with support from Tata. Pininfarina and Tata have signed a letter of intent, which says that Tata will support the Indian center with contracts and participate with a minority interest. Pininfarina will be the majority shareholder with management responsibility.

“This agreement witnesses the great attention Pininfarina is dedicating to an emerging and highly developing market such as the India one,” Andrea Pininfarina, CEO of Pininfarina, said. “Thanks to our partner, one of the worldwide major automotive manufacturers with strong roots on the Indian market, we will reach a higher excellence level in the design and engineering sectors.”

Pininfarina’s research, design and engineering center will offer its services to other Indian and international automakers.

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SsangYong: on the up in the UK?

CLIVE GOLDTHORP


SsangYong’s diesel hybrid drivetrain will usefully boost economy and lower carbon emissions…

AROnline’s main focus recently has been on Tata Motors Limited’s acquisition of Jaguar and Land Rover, the consequential chances of a Rover revival, SAIC Motor Corporation Limited’s just completed merger with Nanjing Automobile Company and the impact of that deal on the future of the MG and nascent Roewe brands.

However, SAIC Motor also has a controlling 51.9 per cent stake in South Korea’s SsangYong Motor Company so that brand’s current re-launch in the UK merits closer scrutiny. Paul Williams, the Managing Director of SsangYong’s new British distributor, Koelliker UK Limited (KUK), has moved rapidly to review the brand’s Dealer Network here and to re-position the three current model ranges: Kyron, Rexton and Rodius.

Williams has initiated an apparently Alfa Romeo UK-like restructuring of the 50-strong Dealer Network which KUK inherited and, having retained just 29 franchisees, now aims to increase the number to 70 by the end of 2008 and to 100 by 2010. KUK has also re-priced and re-specified all three current models and, for example, now firmly pitches the Kyron against the likes of the Kia Sorento and Hyundai Tucson and the Rexton against the Hyundai Santa Fe. Williams intends to target “farmers, builders (and) people who need to tow such as caravanners, horse and boat owners” with the Kyron and Rexton SUVs while “looking at the taxi trade for the Rodius.”

KUK has now disclosed that SsangYong plans to invest more than €1.9bn. in 20 new models, based on five different platforms, with five new engines and with monocoque construction, and which are all intended for introduction between 2009 and 2014. These vehicles, which are likely to feature the new diesel hybrid technology which SsangYong announced at last month’s Geneva Motor Show (See photo), may have some design input from the Italian company which was responsible for the Rexton: Italdesign.

Paul Williams commented that: “I have been able to see some of the new models and although I can’t reveal any details, I’m very excited about what’s coming. It’s unlikely that all 20 will be appropriate for the UK, but it will mean a wider and more attractive range with much greater choice for customers. There will be different body styles and engines including passenger cars that will enable us to compete strongly in new market sectors.”

“A move into more mainstream cars” will clearly be a significant feature of SsangYong’s Future Product Programme but how that will be integrated within SAIC Motor’s overall Brand Development Strategy has yet to be revealed. Indeed, given the recent report that SAIC Motor might now be evaluating the export of Roewe-branded cars to Europe, AROnline reckons that SAIC Motor’s overall Brand Development Strategy may still be a work-in-progress and that the company should, perhaps, even be giving serious consideration to replacing Roewe with one of the BMC legacy brands acquired as a consequence of the merger with Nanjing Automobile Company.

SAIC Motor apparently rejected the idea of reviving either of the company’s own legacy brands of Phoenix and Shanghai prior to opting for Roewe but now has access to the IPRs for the likes of Austin, Morris, Sterling and, by virtue of last year’s JV between NAC MG UK Limited, HFI Automotive Limited and Healey Automobile Consultants Limited, possibly even (indirectly) Austin-Healey.

A re-branding of Roewe may, in fact, be the only way to avoid a potentially expensive and protracted IPR dispute should a Tata Motors Limited-owned Jaguar and Land Rover actively market Land Rover in China and/or launch “Roverised” versions of the Tata Indica V3 as Rovers in Britain and Europe within the next year or two. Indeed, the adoption of a BMC legacy brand might just be the most cost-effective and, more importantly, quickest fix for that, not so unlikely, problem.

SAIC Motor would still, of course, have to address the issue of how to position MG, SsangYong and, say, Sterling, within the “Global Automotive Brand Hierarchy” and, in addition, ensure that each brands’ core attributes were both clearly identified and reflected in their distinctive product ranges.

Ray Hutton’s report in last weekend’s Sunday Times indicates that “a SsangYong-SAIC liaison office is being set up in south(ern) England” so, perhaps, the task of differentiating between SAIC Motor’s various brands has now begun. However, what that might mean for SsangYong’s long-term future in the UK remains to be seen…

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SAIC plans UK comeback for MG TF roadster

JOHN REED, Financial Times

SHANGHAI Automotive (SAIC), China’s largest locally-owned carmaker, is to resume production of the iconic MG TF roadster at its UK plant in July, according to its president.

With plans to resume MG production at its plant in Longbridge, the carmaker is also to consider exporting its own-brand, Chinese-made Roewe cars to Europe, Chen Hong told the Financial Times on Sunday. SAIC, which merged with its smaller regional rival Nanjing Automobile last year, intends to resume production of the TF at the end of this month in China, three months before its planned production date in the UK.

“We will try to launch production at the end of July and bring the car to market at the end of August,” Mr Chen said. MG has 55 dealers in the UK, and also plans to sell its roadster in Europe. NAC bought the MG brand and its production assets in 2005, and shipped most of the plant to Nanjing. SAIC acquired the rights for some of the carmaker’s models, which it renamed Roewe.

SAIC, which has joint ventures with General Motors and Volkswagen – China’s two largest foreign carmakers – wants to build up its own brand to cash in on China’s booming car market. Mr Chen said a possible launch of export sales into eastern and western Europe was being considered. In a country in which carmakers are establishing themselves and fighting foreign brands for market share, SAIC touts its British ties.

Its stand this week at the Auto China show in Beijing was adorned with images of Tower Bridge, William Shakespeare, a red telephone booth and a teapot with cup of tea. The TF model has a large fan base in Europe and the US, but has been off the market for three years in an industry characterised by rapid product improvements. Mr Chen said its pricing would be “competitive”.

SAIC delayed the TF relaunch because of the merger as well as concerns about ensuring its quality. “The manufacturing consistency is stable, and we’re very comfortable with the quality,” Mr Chen said. Supplier company Stadco, which had been expected to provide body panels for the TF, withdrew from a supply deal. The brand will now source them from China, Mr Chen said.

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Roewe 550 unveiled at Beijing Motor Show

KEITH ADAMS

IT’S one of the most scooped cars ever to grace AROnline, but finally after a gestation period of nearly three years – and that excludes the time spent in its former incarnation as the RDX60 – the wraps have come off the Roewe 550… and it looks remarkbly good.

You can read the whole story as it unfolded on the Roewe pages of the website, but needless to say, it’s been a joint Anglo-Chinese venture, and a frustrating insight into what might have been had MG Rover and SAIC been able to get it together back in 2004, when the chance was there to do so. Had that happened, we’d have been looking at our 45/ZS replacement – perhaps with a European twist for the domestic market versions.

Interestingly, an AROnline insider close to Longbridge tells us that SAIC Motor is indeed looking seriously into the idea of producing this car in MG form in the UK, and although the odds of this happening are currently running at ‘something less than 50-50’, it is definitely on the agenda, alongside the re-invigorated MG X120 sportscar project to replace the on-off-on-again TF LE 500. An MG-badged, Longbridge-built, version of the Roewe 550 would almost certainly have a much greater impact on the key UK and US markets. Time will, no doubt, tell.

However, for now, it’s good to see the car has finally made it… and let’s hope it performs better on the Chinese market than the slow-selling 750…

See the Auto Sina picture gallery here

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Geoff Polites, CEO, Jaguar-Land Rover, dies

FORD Press Release

Geoff Polites, chief executive officer of Jaguar Land Rover, has died peacefully in his home country of Australia. He was 60. Mr. Polites, who is credited with leading the team that returned the Jaguar Land Rover business back to profitability and successfully steering it through its ongoing sale process to Tata Motors, had been battling serious illness for the past two years.

“Geoff’s untimely passing robs his family and friends of a man who was a real inspiration to us all,” said Alan Mulally, president and chief executive officer, Ford Motor Company. “His drive and determination, combined with his clear sense of vision for the business, played a huge role in turning round the business at Jaguar Land Rover and returning it to profitability. Geoff ensured that Jaguar Land Rover was not distracted and continued to focus on the fundamentals of the business during the recent sale process, despite at the time also fighting his own personal health battle.

“He was a trusted colleague and someone who was much respected not just by his peers but by all who had the privilege to work with him. Our sympathies are with his wife and family at this difficult time,” said Mulally.

Lewis Booth, executive vice president responsible for Ford Motor Company’s businesses in Europe, said: “For many of us at Ford and Jaguar Land Rover, we’ve lost not just a respected colleague but a great friend. “Geoff was always someone to look up to throughout his almost 40-year career in the automotive industry. His passion for the car business was legend, but the resolve he showed since taking over as CEO of Jaguar Land Rover in 2005 was something very special. His leadership of the team that has put the Jaguar Land Rover business back into profitability has been exceptional. Geoff has given Jaguar Land Rover the solid foundation and established the strong management team it needs for a successful future. We will miss our friend very much.”

David Smith, Jaguar Land Rover’s chief financial officer, will take over as the acting chief executive officer at Jaguar Land Rover until a successor is appointed.

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SAIC Motor Aims to Re-Open UK Factory This Year

IRENE SHEN, BLOOMBERG

SAIC, China’s biggest automaker, plans to re-open a Longbridge, UK car plant in the second half of the year, resuming production at a factory that closed three years ago when MG Rover Group Ltd. collapsed.

The factory will initially make MG TF roadsters. It may add other models later, Vice Chairman Chen Hong said today in an interview at an event to mark the opening of a Beijing research center. He didn’t say how many cars the plant would make a year.

SAIC Motor, Great Wall Motor Co. and other Chinese carmakers plan to open factories overseas as rising domestic competition crimps profit margins. The Longbridge plant, in central England, employed 6,000 workers when production was halted in April 2005.

“MG’s customer loyalty will continue to support sales in Europe,” said Yale Zhang, a Shanghai-based director at CSM Asia, which advises automakers. “Europe is SAIC Motor’s most important overseas market, although China is the company’s first priority because of the strong demand here.”

The MG Owners’ Club is the largest in the world serving a single marque, according to its Web site. Trial production at the Longbridge plant began in May.

Nanjing Automobile Group Corp., which bought the MG brand for £53m in 2005, also planned to open a plant in Oklahoma. This project is now being reviewed after SAIC Motor agreed to buy Nanjing Auto’s auto-making assets last year.

“It’s hard to say if we’ll continue that plan before the assessment is completed,” said Chen.

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Shanghai and Nanjing to fly in for MG talks at Longbridge

DUNCAN TIFT, Birmingham Post

THE fate of car production at Longbridge looks uncertain that a high level delegation from Shanghai Automotive and Nanjing is to visit the plant for crunch talks later this month. Sources have told The Birmingham Post that the visit could decide the long-term future of the MG Rover plant.

Fears about the site have been rife during past week following a decision by a major supplier, Stadco, to pull out of an agreement supplying body panels to the MG TF sports car. A wall of silence has been erected around Longbridge and despite repeated attempts to gain information from the Chinese about their plans, nothing has been forthcoming.

Worryingly, politicians have also been reluctant to comment on the situation. Now, Rachel Eade, programme manager for supplier support agency Accelerate, said she had been told that a Chinese delegation was to visit the plant at the end of April.

“I’m led to believe that an investment decision on the future may well be taken,” she said. “Considerable time, investment and goodwill have been channelled into restoring some form of manufacturing to Longbridge and we are still hopeful that this will eventually take place. “There are a small but significant number of West Midlands companies involved in the process already and, whilst the latest news was not encouraging, there are still a good number of firms who are keen to work with the Chinese to make this happen,” she added.

The visit could focus on the merger of SAIC and Nanjing after Christmas, but the timing of the trip is worrying many observers. There have been a string of problems with the sports car project since its initial relaunch last summer. Despite a fanfare for the media last May, very few of the cars have been produced and none have found their way into showrooms despite dealers being primed for delivery since September.

Late last year, production was hit due to problems with components being shipped from China and this was thought to have delayed delivery until March. Ironically, UK engineers who have moved from MG to Nanjing and SAIC are in China at the moment rectifying quality issues. However, the delayed date for delivery has now passed and still no cars have appeared.

Stadco said it was withdrawing from its contract for “commercial reasons”. It is thought the company was fed up of the repeated delays and was not seeing any return on its investment. Suppliers confided to The Post that they were worried about the situation and feared that the company would decide to manufacture all components in China and then ship them to the UK for assembly – if the project was still viable. Industry insiders believe that despite the iconic MG brand, the TFs time has already gone and that a new model is needed.

The Chinese had appointed 50 dealers in the UK last summer ready for the scheduled launch in September. However, the dealer network is also in the dark and despite being pressed, Nanjing has not said when it will be able to supply them. Again, just as with suppliers, dealers are also struggling to get information.

Luffield Cars in Loughborough, Leicestershire, was the first UK dealer appointed to sell the TF but nine months on and there are still no sports cars in its showroom. Managing director David Woods said: “We can’t get anything out of their communications people at all. I wrote to them at the end of March and the reply was extremely vague.” He said they dealership, which is now selling Citroens, still had 800 MG customers in its database and many had expressed interest in the sports car.

“I’m not saying they were breaking down the doors trying to buy one but they were interested. However, we can’t tell them anything because we don’t know anything – it’s all one-way traffic,” said Mr Woods. “The SAIC takeover probably put things back slightly but I would have thought they’d have been over that by now. There’s enough British guys connected with the project to know what’s required.”

Nanjing was thought to have the capacity to produce around 15,000 TFs this year if there was demand. There was also talk that in 2009 it would take on production of the MG5, a new car based on the old Rover 45.

SAIC boss Chen Hong set for crucial talks at MG

The man at the helm of the Longbridge project is to jet into Birmingham from China next month for talks which could seal the fate of plans to relaunch MG TF. Chen Hong, President of Shanghai Automotive Industry Corporation is pencilled in for a visit to the car factory in May. The visit comes amid mounting speculation that mass car production will never restart at the Birmingham car factory under the plans by Chinese partners SAIC and Nanjing Automobile.

Some car industry experts believe the visit could spell the end for the Chinese reign at Longbridge, although Nanjing are currently locked into a long-term lease with Birmingham landlords St Modwen for the rent of around 100 acres of land. Unions have already expressed fears that Longbridge could be reduced to a “screwdriver assembly” project assembling kit cars imported from China.

It is understood that the Chinese may already have decided to ditch the UK relaunch of the MG TF two-seater and concentrate on the Chinese market through production of MGs at the new factory in Nanjing. Unions in Birmingham have been pressing for talks with Nanjing/SAIC since last November to raise concerns about the painfully slow progress of the Chinese project ever since NAC bought the assets of MG Rover for £53 million in July 2005. Unite senior UK car industry negotiator Dave Osborne has accused the Chinese of “cold-shouldering” the unions over requests for face to face meetings to air their concerns.

A source said today: “Chen Hong, the president of SAIC, is due to visit Longbridge in May. Whether the Chinese will then announce the end of the MGTF project is open to speculation.” Rumours of an impending collapse of the Chinese plans have been rife since body shell specialist Stadco pulled the plug at Longbridge with the loss of around 30 jobs, before a single new Chinese-built MG has entered a UK car showroom.

Nanjing pledged to produce 100,000 MGs a year within five years at Longbridge, but the deadline for a start of volume production has been continually shelved.

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Stadco Limited and Longbridge: the bigger picture examined…

CLIVE GOLDTHORP

The recent announcement that Stadco Limited will, for commercial reasons, be ceasing production of the bodyshells for the MG TF at Longbridge generated more than a little pessimistic press coverage in both the Automotive Industry and regional media. However, upon closer scrutiny, that negative media response may not be entirely justified.

AROnline understands that NAC MG UK Limited (NAC MG) and Stadco Limited (Stadco) agreed the contents of a joint Press Release with each company’s version having an additional, company specific, paragraph. NAC MG was to respond to any press enquiries and a Q&A Fact Sheet was prepared for that purpose. NAC MG’s version of the Press Release and the Q&A Fact Sheet are reproduced in full below:

Press Release

Stadco and NAC jointly confirm that for commercial reasons, production of bodyshells for the MGTF by Stadco will cease. Both parties are working to ensure minimum disruption to the workforce.

NAC remains committed to the re-launch of the MG TF and Longbridge. To date it has invested £38.4 million including research and development in the project and is working to ensure that its products are of the very highest quality. It is not thought that this current situation will affect the TF launch.

Stadco was the MG TF body welding supplier to MG Rover. In September 2006 NAC and Stadco signed a one off purchasing agreement for the relocation and installation of assets in addition to technically supporting the replication of these production assets in Nanjing, China.

Q&A Fact Sheet

What are the commercial reasons to which your statement refers?

The business models presented by both parties are incompatible on a number of issues, these predominantly being volume and quality. Initial volume production for the TF is insufficient for Stadco to make a profit, making the venture uneconomical for them.

Further, NAC currently manufactures bodies in two locations, the UK and China. The NAC China fixtures and welding assembly equipment is of a more recent construction and is consistently producing bodies of a greater quality standard.

As our parent company’s President, Mr Chen Hong, publicised in the Financial Times newspaper recently, we consider the quality of our vehicles to be of the very highest priority.

What will become of the current Stadco workforce?

NAC is working very closely with Stadco to ensure minimum disruption to the workforce. NAC recognises its corporate social responsibility and, although it is not obliged to do so, will do its best to absorb certain Stadco team members into its workforce.

Candidates would be selected on the basis of experience in relevant trades including body quality, sheet metal work and logistics. We would also look through the current vacancies and skill match where possible. NAC remains committed to Longbridge and does not wish to lose any talented individuals it can absorb.

Why will the situation not affect the TF launch?

NAC is confident that the current Body in White manufacturing capability, quality and progress being achieved has secured a launch quantity sufficient for a production start and continuation without a break in supply. In parallel, our vehicle and engine test programmes are delivering very positive results.

What are the benefits to the consumer of moving the BIW function to China?

We have great confidence in our facilities in China and our product and having a single location for the component supply provides (us) with greater influence and economies of scale coupled with the ability to test our first product at the source of manufacture.

Does this mean that the bodies for all NAC/SAIC products will be made in China?

No, only the small volumes of TF will resource its BIW from China and this is a short term solution. The current plan allows for BIW to be carried out in the UK

Is this the first step to seeing all production move to China?

On the contrary, there will be investments into the Longbridge site to produce state of the art European upper and lower medium vehicles.

What will be the environmental impact of sourcing car bodies from China?

As stated above, we are talking about relatively low volumes for the TF at this stage.

AROnline believes that the ending of the contractual relationship between NAC MG and Stadco should be analysed in the wider context of a number of other moves made by SAIC Motor Corporation Limited (SAIC Motor) as a consequence of the merger with Nanjing Automobile Corporation (NAC).

The merger between SAIC Motor and NAC was finally completed on the 8th April, 2008 but, in parallel with that, no doubt, complicated legal process, SAIC Motor has undertaken a programme of commercial and legal corporate housekeeping as demonstrated by, for example:

– the acquisition of the European IPRs to the MG brand for the reported sum of €1.25m. which will now enable NAC MG to distribute MGs in fifteen European countries, including Holland, Italy and Russia, and which was, in all probability, an essential prerequisite for the recommencement of production at Longbridge.

– yesterday’s announcement that SAIC Group’s Volkswagen JV company, Shanghai Volkswagen Automotive Company Limited (SVW), will purchase the former Fiat Group Automobiles S.p.A. and NAC JV plant at Nanjing in China’s Jiangsu Province.

SAIC Motor’s President, Chen Hong, will be visiting NAC MG at Longbridge on the 23rd and 24th April, 2008. A well-placed and informed source has now told AROnline that “the future for Longbridge looks extremely bright” and intimated that an announcement about SAIC Motor’s plans for the MG marque and for Longbridge can be expected early next month. However, in the meantime, AROnline reckons that a careful reading of NAC MG’s Fact Sheet will provide readers with a clear hint as to the nature of those plans…

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News digest – extra

Compiled by CLIVE GOLDTHORP

1) SAIC Motor/MG and Roewe

Supplier pull-out fuels MG doubts – paper
Just-auto.com 16th April, 2008

The last car to be manufactured at the once-famous Austin, MG and Rover plant at Longbridge may have already rolled off the production line, industry insiders have told a key Birmingham newspaper. They told the Birmingham Post the decision by main supplier Stadco to stop manufacturing body shells for the MG TF sports car, as the paper had revealed on Saturday, could effectively sound the “death knell” for the Nanjing project.

One influential source told the paper he doubted whether Nanjing parent SAIC would ever produce cars at Longbridge. He reportedly said he rated its chances of doing so as “very slim” although he did believe that the former Rover factory could still have some role as a servicing centre. The source, who has declined to be named, said a lot of money would have to be spent to develop new versions of what was effectively an old model – the MGF.

The model was first launched back in 1995 and has had one major facelift when it was renamed the TF. The source told the Birmingham Post there were serious questions to be answered – could the TF sell in sufficient volume? Could the group meet quality standards? Could they develop an engine? Could they meet environmental requirements?

“It is a tall order,” he reportedly cautioned. “It is a huge task.” He told the paper that far more attractive operations had also struggled.

Jaguar had been “taken to the brink” before being acquired by Indian conglomerate, Tata; Aston Martin was reliant on Qatari money and Russian Nikolai Smolenski had baulked at producing TVRs at Blackpool. “If SAIC/Nanjing thought they could produce cars at Longbridge economically, then I am sure they would,” he told the Birmingham Post.

“But can they do it economically? I cannot see them prepared to spend the sorts of money required. It was always wishful thinking that something would happen. I accept that some people within Nanjing had intentions to produce. But I have never had the impression they were serious about it.”

He told the paper Nanjing never had the capital to do it and SAIC was pre-occupied with making the more recent merger of the two work. Nanjing held a much-hyped ‘start of production’ ceremony at Longbridge last May but really drove only a few pre-production cars from a silent factory. Few details of when production really would start were forthcoming in subsequent months before, or after, SAIC and Nanjing were merged in China.

“There is no emotional connection to Longbridge,” the insider told the Birmingham Post. “How would they compete? Who would buy the cars? I don’t think they will ever produce anything there,” he added. The paper said the claims were backed up by a second source who said the decision by Stadco had effectively brought the curtain down on the Nanjing project.

Stadco, whose involvement with MGF/TF body shells can be traced back to the original 1995 supply by Mayflower, reportedly cited uncertainty over the delays as a reason for pulling out. It also has other fish to fry, having recently set up a body-in-white joint venture in St Petersburg which offers potential as the growing ‘Detroit of Russia’. “There is a very real fear now that they will just pull out altogether,” the source told the Birmingham Post.

“The best scenario for Longbridge would be for them to make the panels in China and then send them to Birmingham. But why would they [do] that – why not just assemble the cars in China?” The paper said UK suppliers have been desperate for some clue as to what the Chinese might be planning but, with no word coming out of SAIC, they remain in the dark.

Stadco was just one of about 150 companies supplying components to the MG TF but, despite investing heavily in a new operation at Longbridge, its patience eventually ran out, the report said. It announced on Friday it was withdrawing from its contract to supply panels for what it called “commercial reasons”. The decision has put 30 jobs at risk, the Birmingham Post said. However, SAIC/Nanjing is reportedly maintaining that its plans are on track.

“Initial volume production for the TF is insufficient for Stadco to make a profit, making the venture uneconomical for them”, NAC MG admitted to Autocar. “NAC remains committed to the re-launch of the MGTF and Longbridge. To date it has invested £38.4 million including research and development in the project and is working to ensure that its products are of the very highest quality. It is not thought that this current situation will affect the TF launch.”

The company claims that a brand new ‘body in white’ production line has already been built in China and says that shells will be imported into the UK when production of the TF starts, the report added. However, NAC insists that body production will still take place in the UK once production volumes are reached, even though it states that the Chinese body production is “consistently producing bodies of a greater quality standard”, the Autocar report said.


2) China Watch

VW’s China venture to acquire Fiat plant
Automotive News Europe 16th April, 2008.

The Shanghai car making venture owned by Volkswagen and SAIC Motor has agreed to take over Fiat’s former car making facility in east China, an SAIC executive said today. Shanghai Volkswagen will buy the facility from SAIC, which acquired it during last year’s merger between SAIC and Nanjing Automobile, a Chinese partner of Fiat, SAIC president Chen Hong told Reuters.

The facility has suspended production but will resume operating in May, producing as many as 50,000 to 60,000 cars in 2008. Annual production capacity will rise to 150,000 cars in the next few years, Chen said. He declined to say how much Shanghai Volkswagen would pay to acquire the facility. The venture’s current annual capacity is 500,000 cars.

SAIC Motor, China’s largest carmaker, is also investing heavily to develop its own-brand cars. The own-brand car business generated 3 billion yuan ($429 million) in sales in 2007, Chen said, out of the firm’s overall sales of 104.38 billion yuan. In early 2007, SAIC Motor rolled out its first own-brand sedan, the Roewe 750, based on acquired technology. Later in the year, it merged with smaller rival Nanjing Automobile, which had previously acquired failed British carmaker MG Rover.

It aims to sell 16,000 MG cars this year, with sales of Roewe models rising to 45,000 from 16,500 in 2007, Chen said. He added that he expects SAIC to break even on its own-brand car business this year if it can reach its annual sales target of 8 billion yuan. SAIC’s 2007 net profit jumped 242 percent to 4.63 billion yuan, partly because of its purchase of major production assets from its parent group in the previous year, including stakes in venture with Volkswagen and one with General Motors.

Its profit last year was also boosted by 6.58 billion yuan of investment earnings, up from 2.00 billion yuan a year earlier. Investment returns will shrink this year because of the downturn in China’s stock market, but SAIC aims for this year’s net profit to be at least as large as last year’s, Chen said.

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News digest

Compiled by CLIVE GOLDTHORP

1) Jaguar and Land Rover

Jag-Land Rover dealers happy with Tata deal
John Revill, Automotive News Europe 14th April, 2008

Britishness of brands must be kept by new Indian owner to help sell cars in the future

Most dealers across Europe are enthusiastic about the future for Jaguar and Land Rover following the sale of the two brands to Tata Motors. “The Indians have style and a quality of life, and that is what we need again for Jaguar,” said Manfred Hauswirth, chairman of the German Jaguar dealers association and the owner of a dealership in Aachen.

Early customer reaction also has been positive, Luc Spiessens, sales manager of Jaguar Antwerp in Belgium, told Automotive News Europe. “They tend to make jokes [about the deal] after entering the showroom,” Spiessens said, “but during further conversations they see it as a positive and sensible move.” Ford Motor agreed to sell the British brands to the Indian automaker last month for $2.3 billion (about €1.5bn).

The EU is carrying out a routine inquiry into the deal. The EU’s report is due by April 30. The sale is expected to be finalized in June.

All the dealers contacted by ANE agreed that retaining the Britishness of the two brands will be key to their success. They said the takeover will be viewed as a good thing as long as Tata keeps production in the UK, which is the biggest market for both brands. Christoph Grün, a manager at Avalon Premium Cars in Munich, said: “A lot of people think India is a Third World country. So Tata should not take production of Jaguar or Land Rover away from Britain.”

One UK Jaguar dealer, who asked not to be named, thought Tata could even speed up decision making, if it leaves that to UK-based management. Tata’s ownership also could help make Jaguar more popular with the UK’s large Indian community, the dealer added. More than 1 million people of Indian descent live in the UK, according to British government statistics. In Germany, dealers believe Jaguar and Land Rover could benefit from new investment from Tata to produce the cars their customers want. Such models could include a cabriolet to compete with the Mercedes-Benz SLK class and Porsche Boxster.

Said Christian Dünnes, a manager at Autosalon Dünnes in Regensburg: “Our Jaguar customers have been asking for years for a small convertible for less than €60,000 but nothing is in the pipeline.”

Lingering doubts

Not all the dealers are totally happy with the sale to Tata. Thomas Wagner, brand manager at Jaguar House in Bremen, said: “I would have preferred to slip under the umbrella of a European carmaker. Tata is a famous name in Asia, but not in Germany.”

Wagner fears a movement of production to India, which he believes would affect the quality of parts. Other dealers said that to succeed Tata would need to:

— Produce the right number of cars — unlike Ford, which they feel was guilty of overproduction.
— Broaden the Jaguar range and speed up the life cycle of those cars.
— Speed up the life cycle of Land Rover’s models.
— Resist building a two-wheel-drive Land Rover.

“We don’t want” a 2wd Land Rover, said William Rees, sales manager at Harwoods of Edenbridge in southern England. “Four-wheel drive is our DNA, we have to maintain it.”


Most Ford-bred executives will stay at JLR
John Revill and Mark Rechtin, Automotive News Europe

Most Jaguar and Land Rover executives are expected to stay in their jobs when Tata Motors completes its deal to buy the British brands from Ford Motor. “I think 99.9 percent of the people are going to want to stay on,” said Ian Callum, Jaguar chief designer, who will stay. Tata Motors Chairman Ratan Tata says the Indian company knows what it doesn’t know. And it sure doesn’t know the luxury-vehicle market or the European and American markets.

Tata needs guidance, and that should be a great relief to the managers at Jaguar and Land Rover. Both Ford and BMW moved in their own executives during their ownership of the brands. But Tata likely will allow the existing executives to stay on.

Transferring to Tata
These top Jaguar and Land Rover executives will retain their positions
— Geoff Polites, Jaguar Land Rover CEO
— Mike O’Driscoll, Jaguar managing director
— Phil Popham, Land Rover managing director

Jaguar Land Rover CEO Geoff Polites, 60, will stay put. Polites, an Australian, joined the two companies in September 2005 after a spell as vice president sales and marketing at Ford of Europe. He has worked with Ford for more than 30 years. Mike O’Driscoll, Jaguar managing director, and Phil Popham, Land Rover managing director, will both remain in their posts, a spokesman for the two brands said.

O’Driscoll is a native of Coventry, England, Jaguar’s hometown. He has spent most of his career with the British brand and took over from Bibiana Boerio as managing director of Jaguar last year. Popham, who joined Land Rover as a graduate trainee, became managing director of Land Rover in April 2006. Jaguar Land Rover product development boss Al Kammerer will stay.

A Jaguar and Land Rover spokesman said that fewer than 50 people at Jaguar and Land Rover from Ford will have the option to stay with the US carmaker. He said: “Tata has made it clear the way they work, they like to go into companies, retain the managers and let them run the business.”


2) China Watch

China show highlights clean cars
Alysha Webb, Automotive News Europe 14th April, 2008

Fuel-efficient technologies debut alongside German SUVs at Beijing auto show

European, US and Chinese automakers will show off fuel-saving powertrains and cars designed for China at the Beijing auto show April 20-28. Mercedes-Benz and Audi also will give world debuts to their new medium-sized premium SUVs. Audi will unveil its Q5 SUV in Beijing because it sees China as a key growth market. Last year, China became Audi’s second-biggest market after Germany as sales grew 24.8 percent to 101,996 units.

Like Audi, Mercedes wants to take advantage of the growing popularity of SUVs in China. After showing concepts for its new GLK class at the Geneva and Detroit auto shows this year, Mercedes will unveil the production version in Beijing. Audi parent Volkswagen group will debut two models developed for the local market by its joint ventures in China. One will be a family-sized sedan code-named the Model X, based on the Jetta/Bora. The other will be a more upscale sedan called the Lavida that eventually will replace the Santana.

Both cars are based on the fourth-generation Golf platform and will go into production in the summer. The Model X will be made by FAW-Volkswagen Automotive and the Lavida by Shanghai-Volkswagen Automotive. VW’s display also will include models with common-rail diesel and compressed natural gas engines.

BMW also will hint at future China-made models. It is showing its 1-series entry-premium car, along with other cars available in China only as imports, such as the MINI Clubman.

Cars to see
Audi, Mercedes and VW will launch key vehicles in China
Audi: Q5
Mercedes: GLK
Volkswagen: Two China-only cars


3) India Watch

Tata Nano changes low-cost development
Jesse Snyder

Since the debut of Renault’s Dacia Logan, many automakers have changed their methods for developing ultralow-cost cars. The strategy used to be stripping features and manufacturing costs from previous-generation products. Now the automakers are taking a clean-sheet approach.

The Tata Nano, shown, isn’t even on sale yet, but the £1250 Indian car already has changed the rules on how to develop low-cost vehicles. The car was unveiled here in January. Interest remained frenetic during a subsequent media event at the Geneva auto show. Ahead of the unveiling, scoffers had predicted a car with no doors or a glorified pedicab. The substantial actual vehicle has global automakers changing their approach to developing low-cost vehicles, say suppliers and consultants.

“The Japanese, Koreans and Europeans were all approaching emerging markets by taking content out of existing cars,” said Nigel Griffiths, director of international automotive research for Global Insight in London. “The Renault Logan showed them a unique design is possible, and the Tata Nano showed them how far that could go.”

Clean-sheet approach

Global automakers known to be developing an ultralow-cost car include Toyota, General Motors, Fiat, Suzuki, Renault and Nissan. All are taking a clean-sheet approach, suppliers say. Since Renault’s Dacia Logan debuted in 2004, many automakers stopped trying to appeal to price-sensitive markets by stripping features and manufacturing cost out of previous-generation products.

“The Nano and the Logan are clearly not decontented programs,” said Richard Buitendijk, a U.K.-based supplier analyst for CSM Worldwide. Drawing from those examples, other automakers’ new programs for low-cost vehicles are “taking a clean-sheet approach,” Buitendijk said. “Vertically integrated suppliers with a global presence see a real opportunity for sourcing in low-cost countries.”

The incentive for manufacturers is clear: growth in a new segment. By 2020, the global market for vehicles priced below $5,000 will explode to 15.7 million units annually, or about the size of the US new-vehicle market, from just 1.9 million this year, predicts the consulting firm A.T. Kearney. Tata Motors forecasts initial volume of 250,000 Nanos a year. But it is telling its suppliers to prepare for an eventual 1 million units annually, including 500,000 units assembled in markets that could include northern Africa, Southeast Asia and South America.

Nano guides

Tata Motors’ development program for the Nano used a highly focused process with several unconventional philosophies. Here is a sampling of the development team’s guiding principles.

Reject all assumptions. Instead of imagining a cheaper version of existing cars, developers asked what would be better than a motorcycle.

Design for India, prepare for the world. Many suppliers got deals for both base and upgraded parts.

Simplify, redesign. Robert Bosch redesigned mature technologies into new products that are lighter and less complex. For example, its 35-amp generator weighs 11 pounds, 2 pounds less than a standard 40-amp one. It costs less, too, because Bosch used an external cooling fan.

Use less. By limiting the Nano’s weight to 1,279 pounds, the engine needs only 2 cylinders instead of 3 or 4. It has 1 windshield wiper instead of 2. Tiny 65R12 tires and wheels use less material and need only 3 lug nuts instead of 4 or 5.

Maximize low-wage sourcing. About 97 percent of parts are built in India. Costs are lower because of low local wages. The shorter supply chain cuts inventory and safety stocks.

Enlist government help. India’s West Bengal regional government streamlined the construction for the Singur plant near Calcutta and leased the site to Tata for free.

Motivate suppliers. Tata appealed to Indian national pride to enlist native suppliers early. Said Deep Anand, chairman of supplier Anand Automotive: “You don’t say no to Mr. (Ratan) Tata.”

Simplify

Other manufacturers are studying and adapting the same approach that Tata Motors took to develop the Nano. Instead of decontenting, their programs for ultralow-cost cars slash costs by simplifying the product and manufacturing. But different companies’ development processes are not identical because each automaker has different needs, said Richard Butler, CEO of Caparo Vehicle Products in Birmingham, England.

Caparo makes much of the underbody and internal structural stampings for the Nano and is working with an unidentified European automaker on an ultralow-cost car. “Tata’s focus was on reducing weight and cost,” Butler told Automotive News. The approach of the other program is different, he said. “Cost comes in, but cutting weight and CO2 reduction come in more.”

Tata involved more than 100 suppliers early in the process and worked closely with them to coordinate their efforts, said Girish Wagh, head of the Nano project for Tata. Robert Bosch GmbH won several Nano contracts through its local subsidiaries and joint ventures in India. For four years, Bosch has worked on revamping existing products and technology for emerging markets by eliminating unneeded complexity and sourcing parts in low-cost countries, said Ninan Philip, deputy general manager of marketing for Bosch Mico Motor Industries Co. in Bangalore.

For example, Bosch’s generator for the Nano is 35 amps and weighs 11 pounds, instead of the normal 40-amp, 13-pound model. “We reduced the cost with an external cooling fan,” Philip said. For the Tata Nano, Robert Bosch developed a 35-amp generator that weighs 11 pounds, instead of the normal 40-amp, 13-pound unit.

Removed 700 functions

Bosch adapted a motorcycle starter motor for the Nano, saving more weight, said Sanjay Khatri, a Bosch senior sales manager. Bosch removed 700 of the 1,000 functions of its European-market engine control module. It also shrank the electronic chip and its housing. In addition, Bosch redesigned sensors to reduce size and weight by grams.

Delphi won the contract for the Nano instrument cluster by designing one that only included the basic instruments in a package that weighed 14 ounces, far less than the 2 pounds and 3 ounces normal in North America or Europe, said Ashok Ramaswamy, president of Delphi India. “We had to rethink our development process, to just put in the functions asked for,” he said. “We minimized components, used local supply base options, minimized the whole value stream and the manufacturing process.”

Better manufacturing

Automakers are asking their suppliers to reduce manufacturing costs, in addition to trimming weight. Suppliers and automakers are seeking ways to reduce the amount of work done on each part and to simplify the process, right down to fewer welds and alternative ways of putting together subassemblies. “With the Nano, the vast majority of savings in the body-in-white is through different means of joining panels and assembling,” Caparo’s Butler said. “Most of the savings in (stamped) doors is in the assembly jigs and fixtures. Tata says, ‘Let’s look at this panel and assembly’ and reduce the add-on work while retaining safety and integrity.”

Butler would not discuss specific Tata production cost-cutting methods, but he agreed the approach was not unlike methods used at the Dacia Logan factory in Pitesti, Romania. For example, Dacia did not automate the process where the top, bottom and sides of the body are welded together. Instead of several robot welders, Dacia workers hand-clamp the pieces and manually weld them.

Rejecting robots

Although that replaces expensive robots with low-wage workers, it raises the risk of bad welds. To prevent glitches, the assembly jig of tubular steel has channels to guide hand welders modified with elongated tips, so that each manual weld is both aligned perpendicular to the metal for a strong weld and precisely positioned in the right spot.

Delphi modified its production process to reduce capital investment for the Nano instrument cluster, said Douglas Brandt, Asia-Pacific managing director for body security and displays in Shanghai. “When we add a pointer on an instrument in North America, we use a robot,” he said. “Here we designed a process so we could do it manually with precision. We looked for simple ways to do it with less capital intensity.” Tata’s effort is so specifically aimed at India that the Nano is not suited for developed-world markets, suppliers say.

Lower maximum speeds in India, for example, mean the Nano can use a simpler powertrain and a less sophisticated suspension than vehicles built for America or Europe.

Tata factors

Tata has some advantages others would find hard to duplicate: the national pride of Indian suppliers, a virtually untapped vehicle segment priced below £2500 and the lightweight-construction expertise of Indian motorcycle suppliers. But Tata has a disadvantage, too. As a relatively new automaker, it has little “old technology” in the form of functional but fully amortized products and components.

Renault’s Dacia Logan was designed from scratch, but it depends heavily on mature existing technology, including a 12-year-old engine and transmission and previous-generation airbags. A 2007 Deutsche Bank analysis shows the manufacturing costs of the Logan are 62 percent lower than for a Renault Megane, with a quarter of that savings coming from using the older powertrain.

The Nano development program was also tailored to meet unique Tata Motors needs. Tata wants to break out of India and compete globally, so it must have access to international suppliers and their technology. The car is 97 percent India-sourced, but most of those parts come from either Indian-based subsidiaries of international suppliers or joint ventures. In addition, Tata’s key contracts require suppliers to locate next to any future Tata plant in markets outside India.

Nano upgrades

Tata plans to scale up from the basic Nano into the virtually empty pricing space between £1250 and £3500, so the car is deliberately designed to be upgraded with higher-priced equipment. Tata worked to reduce the cost of every Nano part but took the life-cycle cost into account, Tata’s Wagh said. That sometimes meant increasing per-part costs on the basic model, he said.

“We designed the front-door steel for the stress of a manual window lifter,” he said. “But we knew we would add a power lifter later, and it puts the stress in a different place. So we ended up with a door that can handle both.”

Suppliers are eager to prove themselves.

Caparo’s Butler said being known as Tata Motors’ body-in-white partner establishes his company’s credentials as an ultralow-cost supplier. Similarly, German’s Continental sees its Nano contract as a modest but profitable start in the low-cost sector. “We don’t earn much money with it, but we would never do a project just to make an investment in the future,” said William Kozyra, Continental’s North American CEO.

Single sources

But in return for suppliers’ commitments, Tata is willing to make concessions. Three-fourths of the car’s parts are single-sourced. Suppliers are getting long-term contracts and deals to provide upgraded parts later if they develop simple parts now. For example, Shavani Locks in Faridabad, India, will supply the manual window lifters for the Nano.

“But we are already developing the electric window lifts for the upgraded Nano,” said AK Gupta, Shavani’s deputy general manager for marketing. “We don’t make a lot on the manual lifters, but we will do well on the upgrades. And the program is for a million.”

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MG: any closer to that promised revival?


Riley’s XPower WR… (Picture: Andrew Elphick)

KEITH ADAMS

The XPower SV supercar’s come back? Why?

In the latest twist of the MG Rover saga, and three years after the original MG XPower SV supercar went out of production, the controversial car has made a surprise re-appearance – and without any help from the Chinese.

Now known as the XPower WR, the controversial supercar has been eased back into production by William Riley – a descendant of the creators of the historic car company bearing the same name.

His company, known as MG Sports and Racing Europe Limited, produces the supercharged WR, selling it for between £75,000 and £90,000 depending in specification. The rights to the car – and its badge – were bought from MG Rover administrators PricewaterhouseCoopers in 2005. Riley claims that the seven examples of the new car have been sold, following its unveiling at the International Classic Car Show at the NEC last autumn.

How many will they build, and what’s the real story?

The founder of MG Sports and Racing Europe Limited told AROnline that he plans to expand his operation ambitiously to produce between 1500-1800 cars per year, and denies claims that his company is merely assembling partially completed SVs, readied for production in 2005.

Riley claims that his WR is rather special. ‘This is the CS version, 150kg lighter than the standard car.’ A lowered compression ratio and increased supercharger boost, results in nearly 600bhp. Riley intends to enter the CS in the Shelsley Walsh hill climb in May.

However, according to one Longbridge insider, talk of series production is premature. The WR is yet to be Type Approved, and our source tells us that Riley is trying to sell his new car using the old documentation from the MG Rover era – and although new approval can be obtained, it’s an expensive and time-consuming process. He added that Riley has been banned from ever setting foot into Longbridge – and that the relationship between him and the Chinese has broken down.

And where does that leave plans for the TF roadster?

The production status of the WR might be questionable right now, but at least it’s out there – something that can’t be said about the reinvigorated TF roadster, first shown to the press in April 2007. Development work continues, although there are issues hindering the introduction of the Longbridge built car.

However, quality’s not one of them. The NAC produced car is more tightly screwed together than those built by MG Rover – a situation that needed to happen. The real reason for the fail to launch appears to be regarding production volumes and the future plans for the popular roadster – with NAC and SAIC disagreeing over how it should proceed.

Many at NAC want to introduce the vehicle now, proving the company’s commitment to Longbridge, but SAIC want to produce a new roadster from scratch. However, given that time’s slipping, and MG’s name falls further in the mists of time, action needs to take place sooner rather than later – and that the final outcome will probably be that the TF will be built in limited numbers, a holding pattern until real resources can be put into MG’s relaunch with new products.

Given that StadCo will no longer produce MG TF bodyshells in partnership with NAC at Longbridge, the question may well already be answered. Being the dominant partner in the relationship, SAIC could well be imposing Chinese built bodyshells on Longbridge in lieu of future developments for the factory.

Either way, it seems like there are more questions now, than there were back in 2005.

Back to top


News digest

Compiled by CLIVE GOLDTHORP

1) SAIC Motor/MG and Roewe.

Reassurances needed on Nanjing’s and Shanghai’s intentions at Longbridge
David Bailey, Birmingham Post 10th April, 2008


Does StadCo’s pull out of Longbridge affect the production of new MG TFs?

News today that that StadCo will no longer produce MGTF bodyshells at Longbridge for Nanjing raises some urgent questions as to Nanjing’s intentions at the site. In particular, is MGTF production still going ahead?

StadCo and Nanjing said simply that “Stadco and NAC jointly confirm that for commercial reasons, production of bodyshells for the MGTF by Stadco will cease. Both parties are working to ensure minimum disruption to the workforce.” They added that “consultations with elected employee representatives will commence immediately and every effort will be made to assist those affected by this announcement”.

Until today, StadCo had been seen as a key partner for Nanjing in its efforts to restart small scale MGTF production at Longbridge, and had shifted body-shell production there from its site in Coventry (StadCo had always made the body shells for the MGTF, back under MG Rover days).

Quite where this leaves MGTF production is the big question.

Nanjing’s efforts to restart MGTF production at Longbridge had already been delayed, apparently beset by concerns over quality. Whilst Nanjing are good at lift-and-shift operations (witness the speed at which they shifted production lines out to China), actually making quality cars has proved to be more difficult for them. While Nanjing beat Shanghai in the bidding for MG Rover’s assets back in 2005, many commentators noted then that actually it is a small firm and never really had the resources to invest in the brand and to develop new models. Its joint venture in China with Fiat has not gone well and the firm has never successfully developed a new model and brought it to market. Perhaps not surprisngly then, progress at Longbridge since 2005 has been painfully slow.

Indeed, it was with some relief that Shanghai Auto purchased Nanjing’s car operations at the end of 2007. This was in part prompted by the Chinese government rightly banging heads together to make a go of the MG brand and to consolidate a fragmented industry in China. Shanghai was always the better bet for reviving MG given its size and ability to generate cash, as the unions here rightly pointed out back in 2005.

So, at the start of this year, things looked more positive for an MG revival at Longbridge. Shanghai was the firm which should have taken over MG in the first place. Hopes were also raised because after Shanghai bought MG Rover’s intellectual property rights in late 2004, it continued to develop the replacement for the R45 through its joint venture with Ricardo here in the West Midlands. This is now well advanced and there are hopes that an MG-badged version could be produced both in China and at Longbridge.

So the decision today raises a number of serious questions. Is this part of Shanghai asserting control and maybe bringing in complete knock-down MGTF kits from China including body shells? If so, there will be fewer jobs here in the UK than we thought.

Or is MGTF production still going ahead at all? Indeed, what exactly is Nanjing and Shanghai now planning for their operations at Longbridge?

Some answers would be very welcome, especially when Nanjing’s plant still forms such a large part of the old Longbridge site which needs to be redeveloped to create much-needed local jobs.


SAIC-Nanjing acquires European rights to MG name
Motor Authority 8th April, 2008

Chinese automaker Nanjing purchased much of the MG brand while then-rival SAIC took ownership of other names under the MG umbrella, including several Rover models. Not included in either deal, however, were rights to distribute under the MG trademark in Europe. That has been rectified, however, for a mere €1.25 million.

The acquisition of trademark rights in the MG name means SAIC-Nanjing can legally distribute MG cars in fifteen countries, including Russia, Italy and the Netherlands, reports AutoTelegraaf. The purchase of the name rights should see production at Britain’s Longbridge plant ramping up soon. Late last year SAIC and Nanjing announced their merger, and prospects of real progress on a return of European MG production and sales was looking bright. But the stumbling blocks of quality control and legal technicalities like the trademark rights held things up. Now that the marque can use the mark freely in Europe, SAIC-Nanjing is a step closer to realizing production.

SAIC independently produced cars under the Roewe brand for the Chinese market prior to the merger. Likewise, Nanjing had built some MG ZT and ZF models in China, although sales were slow due to a lack of brand awareness.


2) Jaguar/Land Rover

Tata picks up Daimler and Lanchester brands
John Cranage, Automotive Correspondent, Birmingham Post 4th April, 2008

Tata Motors of India has acquired more than just Jaguar and Land Rover under its £1.15bn deal with Ford. It also now owns two of the most famous names in British motoring history – Daimler and Lanchester, both owned by Jaguar.

Both were born in Coventry in the heady early years of the city’s car industry boom and both made automobiles for the upper crust carriage trade. Indeed Daimler, whose name is still alive (just) thanks Jaguar’s persistence in building a high end Daimler-badged variant of the flagship XJ luxury saloon, complete with the famous fluted radiator grille, was once the limousine of choice of the British Royal Family.

Lanchester disappeared a long time ago but memories linger of its stylish, well-engineered cars. Lanchester was the first four-wheeled petrol-engined car to appear on the roads of Britain. It and Daimler grew out of a failed attempt by Victorian entrepreneur Harry Lawson’s attempt in 1896 to use the engineering skill in Coventry to convert the city’s manufacturers from bicycles to cars.

He also did his best to make sure he had a monopoly on the burgeoning horseless carriage industry. Lawson leased part of a factory owned by the Coventry Cotton Spinning and Weaving Company in Drapers Fields as the HQ of what he called The Great Horseless Carriage Co. Ltd. That was short lived but out of it, in 1898, grew the Motor Manufacturing Company and out of that came Daimler and Lanchester.

Automotive historian Brian Long, in his 1990 book The Marques of Coventry explains how Lanchester grew out of the Daimler enterprise to become an independent carmaker before the two were reamalgamated in 1931. Common to both was Dr Frederick W Lanchester, described by Long as this extraordinary engineer, who was initially consulting engineer to Daimler. He had his first car on the road in 1895 – albeit illegally – and went on via Daimler to form the Lanchester business.

“The vehicles incorporated many novel features, a lot of them years ahead of their time,” writes Long. “By 1899 the Lanchester Engine Co had been founded in Birmingham, and just two years later the first of the Lanchester cars were being sold.” Dr Lanchester resigned in 1909 to work as a consultant while his brother, George, went on develop engineering innovations – among them the fluid flywheel, an early form of automatic gearbox – for Lanchester and Daimler.

The last car to be badged as a Lanchester was the 1954 Sprite and Jaguar acquired the rights to the name when it bought Daimler, with its factory at Radford, from, Birmingham Small Arms (BSA) for £3.4 million in 1960. Ironically, Ford once approached Jaguar with a proposal to build Jaguars in Germany and call them Lanchesters. Ford went on to buy Jaguar in 1989.

Daimler, which according to Long “can justly claim to have been the first company in England set up for the sole purpose of manufacturing petrol-driven motor vehicles on a large scale”, owed its origins to a deal struck between the German engineer Gottlieb Daimler and young British mechanical engineer F R Simms. In the late 1890s Simms attended a exhibition in Bremen where he saw a single vertical cylinder internal combustion developed by Daimler and his partner William Maybach.

By 1893 Simms had acquired the UK patent rights for the Daimler engine and had founded the Daimler Motor Syndicate. Long says: “The obvious location for the development of the company was Coventry, because Simms knew mechanical skills and inventiveness abounded. When the Prince of Wales [later Edward VII] bought a Coventry-built Daimler in 1900, this gave the industry a much-needed boost, as well as a large gain in respectability.”

Daimler achieved the height of respectability, exemplified by the stately Double-Six built for Queen Mary in 1935. That was tarnished after Chairman Sir Bernard Docker and his flamboyant wife pushed the company into producing a number of “outrageously finished Docker Daimlers” in the 1950s. By the end of the ’50s the company was in financial difficulties and Sir Bernard was forced out amid allegations of extravagance and mismanagement.

The final real Daimlers were the Majestic and the SP250 sports car known as the Daimler Dart. Since the 1960s Jaguar has produced Daimler variants of its big saloons but there was a seven-year gap before the name reappeared in the form of the Super Eight in 2006. With a showroom price in excess of £80,000, the Super Eight is built only in very small numbers for, as one motoring writer said, traditionalists who still call the radio “the wireless”. So far this year, Jaguar has sold 13.

Journalist Mark Bursa speculated on whether Tata will attempt to recoup some of the £1.15 billion it is paying for Jaguar and Land Rover by selling Daimler back to Daimler of Germany, which is currently allowed to use it only in conjunction with something else, i.e. Daimler Benz. “On the other hand, Tata might see potential to turn Daimler into a super-luxury brand to challenge Rolls-Royce and, in a supreme irony, Daimler AG’s Maybach – especially in Asia,” Bursa wrote.

At the time the Super Eight was unveiled, a Jaguar executive said: “Just as in Great Britain, royal families and political dignitaries in the Far East traditionally used Daimlers and we expect this new model to appeal to them in much the same way. “We know there is latent demand and will sell them on an individual basis to enthusiasts looking for renowned British engineering and craftsmanship tailored to a name as distinguished as our customer base.”

It seems that, even before Tata’s deal with Ford is finalised, that the Daimler name will motor on. But Lanchester? Some enthusiasts might dream of a revival of the brand. But remember, BMW’s Bernd Pischetsrieder said back in 1994 when the company bought Rover Group that he dreamt of reviving nameplates such as Riley and Triumph.

Needless to say, that didn’t happen.


S&P cuts its rating for Tata Motors
Joe Leahy in Mumbai, Financial Times 7th April, 2008

Tata Motors’ £1.15bn debt-funded deal for Jaguar and Land RoverFord has led Standard & Poor’s to cut its credit ratings because of concerns about growing indebtedness. The agency left the Indian group on credit watch after cutting its already noninvestment grade ratings a notch to “BB” from “BB+”.

Shares in Tata Motors have fallen 23 per cent since it was confirmed as the frontrunner in the race for the Ford luxury marques in early January. The stock ended Friday down a further 2.39 per cent at Rs613.65. Investors are balking at the additional debt required and challenges that Tata Motors faces turning round lossmaking Jaguar and managing the profitable but high-end Land Rover brand.

Proponents of the deal counter that the takeover gives Tata Motors, which is at present mostly a domestic operator and little known outside its home market, exposure to advanced technology, and to branding and distribution in developed markets. The company is planning to take out a £1.5bn bridge loan to finance the deal and intends to raise an additional $1bn in new equity and sell assets as part of a refinancing package. Anshukant Taneja, credit analyst at Standard & Poor’s, said: “The rating action reflects Tata Motors’ heightened financial leverage, resulting from the $3bn bridge loan mobilised to fund this transaction.”

The ratings downgrade reflected worries that business conditions were turning against Tata Motors, the agency added. “It also reflects a more challenging business environment, both for the company’s domestic passenger and commercial vehicle segments in India and for the high-end luxury car segments in the key markets for Jaguar and Land Rover,” Mr Taneja said.

Tata Motors benefited from its parentage as a member of one of India’s biggest private sector conglomerates. The profits and cash flow of Jaguar and Land Rover had also recently improved, he said. But there was also concern that Tata Motors was pushing ahead with aggressive domestic investment plans.

“This could result in still higher leverage and a potentially protracted improvement in its credit metrics,” Mr Taneja said.


3) MINI.

MINI crossman is coming
Auto Express 9th April, 2008
Text: Sam Hardy / Photos: Radovan Varicak/Motor Forecast

The MINI is toughening up – with this new 4×4 model, on sale next year. Sitting above the Clubman estate variant, it will further develop the MINI line-up, and compete with other lifestyle SUVs such as the Ford Kuga.

The model will also rival forthcoming prestige brand 4x4s like the BMW X1, with which it shares underpinnings. Bosses haven’t decided on a name yet, but Auto Express has learned that Crossman is leading the charge as the favoured badge at this stage. As you can see from our pictures – produced using inside information – the MINI SUV takes the look that was debuted by the Clubman and adds a bit more muscle. It features extra body cladding and a raised ride height to provide a more beefy stance and a chunky shape. Details such as the roof rails and side rubbing strips complete the look.

Yet with its bold circular headlights, oversized grille and trademark clamshell bonnet, the newcomer still has the cheeky appearance of the hatch. And that’s vital – owner BMW didn’t want too aggressive a design that would tread on the toes of the X1, or alienate the legions of buyers who are loyal to the MINI brand.

While the styling is clearly inspired by the Clubman, the 4×4 has a more conventional layout – there are two proper rear passenger doors, instead of the single ‘Clubdoor’ that features on the estate. These combine with the distinctive twin van-style openings on the tailgate – also seen on the Clubman – to ensure the off-road MINI is the most practical car in the range.

As it sits on a stretched version of the standard load-lugger’s platform, the SUV will offer more space inside. That means there will be adequate room in the back for two adults – although thanks to those rear doors, access should be much better. The dashboard and all other interior detailing will be carried over from the Clubman. But the question on the lips of all MINI fans is: will the latest MINI be a proper off-roader, like the Land Rover Freelander?

Not really. The SUV will be biased towards on-road use, and won’t sacrifice the agile, driver-pleasing handling for which MINI has become famous. Nevertheless, there will be a full-time four-wheel-drive system, said to have been developed by transmission expert Getrag. Add in the raised ride height, and the car will be reasonably capable over rough terrain – easily rugged enough for most buyers.

Top brass are conscious they are introducing an SUV at a time of feverish environmental awareness, so they will make the model the cleanest and most frugal fuel-wise in its class. As a result, every variant will benefit from the Efficient Dynamics tweaks seen elsewhere in the range, with a stop-start system cutting the engine when the car comes to a standstill and a clever alternator control which only charges the battery when needed.

The engine line-up will be carried over from the Clubman, although an entry-level One model isn’t likely to be offered. That means buyers will be able to choose from the 118bhp 1.6-litre Cooper, the 109bhp 1.6-litre diesel Cooper D and the flagship 173bhp 1.6-litre Cooper S. A six-speed manual transmission will be standard, with an automatic box on the options list.

Testing of the SUV is well underway – as revealed by our spy shots. But fans will have to be patient, as it will be some time before the final showroom model is ready. As it did with the Clubman, MINI will preview the car with a series of concepts, and the first is expected to be displayed at a major motor show later this year. Production will start shortly afterwards – the off-roader is being assembled at the Magna Steyr plant in Austria because MINI’s factory in Oxford is already at peak capacity – and the car will arrive in dealers here towards the end of 2009.

There’s no official word on prices yet, but with the Clubman starting at £14,235, entry-level models are likely to kick off at around £15,500.


4) China Watch

Auto consolidation running smoothly
Jin Jing, Shanghai Daily 4th April, 2008

THE Shanghai Automotive Industry Corp, which has acquired the smaller domestic rival Nanjing Auto, said consolidation has been going smoothly and fruitfully and has revealed a series of blueprints on its management team, products and manufacturing capacity. SAIC has appointed four high-profile officials including Chen Zhixin, the executive vice president, to lead the restructuring, the company said in a statement yesterday.

The move came three months after the nation’s largest car maker signed an agreement to acquire Nanjing Auto in the biggest merger and acquisition deal in China’s car industry history as the government urged the country’s carmakers to consolidate. The consolidation also included product development and the sharing of resources in engineering ability and manufacturing facilities, part of its 8.5 billion yuan (£600m) investment to integrate and further develop Nanjing Auto.

SAIC said Nanjing Auto will be able to boost its annual production to 500,000 units by 2012 with its overall plant coverage trebled by 2010. The newly established Donghua Co Ltd, which grouped the auto parts and trade assets from SAIC and Nanjing Auto, has also targeted a sales revenue of 15 billion yuan within five years.

Nanjing Auto’s MG-branded vehicles will be designed to meet the increased market demand for cars with sporty features, with future model development to be guided by SAIC, the company added. The move will help SAIC to resolve the overlap of product line-up between its self-owned Roewe and Nanjing Auto’s MG models, which were both developed from the models from the bankrupt British car maker MG Rover, analysts noted.

MG7 sedans

Nanjing Auto will launch the new MG7 sedans, equipped with SAIC’s own 1.8-liter engine, this year as well as the MG3 sports car. In the commercial car vehicle field, Nanjing Auto will continue to introduce new models this year after joining with SAIC in the research and development sector, starting with the Yuejin Ouka in this coming year.

A former production facility of Nanjing Auto’s venture with Fiat S.p.A will produce cars for Shanghai Volkswagen, the joint venture between SAIC and Volkswagen. The Chinese partner of Volkswagen AG and General Motors Corp, aims at selling at least 1.9 million cars this year.


5) The Demise Of MG Rover Group Limited

We deserve answers on Longbridge failure – MP
Duncan Tift, Business Staff, Birmingham Post 7th April, 2008

Almost all of the 6000 former car workers who lost their jobs when Longbridge collapsed have found re-employment – but three years from the crash they are no closer to finding out the official reason for the factory’s closure. A long-awaited report commissioned by the Government into the events at MG Rover remains unpublished and, according to Richard Burden MP (Lab: Northfield), until it is no one will “achieve closure on the closure”.

Latest requests to the Department for Business, Enterprise and Regulatory Reform – which took over responsibility for the report from the now-defunct Department for Trade and Industry – for the report’s publication date are batted off with the response: “We have no date yet. We want an accurate and thorough investigation that gives all the answers.”

However, Mr Burden said this simply wasn’t good enough and the ex-employees, their families, the Longbridge community and Birmingham as a whole deserved answers. “It is beyond a joke,” he said. “I simply don’t understand why it is taking so long to produce the report and until it is published then we shall never achieve closure on the closure.”

Latest figures have shown that the independent report has so far cost around £11 million and in the process of their deliberations inspectors have run up almost £100,000 in hotel bills and £30,000 on food bills. The Commons Public Accounts Committee has estimated that the total cost of MG Rover’s collapse to taxpayers, creditors and former employees was almost £1 billion.

This included more than £600 million owed to employees and unpaid creditors, and costs of £270 million to the taxpayer. The four members of the Phoenix consortium – John Towers, Peter Beale, John Edwards and Nick Stephenson – that rescued Rover when BMW pulled out are currently managing assets that will ultimately be sold and the proceeds placed in a trust fund set up to benefit redundant Longbridge workers and their families.

However, they have said they are not in a position to do anything until the report is published. A clearly exasperated Mr Burden added: “If that is the case, then it is just further justification for the report to be published as quickly as possible.” He said that the Phoenix consortium had a vested interest in seeing closure because if they failed to provide any money for former workers then that was likely to be their legacy – not the fact that they saved Rover when no one else would.

Mr Burden said he also hoped that the assets being managed by PricewaterhouseCooper would be declared shortly in the hope that ex-employees would get something back. Figures released today by the Rover Task Force show that of the original 6,346 who made claims for Jobseeker’s allowance, 5979 are no longer claiming Working Age Benefits – this equates to 94.2 per cent.

Of the 5,979, 5,801 are known to be working and 139 are registered for Jobseeker’s Allowance. David Cragg, regional director of the Learning and Skills Council in the West Midlands, said: “The closure of MG Rover was a devastating blow for the local community – unprecedented in its scale. “Now, three years down the line, the fact that the vast majority of ex-MG Rover workers are back in employment is testament to that commitment to our core objective – delivering the right skills that will meet employers’ needs and creating opportunities for individuals.”

He said the challenge going forward was to make sure that everyone continued to build on the work that had been done so far, not only in Longbridge but in disadvantaged communities throughout the region. However, while the majority of workers have found alternative employment, very few of them are actually employed making cars.

Hopes were high last year that Shanghai Automotive, which took on the MG brand from Nanjing, would soon begin producing sports cars from their base at Longbridge. Around 50 dealers across the UK had been told that the MG TF would be launched in September and had confidently expected to see it in showrooms by now. But quality issues with the Chinese-made components have caused further delays and now no one is sure when production might recommence.

Suggestions were that SAIC were eyeing developments at nearby Jaguar and Land Rover to see what might happen there. It was hoped they would see the advantages of having a British design and manufacturing facility at Longbridge that could be the base for a European subsidiary operation. However, so far nothing has happened and no one from the company has been available for comment.

The old Rover 75, now renamed the Roewe 750, is enjoying a new lease in China, winning a host of consumer awards including The Most Satisfactory Self-owned Brand Award and The Most Satisfactory Product Design Award.


6) The Future Of Britain’s Automotive Industry

The Big Question: As Jaguar/Land Rover is bought by Tata, is the UK car industry finished?
Sean O’Grady, Economics Editor, The Independent 27th March, 2008

Why are we asking this now?

Because the US motor giant Ford has just sold two of the proudest names in the British car industry – Jaguar and Land Rover – to Tata of India. Some 16,000 jobs are at stake. Given India’s relatively low cost base and rapidly expanding market for vehicles, there is naturally some concern about the future of the marques. The worry is that Tata could do what the Chinese car companies Shanghai Automotive and Nanjing did to MG Rover and simply seize control of the intellectual rights to the designs and brands and move production eastwards. An Indian rather than a Chinese take-away, perhaps. However, that is a worst-case scenario – the future could be a lot brighter.

Do we still make cars in Britain?

Yes, lots. Production last year was just over 1.5 million, just off its recent high of 1.6 million and below the all-time peak of almost 2 million reached in 1972, but still way up on the dark days of the late 1970s and early 1980s. British cars are now better value and sell more abroad.

What will happen to Jaguar/Land Rover?

In the short-term, very little. Production will continue and Ford will continue to supply engines and other components to the companies. In the medium-term, the chances are that production of the more basic Land Rover models will migrate to India. The principal candidate for relocation would be Land Rover’s Defender – beloved of the British Army. The potential for this vehicle in emerging markets is huge. However, that would leave most of the more sophisticated designs, such as the highly profitable Range Rover, in Britain. In the long-term, a small Jaguar might be built in India, with the more lucrative, more expensive models still made here. Such a strategy might yield impressive global results.

Is the Jaguar an endangered species?

Last year, Land Rover built 232,548 cars and made a profit, although not a huge one. Jaguar is different and much depends on new models the company is developing. Jaguar simply does not sell enough cars to justify its present production capacity and pretensions – and that is fundamentally why it loses money. Having made 54,000 cars last year, it is a tiddler by global standards and small even for a premium marque. It is dwarfed by BMW, Mercedes-Benz and Lexus and is about half the size of also-rans such as Saab or Alfa Romeo – in other words barely viable. It desperately needs to improve sales.

In the recent past, it suffered from too many “retro” designs which, although elegant and superbly engineered, looked a bit fuddy-duddy. Until recently, there was also few diesel options – a major handicap in the European market. That is now being rectified with the release of the more modern-looking XF saloon. Any replacement for the large XJ limousine and smaller X-Type model, if there is one, will have to be similarly avant garde. Jaguar and Land Rover will also have to catch up with the Germans and Japanese in advanced engineering – not least in developing greener diesel, hybrid and hydrogen fuel cell technologies.

Jaguar was also plagued, as it has been on and off since the mid-1970s, by quality and reliability issues. Americans once joked that they bought their Jags in pairs: one to drive while the other was in the garage. Quality has improved vastly in recent years, but it takes a long time to rebuild reputations. Land Rover has been just as bad but somehow seems to have escaped the stigma, and is also moving up the customer satisfaction tables.

Are British jobs safe?

The unions seem cautiously optimistic but many analysts think that Jaguar/Land Rover has one too many car plants. Its Halewood factory on Merseyside is probably safe because it is more efficient than the Solihull (Land Rover) or Castle Bromwich (Jaguar) sites. Jaguar closed its main plant at Browns Lane, Coventry, in 2005, so its costs are lower than they used to be.

Can Tata do it?

The family-owned Tata conglomerate is a massive and well capitalised company into everything from information technology consultancy to Tetley Tea. More relevantly, it owns the Anglo-Dutch steel company Corus and its own automotive division, which recently unveiled the Tata Nano – India’s car for the masses. If all goes well, Tata will invest in the Jaguar and Land Rover brands and reap rewards which eluded Ford, thereby securing British jobs. In return, Tata will learn much about the premium and executive car markets it is desperate to enter.

Who owns Britain’s car industry?

A collection of Japanese, German, American and now Indian based transnationals. With the demise of MG Rover in 2005, the last remotely serious volume manufacturer was lost to the nation. Most of our surviving famous names are in the hands of “foreigners” – Mini and Rolls-Royce are subsidiaries of BMW, Bentley is in the loving care of Volkswagen, Vauxhall is still owned by General Motors of the US and Ford retains engine and van-making operations in Britain. The biggest growth in the British car industry has come from the Japanese brands.

Margaret Thatcher opened Nissan’s plant in Sunderland more than 20 years ago and it is still one of the most efficient in Europe. The company is the UK’s biggest car manufacturer. Toyota and Honda are also significant players and Tata will hope to emulate the successes of all three. Even the Malaysian company Proton owns a slice of our heritage, in the sporty shape of Lotus, while Nanjing Automobile of China is promising the return of small-scale MG sports car production to Longbridge in Birmingham. The Russians own LDV Vans – a vestige of the old British Leyland. Only specialist manufacturers such as Morgan and Bristol can be said to be British in the traditional sense.

Does the UK industry have a future?

Yes. Nissan, (353,718 cars), Toyota (277,852 cars) and Honda (237,772 cars) have proved that Britain can make competitive products in large numbers. They have taken up the slack from the end of car-making at historic sites such as Longbridge, Ryton, Dagenham and Luton (although Morris Motors’ old factory at Cowley, Oxford, is happily churning out record numbers of new Minis). GM will build the next generation Astra at the Vauxhall factory at Ellesmere Port, while commercial vehicle production – especially vans, is at a high.

At the other end of the spectrum, Bentley is making 10,000 cars in Crewe this year, while Rolls-Royce will build 1,000 at Goodwood in West Sussex. Aston Martin, recently sold by Ford to private investors, is another winning marque. Apart from Italy, no other nation is so successful at producing luxury cars. Hopefully, Jaguar and Land Rover will continue to make their presence felt as well.

Is the British car manufacturing industry safe for the time being?

Yes…

* We still make more than 1.5 million cars each year in Britain, the same level of production seen in the mid-1970s.
* Though British brands have been bought by foreign firms, that has not been accompanied by the disappearance of UK car-making.
* Tata is a huge company, capable of injecting cash and new ideas into a company. Britain could benefit from the purchase.

No…

* British car brands have been picked off by foreign buyers over the past 20 years.
* While unions may be optimistic about jobs, some analysts say there are too many car plants in this country.
* With Jaguar and Land Rover being bought by Tata of India, there are natural fears of jobs being transferred abroad

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Face to face with William Riley, XPower man

RUSSELL GOWERS

“I’ve seen Bentley, and I’ve seen Aston Martin, and I know what they can do in terms of quality. We can do better.”

This was the bullish message that William Riley, holder of the MG Xpower trademark and resuscitator of the MG SV project, gave out at the Pride of Longbridge rally today. The founder of MG Sport and Racing Europe limited said that he plans to expand his operation to produce between 1500-1800 cars per year, despite fierce competition from the likes of Aston Martin and Porsche.

Riley claimed that MG Xpower had already delivered seven customer cars, and that eighteen new shells had been produced by the company’s subsidiary in Droitwich, West Midlands. He dismissed claims that the company was merely bolting together old MG-Rover cast-offs, stating that both the engine and bodyshell supply chains were strong. Despite this, the car at Pride of Longbridge (the same one which has been used in recent press photos) was on an 07 plate. “It’s a demonstrator, and yes it is one of our own shells,” retorts Riley.

It was obvious to an observer that the standard of fit and finish inside the cabin was not up to Aston Martin or Porsche standards. Exposed screwheads were visible, and various pieces of door trim were missing. “That is because this is the CS version, 150kg lighter than the standard car,” claims Riley. He also claimed that by lowering the compression ratio and raising the supercharger boost, the MG Xpower SV WR CS (to give it its full name) produces nearly 600bhp, but no documentation was available to substantiate this claim.

To raise the car’s almost unknown reputation, Riley plans to enter the CS into several hillclimb events, of which the first will be Shelsley Walsh in May. But the buying public will be more interested in how well the car functions on the road. If Riley is to sell even a fraction of the 1800 cars per year that he so boldly targets, he will need to convince a potential Aston Martin Vantage buyer that the SV WR is an attractive alternative. Put simply: if the standard of fit and finish is less than exemplary, the car is unlikely to sell, hence the brash claims about the competition.

Whether Riley can back up words with actions remains to be seen

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MG is back on the road

John Griffin, Birmingham Mail, 8th April

THE MG is back – with a Midland car veteran beating Nanjing in the race to relaunch the world-famous sports car. Exactly three years to the day that Longbridge went bust, MG vehicles are once again being made in the Midlands in the shape of the luxury X-Power model.

Worcestershire-based William Riley, a member of the famous Riley motoring dynasty, has launched MG Sports and Racing Europe Ltd from a 2.5 acre factory site in Eardiston, near Tenbury Wells. The £2m venture has already created 17 jobs, including a handful of positions for former MG Rover workers, with the factory producing six high powered MG X-Power WR vehicles a month.

The supercharged MG, a direct descendant of Longbridge’s most expensive model, sells for between £75,000 and £90,000. Seven have already been sold and the fledgling firm has 35 other advance orders in the bag. And Mr Riley has plans to eventually launch a purpose built 100,000 sq ft factory within the M5 corridor, employing between 150 and 200 people.

Mr Riley, a lifelong car enthusiast, said: “We have bought the badge rights for the MG X-Power from the administrators PricewaterhouseCoopers – it has been a lot of hard work but it’s going well and we are keeping the MG brand alive. “We are in production, making six cars a month. It’s very early days but we are very encouraged. We have sold seven cars, all over the UK, and we have got 35 other orders in the pipeline.

“We have exported five cars to America already, in various stages of build. The people who are buying the model are young and middle-aged executives who want an individual, British made sports car. At the moment, we have got 16,000 sq ft of works and offices but in time, I am looking to buy a piece of land or an existing building for a 100,000 sq ft factory, in the M5 corridor, between Tewkesbury and north Birmingham. When we are in full production, we would like to employ between 150 and 200 people. We are in this for the long run.”

Mr Riley’s launch of the MG X-Power WR comes as the motoring world continues to await the resumption of volume production at Longbridge by Chinese owners Nanjing. Nanjing bought the assets of MG Rover for £53m in July 2005 but, nearly three years on, is still to produce a single car for sale.

“I feel very proud to have launched the MG X-Power WR. So many people in this business just talk. We are up and running and producing cars,” added Mr Riley.

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News digest

Compiled by CLIVE GOLDTHORP

1) Jaguar/Land Rover

Baby Land Rover scooped,
Auto Express 19th March, 2008

Auto Express can reveal the new baby that’s set to join the Land Rover family.

Here’s proof that Land Rover is set to turn on the style. As the British brand gets ready to push upmarket, Auto Express can exclusively reveal the look of an exciting new model. Our spies have produced these exclusive images from top secret information.

Based on the LRX concept cars that wowed the crowds at this year’s Detroit and Geneva motor shows, the newcomer is a sporty five-door SUV. It will slot into the range above the Freelander and go head-to-head with prestige brand rivals, including the upcoming BMW X1 and Audi Q5. The model will showcase technology aimed at increasing efficiency and boosting the marque’s green credentials. A stop-start system and a hybrid drivetrain are likely to appear as top brass attempt to reduce the overall CO2 emissions of the range.

But the exterior will get the most attention. The LRX’s aggressive front end has clearly been a big influence, although the new car also benefits from a versatile five-door body and an increase in height to give extra space for both occupants and luggage. It is lower than the Freelander it’s based on, however, while shallower side windows and black pillars give the impression of a ‘floating’ roof. At the rear is a handy split tailgate.

Stepping inside, you’ll find a heavily toned-down version of the show car’s cabin. The dashboard and other fixtures are likely to be carried over from the Freelander. Luxurious materials such as leather, wood, carbon fibre and aluminium are expected to be used, while the quality of the plastics will be raised to match. Buyers can expect a wide range of engine options. Stop-start technology fitted to the 2.2-litre diesel and 3.2-litre straight-six petrol units will lower fuel consumption and CO2 out-put – helping Land Rover meet EU regulations to cut its overall average output to 130g/km by 2012.

There is also the possibility of a hi-tech hybrid system. Using super-capacitors rather than batteries, it will store energy from regenerative braking and a traditional alternator. When the driver wants extra acceleration, the electricity is channelled to motors hidden in the front wheels. All variants get a chassis biased towards composed on-road ride and handling. But, being a Land Rover, it will also perform well off the tarmac. The firm’s smart Terrain Response all-wheel-drive transmission will provide settings for grass, gravel and snow.

A name for the newcomer has yet to be decided, although Freelander Sport has been suggested. Expect a showroom version as early as 2010.


Tata-JLRover
David Leggett, just-auto.com 26th March, 2008

Just been talking to Mark Bursa about Tata and JLR. Just who owns the Rover brand now? Ford bought it off of BMW and stopped Shanghai Auto getting it a couple of years back (and SAIC therefore had to resort to Roewe). Have the rights to the Rover name simply transferred over to Tata now under the terms of the JLR sale deal? We’re not 100% sure, but it would be strange if that was not the case.

Don’t laugh but there might be worse things to do than revisit the ill-fated CityRover badge that Tata did with the Indica and MG Rover. It’s an option and maybe not quite as nuts as it sounds. The car would have to be brought up to half-decent European spec and you wouldn’t sell it through Jag outlets, but maybe it could work as a sub-brand in a Land Rover showroom? Or find another, more direct, route to market? Could be a brand there that might also conceivably work for a European spec Nano in a few years time (can’t quite see European Fiat dealers falling over themselves for that)?

If Tata has acquired the Rover brand, might it even consider a brand licensing deal of some sort with Shanghai Auto? There are possibilities perhaps. Lots of them. There again, why would Tata help give the Chinese auto industry a leg-up? Ratan Tata may well be enjoying the fact that he has acquired a couple of good brands that sell in substantial volume in Western markets and are in pretty reasonable financial shape. There are profits to be banked, global sales to be developed with already there and upcoming product. Three years on, it’s not quite the same story with MG Rover and the rather messy Chinese acquisition of those assets is it?

The Indians can perhaps be forgiven for enjoying this moment. Jaguar and Land Rover are now fully owned by an India-based company. A good bit of class and international prestige has been puchased off the shelf (albeit a wobbly shelf that Ford was having trouble supporting). This catapults India’s standing in the global auto industry into the top league. And Nano has just wowed Geneva. And this all comes in spite of having to observe the tidal wave of Western FDI money heading into China over the last ten years.


Tata means a better future, says Lord Bhattacharyya
John Duckers, Business Editor , Birmingham Post 26th March, 2008

Whisper it, but Jaguar and Land Rover are soon to be under new management. There was no ticker-tape takeover, Tata doesn’t work like that. It was low key, keeping the Press at arm’s length, that is how the group’s charismatic leader Ratan Tata likes it.

Professor Kumar Bhattacharyya, head of Warwick Manufacturing Group, who knows Jaguar, Land Rover, their parent Ford and Tata well, says the workforce has no need to be afraid. “They should not be apprehensive,” he said. “It means a better future.”

Some would ask how Tata is going to address the three plant scenario, which sees Jaguar and Land Rover models built variously at Castle Bromwich in Birmingham, Lode Lane in Solihull and Halewood in Liverpool. Most pundits say it is at least one factory over-subscribed. Figures have never been revealed but analysts claim Jaguar probably lost in the region of £400 million last year whereas Land Rover made something like £750 million profit.

But Lord Bhattacharyya, who has known Tata for 15 years and worked with Jaguar and Land Rover for 20, says the critics are missing the point. Tata, he says, sees it as an opportunity, not a problem. “All the plants will stay,” insisted the professor. “Tata is in for the long term. This is not about cutting and shutting. The capacity is there to produce the new models that are in the pipeline.”

He won’t speculate about how much money Tata will pump in over the next five years, over which time it has guaranteed the business plan and model line-up, but suggests it will be “several billion pounds”. He insisted: “You cannot cut corners – that is what we have been doing in this country for too long. Those days have gone. “Whatever is needed in terms of emissions and competitiveness – they will take all this into account.”

Job numbers, says Lord Bhattacharyya, will remain the same and if sales improve then new people will be taken on. It is, he says, a text book takeover – a win/win situation for both Tata and willing seller Ford. Ford is retrenching to the United States in order to survive, and the money it is getting for offloading Jaguar and Land Rover is vital as it looks to pay off thousands of workers across the Pond.

Lord Bhattacharyya will not condemn the company for its mixed stewardship. Some would say Ford is fleeing just at the point the businesses are turning round – surely madness. But Lord Bhattacharyya was generous. “They have done their best,” he stressed. “They know what they are doing – they want to concentrate on the US. There is no criticism from me.”

Jaguar and Land Rover’s existing leadership will remain in place. Tata is comfortable with that. Stability and sustainability are the buzz words of the moment. It clearly believes both marques need a bit of nurturing. Tata, insists Lord Bhattacharyya, will be a benevolent owner, inspiring confidence and offering leadership. “It has been right from the beginning,” he stated. “For the West Midlands – and we have had tremendous failures such as Longbridge – it just goes to show we can hack it.

“We have great ability in this region. People in the West Midlands can be proud.”


Mixed reaction to Tata deal from workers
Katie Dawson and John Cranage, Birmingham Post 27th March, 2008

The news that Ford had finally struck a deal to sell Jaguar and Land Rover to the Tata industrial conglomerate of India met with mixed reactions from the carmakers’ employees yesterday. Many said they were relieved that ownership of the two luxury brands had been resolved but others said they were worried about their jobs.

Paul Hoyte, who works on the Defender line at Land Rover’s Lode Lane plant in Solihull, said workers there were told about the deal in a three-minute team briefing yesterday morning. They were given a CD and a leaflet about Tata but little information about the actual sale. Mr Hoyte, aged 35, said he felt both pleased and concerned. “I am pleased I have kept my job,” he said. “But for how long?”

Worker Derrick Robinson said: “I just hope we don’t get stitched up again.” Other Land Rover workers however were more upbeat. One, who said he had worked for the company for 20 years, described the move as “a good thing”. There was also a mixed response from Tony Woodley, joint general secretary of Unite, the trade union that represents most of the Land Rover and Jaguar shopfloor workers.

If they had to be sold, then Tata was the best option, he said. Local MPs were unequivocal in their support for the deal. “This is a win-win deal. Land Rover and Jaguar will get the investment they need to develop exciting new brands like the LRX, and Ford will be able to concentrate on their core business while continuing to supply engines and technologies to Land Rover and Jaguar,” said Lorely Burt (Solihull, Lib Dem).

“News that Ford will put £300 million into the Jaguar and Land Rover pension pot is very welcome.” Richard Burden (Northfield, Labour), chairman of the all-party parliamentary motor group, said: “Tata is a forward-looking global company. All the indications are that Tata recognises the huge potential of Jaguar and Land Rover to become part of its group in a way that maintains the pace of investment and product development at the same time as retaining the essential Britishness of the Jaguar and Land Rover brands. That will be vital to safeguarding thousands of jobs in the Midlands and elsewhere.

Among those arriving to start the evening shift at Halewood in Liverpool, the mood was positive. Peter Kirk, aged 31, a production operative, said: “Tata has said he will honour Jaguar’s five-year plan for this place, which is great news in the short term. I think the real test will come in 2009/10 when the wage negotiations are taking place. Then we’ll know what his long-term plan is.” Dave Loftus, aged 56, who has worked at Halewood for 35 years, said: “I’m disappointed in Ford because we have done so much for that company, worked so hard to make it profitable and now they have sold us to make a quick buck.

“They have effectively pulled out of the UK car industry and they will regret it.” Mark Long, aged 41, a production supervisor who has worked at the plant for 20 years, added: “I am delighted Ford has gone. “All I know about Tata is that he makes the world’s cheapest car and also owns Corus and Tetley tea bags.” Karl Roberts, aged 32, a production engineer, said: “There is going to be one major car manufacturer go down in the next few years and I think it will be Ford.”


Investors concerned about Tata Motors deal
Joe Leahy in Mumbai, The Financial Times 28th March, 2008

Investors in Tata Motors are bracing for India’s third largest passenger carmaker to begin selling down some of its investments and stakes in subsidiaries to help finance its $2.3bn takeover of the Ford-owned marques Jaguar and Land Rover. Tata Motors’ share price faced renewed pressure yesterday over the deal. Its stock initially fell about 7.3 per cent before recovering to end down 3.6 per cent at Rs655.20.

In a note on the deal, which was formally sealed on Wednesday, Credit Suisse said Tata Motors would probably first offload its holding inTata Steel, India’s largest private steelmaker. “The prime candidate for such a sale would be Tata Motors’ stake in Tata Steel, which is worth about $450m at the current market price,” said Govindarajan Chellappa, a Credit Suisse analyst.

Tata Motors has said its takeover of the luxury marques will help it develop capabilities in design, technology and distribution to compete with global brands in domestic and international markets. But the deal has been unpopular with investors since rumours about it began circulating in the middle of last year. Tata Motors’ stock has fallen about 13 per cent since last July. The Sensex Index has gained nearly 5 per cent in the same period, and the benchmark dropped 0.4 per cent yesterday to 16,015.56.

Investors are concerned on three counts: Jaguar is lossmaking; the US market for luxury cars is heading into a downturn; and the brands do not fit the Indian group’s stable of low-cost vehicles for the developing world. They are also worried about Tata Motors’ plan to raise $3bn in bridge loans for the acquisition. Tata Motors has indicated that it will set up a special purpose vehicle to hold Jaguar and Land Rover, which some analysts believe will also assume the debt.

But investors are concerned that the deal will still be dilutive. Tata has announced that it plans to raise $1bn in new equity for the acquisition. This could be mitigated by a potential plan to sell the company’s 4.29 per cent stake in Tata Steel. Piyush Parag, an analyst with brokerage Religare Enterprise, said Tata Motors might also sell down part of its holdings in some subsidiaries. These include its successful South Korean truck acquisition, Tata Daewoo, and its two large components makers, HV Transmissions and HV Axles.

“Is the deal value accretive?” Credit Suisse asked in its note. “There are too many questions left unanswered to give a definitive answer.” More details were needed on the intellectual property Tata Motors had acquired as part of the deal and on how it planned to turn Jaguar round, the note said.


Now the hard work begins
Tony Lewin , Automotive News Europe 31st March, 2008

There will not be much time for Tata Chairman Ratan Tata to enjoy his company’s purchase of Jaguar and Land Rover. Once the $2.3 billion (about €1.5 billion) deal is finalized, likely in June, Tata will inherit all of the challenges that former owner Ford Motor faced. The tasks at hand include:

— Slashing CO2 emissions to meet the EU’s 2012 target
— Improving Land Rover’s poor scores in quality tests
— Securing access to future pollution-reducing solutions
— Lowering dependence on western Europe and the US.

Both British brands have large, heavy, powerful vehicles. Just one Land Rover model and five Jaguar variants emit less than 200 grams per kilometer of CO2. The EU wants the average fleet emission from automakers to be 120g/km within four years. That’s why Land Rover’s compact LRX concept, which the company says has the potential for 120g/km of CO2, is such a key future model. Its low emissions will help offset the higher CO2 of the big models.

Jaguar and Land Rover announced last year they would invest £700 million in environmental technologies. This research spending will continue under the new ownership, says corporate affairs director Don Hume. “Everything that was planned for the forward business plan will be brought in,” he said. “There will be a strong ongoing relationship between the partners, and co-development programs will continue, too.”

During an interview last month, Gerhard Schmidt, Ford’s vice president of research, said: “We will be linked with Land Rover and Jaguar for a fairly long time.” Tata’s agreement with Ford guarantees the supply of components for the lifetime of the current models as well as some due in coming years. This effectively ensures up-to-date technology only until 2012 or 2013. After that, Tata will have to be ready with its own emissions-reducing solutions or partner with another automaker. Jaguar and Land Rover are free to look outside Ford. They could capitalize on Tata’s links with Fiat, which is a leader in low-CO2 cars.

Fix Land Rover quality

Also, Land Rover’s current winning streak — 2007 sales were up almost 18 percent to 226,395 — needs to be safeguarded by improvements in the brand’s quality. The SUV maker continues to be at or near the bottom in leading customer satisfaction surveys. Tata Motors has promised to continue with at least the next five years of Jaguar’s and Land Rover’s existing product plans. That’s a practical decision, because to cancel programs now would bring instant cost penalties.

Here are some of the models that Automotive News Europe sister publication AutoWeek expects will come from Jaguar and Land Rover.

2009

New Jaguar XFR, XKR: These high-performance versions of the XF sedan and the XK coupe will be based around an all-new 5.0-liter, direct-injection gasoline V-8, in naturally aspirated and supercharged variations. The cars will go on sale late in the year. The naturally aspirated V-8 will be rated at 380hp, and the supercharged version will make about 500hp. Both will be equipped with ZF’s latest seven-speed automatic transmission.

Face-lifted Range Rover, Range Rover Sport: These models will get the new 5.0-liter V-8s used in the Jaguars. Also, the Range Rover and the Range Rover Sport will get redesigned interiors with revised instrument panels, switchgear and interior trim.

2010

Jaguar XJ (Project X351): This is the overhaul of Jaguar’s flagship sedan. With styling inspired by the XF, the new XJ nonetheless will be its own car, with a more restrained, regal air than the racier XF. The dimensions stay the same, but just as Jaguar has cleverly repackaged the old S-Type platform for the XF, careful interior design will create more leg and shoulder room in the new XJ.

Jaguar X-Type: This is likely the year for the unloved X-Type to die and make room for the LRX on the Halewood production line.

2011

Land Rover LRX (Project L513): This will be the most significant new model in the early stages of Tata’s ownership as Land Rover extends its range to six models. Land Rover is striving to retain as much of the LRX concept’s interior as possible to fill the vehicle’s role as the company’s urban chic car and compete against the Mini. A hybrid model is planned. A major question is the name — LR1 could be too entry-level, but LR4 could be too upmarket.

2012

Jaguar F-Type (Project X700): Jaguar has wanted a $50,000 (about €31,650) two-seat sports car since it unveiled the F-Type concept in 2000. Now the car is back in the planning stage, with options to base it on either the XF or XK platform. Tata boss Ratan Tata appears to have given the F-Type his backing. The production car could be badged as the XK-E.

2013

Jaguar XF Coupe (Project X252): This is another obvious range extension, but it awaits a green light from Tata. Jaguar has based the design on the lower-roofline style seen on the rakish C-XF concept.

All-new Range Rover (Project L405): Thirteen years after Ford bought Land Rover, the flagship that relaunched the company will be replaced. Expect the size to grow but the styling to become sportier and less utilitarian. Bentley levels of luxury are planned, making the $200,000 Range Rover no whim. Alloy body construction and hybrid powertrains will keep weight and emissions down.

2014

All-new Jaguar XF (Project X260): This car is likely to bring alloy body construction to the mid-sized Jaguar, as once planned under Ford. By creating the new XF alongside 2015’s new XJ, Jaguar can get vital economies of scale.

All-new Range Rover Sport (Project L494): Created as a variant of the new Range Rover, the new Sport also will switch to an aluminum body.

All-new Land Rover Defender: This is not confirmed, but for developing countries, Tata is eyeing a 4×4 with simple, robust engineering similar to past models of the Toyota Land Cruiser. Sales could add up to hundreds of thousands of units.

Some production could be overseas. This could give Land Rover the perfect base to use to replace the Defender.

2015-2016

All-new Jaguar XJ (Project X360): This is already penciled in as a new four-door flagship to replace the 2010 reskinned model.

All-new LR3: It will be time for the seven-seat LR3 to be replaced, but the platform is unknown. Could this be a variant of the new Defender?


What’s ahead for British brands? Concern … confidence … curiosity — welcome to America, Tata
Richard Truett, Automotive News 31st March, 2008

Florida XK8 owner Tim Kip worries that Jaguar will lose some of its “Britishness” under the ownership of Indian automaker — and tea maker — Tata Motors. Each day on his way to work, Tim Kip zips past the Tata Tea Inc. processing factory in Plant City, Fla., in his Jaguar XK8 sports car. Kip said he rarely if ever thought of Tata before last week. And if he did, it meant just one thing: tea bags.

That changed when Ford Motor Co. sold Jaguar and Land Rover to Indian automaker Tata Motors Ltd. for $2.3 billion. Kip, owner of Family Estate Advisors, a financial planning company, says he is not happy that a company that makes tea now also holds the keys to his favorite brand of cars. “It’s tremendously disappointing,” says Kip. “Maybe it gives Jaguar the cash infusion it needs to maintain the company, but 50 percent of owning a Jaguar is the mystique. I don’t know if you can have that with an Indian owner.

“I’m sure Tata makes fine tea, but any time you take away from the Britishness of Jaguar, you lose that personality.”

Welcome to America, Tata.

The purchase by the Tata conglomerate — maker of such diverse items as wristwatches and huge earth-moving equipment — is being viewed with curiosity on many fronts. Old-school Jaguar customers such as Kip worry that the brand’s rich heritage is in jeopardy. Dealers such as Mike Collier and Ken Gorin take the global view and say the change in ownership is no big deal. Others have adopted a wait-and-see attitude.

They all hope the ownership change will help revive Jaguar. Things never really got going under Ford, which acquired the legendary marque in 1989. Jaguar sales in the United States are in a tailspin, plunging from 61,204 in 2002 to 15,683 last year. In contrast, Land Rover sales nearly doubled after Ford acquired the automaker from BMW in 2000. Land Rover sold 49,550 vehicles last year, compared with 27,148 in 2000.

What’s the deal?
Highlights of Tata’s acquisition of Jaguar and Land Rover from Ford
— Tata pays Ford $2.33 billion for assets of Jaguar and Land Rover
— Deal closes around June 30, pending regulatory approvals
— After closing, Ford pays Tata additional $600 million for pension obligations
— Ford retains no ownership stake
— Most of the Jaguar-Land Rover management team, including CEO Geoff Polites, transfers to Tata
— Ford supplies Jaguar and Land Rover ” for differing periods” with powertrains, certain parts and technologies
— Ford Motor Credit will continue providing new financing for Jaguar and Land Rover dealers and customers for up to 12 months
— No significant changes in employment terms for Jaguar and Land Rover employees; unions endorsed the deal

Who owns Harrods?’

The deal calls for Ford to continue providing financial services to Jaguar and Land Rover dealers and customers for the next year, including floorplanning and vehicle loans. Ford also will keep supplying engines, body parts and technical assistance to Jaguar and Land Rover for at least five years. The management team also is expected to stay in place. Ford spokesman Tom Hoyt says nothing is likely to change between now and the end of June, when the sale is scheduled to close.

So its business as usual at Collier Jaguar in Orlando, Fla., says dealer principal Mike Collier. The new XF sedan is being launched, and Collier’s sales staff made initial deliveries of the svelte performance sedan last week. Collier says no one mentioned the sale to Tata or canceled an order. “No one has said a word one way or the other,” he says. “I haven’t heard anything negative. “It’s like anything else. Who owns Bentley? Who owns Rolls-Royce? Who owns Harrods in London? Has anyone questioned the quality of the luxury goods at Harrods?”

Collier says he’s unconcerned about Jaguar’s future because Tata has been a good steward for the other brands it has bought. Those brands include Tetley Tea and Corus Steel, the biggest producer of steel in the United Kingdom.

“The one thing that Tata has done in the past is they have been loyal to existing management and brand image,” Collier says. Timeline: Ford’s luxury buying spree

1987: Ford buys luxury sports car maker Aston Martin.
1989: Ford agrees to buy Jaguar for £1.6 billion.
1999: Ford buys Volvo Cars for $6.45 billion and includes it in its new Premier Automotive Group.
2000: Ford buys Land Rover from BMW for £1.8 billion.
2004: Ford ends Jaguar production at the sports car maker’s Browns Lane factory in Coventry, England, to cut costs.
2007: Ford sells Aston Martin for £479 million to an investment group led by Prodrive Chairman David Richards. Ford hires investment bankers to look into sale of Jaguar and Land Rover. It decides to keep Volvo.

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MG dealers still await cars and contracts

Tim Rose, AMOnline/Company Car Driver 27th March, 2008

MG will not say whether it expects to supply its appointed UK dealers with their first new cars this year. The brand’s relaunch under new owner Nanjing Automobile Corporation (NAC) has been beset by delays. It had appointed 50 dealers in the UK last summer ready for a scheduled launch of the MG TF in September 2007.

Quality issues with the Chinese-made components led that target to slip to February 2008. But after that date passed, Longbridge assembly plant executives would not say whether they expect to have cars available at all this year. And it has emerged that none of the 50 dealers have franchise contracts in place, although a few have begun marketing and taking deposits; MG has only issued each with a memorandum of understanding.

Stephen Cox, NAC-MG UK sales and franchising manager, insisted there was no negativity in the network. He said: “There’s complete support. They don’t want a car that’s not right, and wouldn’t sell a car that’s not right. If that means delaying it, that’s what we will do.”

Considering the lack of production activity at Longbridge, industry observers have questioned what is actually going on behind the front gate and whether NAC has been feeding the public with false promises of significant production. In 2006 the company said the plant would have annual capacity for 15,000 units. It also talked of introducing an MG 7 saloon based on the Rover 75, still an ambition of NAC parent Shanghai Automotive.

Cox said work completed so far included logistical planning, parts accumulation and engineering. Around 45 “engineering vehicles” have been assembled since May 2007, when NAC held a much-hyped re-opening of Longbridge. The site now employs 140 people in sales and marketing, security, engineering, production and logistics.

When asked what the staff were doing, Cox said: “Training and looking at methods of production and process.” Cox added that he did not believe the car’s aged design would mar the relaunch. It’s essentially the MGF from 1995 and may need a low price to compete against the more modern Mazda MX-5, which starts at £15,730.

Cox refutes this suggestion, adding that the price is still under debate. “The market for two-seater sports cars is driven by people with high disposable income. They don’t need a two-seater, they want one,” he said. Cox plans to re-start dealer recruitment when MG is finally relaunched. He wants a full network of 120 owner-driver dealers.

Keith Adams

Keith Adams

Editor and creator AROnline at AROnline
Created www.austin-rover.co.uk in 2001 and built it to become the world's foremost reference source for all things BMC, Leyland and Rover Group, before renaming it AROnline in 2007.

Is the Editor of the Parkers website and price guide, formerly editor of Classic Car Weekly, and launch editor/creator of Modern Clsssics magazine. Has contributed to various motoring titles including Octane, Practical Classics, Evo, Honest John, CAR magazine, Autocar, Pistonheads, Diesel Car, Practical Performance Car, Performance French Car, Car Mechanics, Jaguar World Monthly, MG Enthusiast, Modern MINI, Practical Classics, Fifth Gear Website, Radio 4, and the the Motoring Independent...

Likes 'conditionally challenged' motors and taking them on unfeasable adventures all across Europe.
Keith Adams

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Posted in: AROnline News
Keith Adams

About the Author:

Created www.austin-rover.co.uk in 2001 and built it to become the world's foremost reference source for all things BMC, Leyland and Rover Group, before renaming it AROnline in 2007. Is the Editor of the Parkers website and price guide, formerly editor of Classic Car Weekly, and launch editor/creator of Modern Clsssics magazine. Has contributed to various motoring titles including Octane, Practical Classics, Evo, Honest John, CAR magazine, Autocar, Pistonheads, Diesel Car, Practical Performance Car, Performance French Car, Car Mechanics, Jaguar World Monthly, MG Enthusiast, Modern MINI, Practical Classics, Fifth Gear Website, Radio 4, and the the Motoring Independent... Likes 'conditionally challenged' motors and taking them on unfeasable adventures all across Europe.

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