China Watch : SAIC Motor plans ‘major’ news, suspends shares

Carole Nash Classic Insurance Specialists

Soo Ai Peng, Reuters, 11th February, 2011

SAIC suspends shares
SAIC suspends shares

Trading in the shares of China’s top carmaker SAIC Motor Corp. will be suspended from the 14th February, 2011 pending a material corporate announcement, SAIC Motor said on Friday.

SAIC Motor, the Chinese partner of General Motors and Volkswagen Group and operator of the MG Motor plant in Britain, said it has been notified by its holding company SAIC Group that it is working on a major plan involving SAIC Motor and discussions over the proposal are continuing, it said in a filing with the Shanghai Stock Exchange.

SAIC Motor said it expects to make an announcement regarding the plan in five trading days following the trade suspension.

SAIC Motor’s Shanghai-listed shares ended 0.44 percent higher on Friday ahead of the trade suspension announcement. The stock has risen 25 percent so far in 2011, compared with the 0.36 percent gain in the benchmark Shanghai Composite Index SSEC.

[Source: Reuters]

Clive Goldthorp

Clive claims that his interest in the BMC>MG story dates back to his childhood in the 1960s when the family’s garage premises were leased to a tenant with an Austin agency. However, back in the 1920s and 1930s, his grandmother was one of the country’s first female Garage Proprietors so cars probably run in his genes! Admits to affairs with Alfa Romeos, but has more recently owned an 06/06 MG TF 135 and then a 15/64 MG3 Style… Clive, who was AROnline’s News Editor for nearly four years, stood down from that role in order to devote more time to various Motor Racing projects but still contributes articles on as regular basis as his other commitments permit.

38 Comments

  1. @Simon Woodward
    Well, I am definitely not a Financial Analyst, but my guess would be that the announcement of next week’s suspension of trading in SAIC Motor’s shares might well be a precursor to a further one about a major corporate restructuring.

    Mind you, I wonder whether the recent MoU with General Motors might just turn out to be of relevance here…

  2. This probably suggests SAIC Motor is either about to be taken over or that there is to be substantial external investment.

    I would suggest that, if the value of the stock has been rising, it might be because more than one bidder has been interested – or just that the company’s prospects have been improving. Indeed, with the MG brand about to launch in Europe, that is a possibility.

  3. @Clive Goldthorp
    I read recently that the Chinese Government are not keen on having too many car/truck manufacturers and want to limit them to about eight in total. This is what effectively killed off the ‘Hummer’ sale at the eleventh hour.

    I think it is due to a lack of resources such as materials, energy etc. and a infrastructure that is struggling to cope. A friend who has imported safety boots from China for the last ten years is continuously complaining of poor supply due to a lack of resources and massive fluctuation in costs each time he orders, which is every quarter.

    It may be wishful thinking but perhaps it would be wiser for the Chinese to run satellite factories in Europe – could that be good news for Longbridge?

  4. It’s probably just the Chinese Government merging more of their car makers – it doesn’t do to have too many firms competing with each other. You would otherwise end up with British Leyland – lots of rival brands under effectively the same ownership competing with each other.

  5. @Simon Woodward
    I would love to think that this is a positive development for Longbridge, but I suspect that this is exactly the opposite and that any rationalisation or major Joint Venture Agreement will spell the end for ‘production’ in the UK.

    However, I hope that I am wrong.

  6. I’d like to think positive thoughts here too, but we will just have to see on Monday.

    However, if there is any tie-up with GM, I would be really p**d off if extra work from SAIC Motor ended up in Vauxhall or Opel factories in the UK and Europe instead of some more investment going into Longbridge.

    I know that the assembly line was shipped to China, but am sure that something could be put together in quick time if the right level of cash input was made.

  7. @Ayd
    Don’t, that’s not fair!!

    Mind you, in all honesty, that wouldn’t be a bad thing – SAIC Motor could then do what they really want to do with Longbridge. I am sure St Modwen could make better use of another chunk of that site…

  8. Ayd :
    Is Tata Motors going to buy the MG brand off them? (Fantasy)

    Personally, I hope not (reality-based fantasy). After all, Tata already owns the Rover name which would offer more diverse opportunities beyond ‘merely’ sports cars and sports saloons, if they wanted to expand their product portfolio.

    The Rover name took the brunt of the negativity when MG Rover Group collapsed in 2005 but, despite that, the brand continues to have more interest and appeal to me than MG.

    I do, though, hope that, whatever the news is concerning SAIC Motor and (possibly) MG, it is encouraging.

  9. @Jon
    I mentioned, a few months back, that I saw a white MG6 loaded up with four suits pulling off the M40 at the junction that takes you straight to Gaydon (about two miles off the motorway).

    I hate to start rumours but, if you read back, I did say this in response to a previous article about the MG6’s UK launch.

    I think that sighting could either be a coincidence or an evaluation by JLR. JLR are doing well, need a smaller car and, though a lot of Longbridge is set aside for houses and a small industrial estates, it still has a lot of land and a lot of the old factory is still in place.

    I doubt it will happen but funnier things have turned out to be true – who, 10 years ago, would have thought India would jump from making Hindustan Ambassadors to owning JLR today?

  10. Who cares about SAIC Motor’s shares? They are a sub-standard car maker which has put our flag on a car that has nothing to do with Gt. Britain. I hope the company folds asap.

  11. Jaguar Land Rover don’t need MG and I doubt if Tata will try to buy it. It all seems like SAIC Motor is trying to restructure and streamline their operations via a stock floatation or partial buy out.

    SAIC Motor is the largest Chinese car producer and, as such, will be keen on concentrating on areas of its business which are showing the greatest potential for expansion. The Chinese Government will want to keep the company strong and sales of MGs have been rocketing in China over the last year.

    What we might struggle to comprehend is that China is not in a recession – its economy is still expanding and, if anything, SAIC Motor will be the ones looking at buying any overseas operations.

  12. Yet another VAG brand? Well, as I keep saying, the MG6 is an almost direct competitor for the Octavia – especially the vRS. Skoda is on the up… Does the VW Group need a new Skoda to replace Skoda? After all, it seems to me that Skoda replaced Seat when Seat moved up the market.

  13. Maybe Tata Motors see a benefit in having the MG and Rover names under the same umbrella again? (No, I don’t need to see a specialist). Seriously, there could be much worse scenarios.

    @Marinast
    Maybe Tata Motors doesn’t need MG commercially but might not SAIC Motor might see value in selling the name and leasing it back for the Chinese market, thereby leaving someone who knows what they are doing to relaunch it properly in the UK and Europe?

  14. I wonder if it is to be taken under the wing of Shanghai Volkswagen as they have a great hold over the motor industry in China.

  15. Well, if I were Tata Motors, I would be interested in developing a sub-brand to make use of the Rover name with cars in the £10k – £20k category just where SAIC Motor are positioned.

    Surely JLR could re-body the MG6 and MG3 to create such a scenario and then fit world-class engines from Ford? Think Focus… Production could take place in the UK at a new site and in China where, in any case, JLR are looking for a manufacturing partner.

    This would still allow MGs to be assembled at Longbridge and sold in low volume across Europe whilst spreading development costs with JLR. Speed to market would be much enhanced and JLR styling would be a winner.

  16. I hear they’re about to look for a listing for some other chunks of their corporate empire – if so, all that remains to be seen is which bits of the business and how much of the share capital will be listed. I wonder if a sizeable proportion of SAIC will be thrown over to the markets…

  17. Move along please, nothing of any direct relevance to MG Motor UK here… See: Rumour and speculation on SAIC’s trading halt, China Car Times, 14th February, 2011.

  18. My bet would be on the GM deal or, at least, more SAIC-GM sharing of technology – probably not unlike the Honda-ARG tie up of the 1980s.

    I doubt that Tata Motors would buy MG and I doubt that SAIC Motor will be bought – its big enough to sort itself out.

    I would think that Tata Motors and the JLR resources would have the capacity and nouse to build their own compact range of cars with very little trouble and I think they should. A compact Jaguar or an all-new medium-sized Rover would sell well if it were built well. Jaguar is well placed to build good cars.

    I suspect that the MG6 might be in trouble though. I can’t see it selling well -it’s not that good looking and it’s not AWD which it should be to be a driver’s car in this century.

    Alex.

  19. I can only afford secondhand cars and, at present, drive a Jaguar XJ40 but, whilst I accept that cars are made for executives and fleet buyers, I still think there is a gap in the British car market.

    BMW, for example, make cars from the 3 Series range right through to the 7 Series as well as the MINI and the 1 Series – all, bar the MINI, being rear wheel drive.

    We recently replaced our classic Mini, which has been a good town car, with a BMW 318 Compact. We were looking for was a good, solid small car (think Dolomite Sprint or MG ZR but, here in New Zealand, there’s not a lot on offer except some sad Rover 216s and 25s. I would have bought a BMW MINI if only it had five seatbelts.

    I think that, if Jaguar built a BMW 3 Series-sized RWD or AWD car, it would do well, but it needs to be aimed at the right market to sell (hairdressers?).

    Weirdly, there is a good selection of BMW 318s for sale – they are everywhere in New Zealand which suggests that Japan bought them buy the shipload and now they are for sale here still in good nick.

    Alex.

  20. It’s now very much the 14th February in the UK and probably the 15th February in China so does anyone have any news?

  21. @iClaudius
    I spotted another MG6 on the M6 near Birmingham today – it was a well-used left hand drive model. I like them – I have put it on the AR Facebook page but the picture is a little fuzzy as I used my ‘phone and my windscreen was dirty.

  22. @Paul T
    Actually, this is exactly the same logo that they have been using at the recent Chinese Motor Shows.

    I am concerned that, if this is the big secret, then the MG6 really doesn’t stand a chance. Hoping I am wrong, although doubting it very much at the moment.

  23. JLR “evaluating” the local competition?

    @Ianto
    MG6 – soon to renamed the Talbot 6?

    Peugeot are, in fact, rumoured to be bringing back the Talbot brand as a competitor for the likes of Dacia and Chevrolet (GM’s EU entry-level brand under Opel/Vauxhall).

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