News : 1 September 2008

News digest

Compiled by Clive Goldthorp

1) SAIC Motor/MG and Roewe

Longbridge pinning its hopes on success of new MG TF
Duncan Tift, Business Staff, Birmingham Post 27th August, 2008

Three years after the last MG was made at Longbridge, the famous marque is making a return to our roads. Business reporter Duncan Tift took to the wheel of one of the first of the new TF LE500 models to be rolled out. The marketing experts have billed it as ‘MG: A New Journey” and so far as the company is concerned, that is just what it is.

However, the product they have chosen has a certain familiarity. Journalists were given their first opportunity on Tuesday to try out the car carrying the hopes of NAC-MG on its slender shoulders – the TF LE500, a special edition of the former TF sports car that was for a time Britain’s best-selling roadster. There is clearly, no pun intended, a lot riding on it. For however the marketing men may dress it up, the MG TF isn’t new and this was evidenced around the roads of Warwickshire and Worcestershire as the car hardly warranted a second look.

Only die-hard enthusiasts would have been able to spot the subtle differences between this car and the one it replaced. This is a pity because the roadster has a lot going for it. The special edition has a full set of extras including leather seats, air conditioning, a detachable hard top, parking sensors, top-of-the-range stereo and much more.

I have to confess I am probably not the ideal person to take such a car out for a spin. My 6ft 8in frame and its accompanying bulk is not designed to fit behind the wheel of a sports car and I did feel rather like Noddy as I manoeuvred myself into position. I was also grateful it was a dry day and I was able to have the roof down because there would probably have been an unsightly bulge in the soft top had conditions been inclement.

However, the cockpit did accommodate me and I found I could drive easily, although my size 13s did occasionally hit the wrong pedal. The interior has a quality feel which I am sure will appeal to discerning drivers ready to pay a premium for such luxuries. This will be a comfort to the firm’s Chinese owners, especially after teething problems with poor components.

The only mid-engined sports car in its class, NAC-MG say the car is ‘engineered to deliver a thoroughbred British sports car driving experience”. It comes equipped with a new Chinese-made Variable Valve Control N series engine. The EU4 compliant 1.8 litre power plant will propel the LE500 from 0-60 in 8.3 seconds and give it a top speed of 127mph. The N-series engine also has a newly designed multi-layered steel cylinder head gasket and an upgraded oil rail, that allows an increase in the clamping load, and an enhanced cooling system; all improvements that result in a much more robust engine.

This means the car handles far better than its predecessor and could well bring the joys of open-topped motoring to a new audience next month. It is clearly proving popular with MG fans – about 400 of the 500 limited edition models have been snapped up at £16,399. Some might say this is expensive for a mid-range sports car but the package represents good value – provided you have that kind of money, which in the current economic climate is by no means guaranteed.

However, two facts to bear in mind: the equivalent car manufactured by MG Rover would have cost a shade under £24,000, and a similar specification Mazda MX-5 – the TF’s main rival – is considerably more expensive, although it does offer rear-wheel drive, which many motorists still place as the most important consideration in a roadster. When the 500 cars have been sold, the company will revert to a standard model, cheaper than the top specification model I took out. Its extras such as air conditioning and leather seats will only be available as options.

NAC-MG is hopeful that it can produce 700 cars between now and the end of the year and is expecting to increase this to 4,000 next year. It clearly believes there is still a market for the model – it would be nice if Britain’s car buyers thought the same. We shall see.

MG production at Longbridge good for the Midlands
Duncan Tift, Business Staff, Birmingham Post 27th August, 2008

The news that MG is to invest in new models for assembly at Longbridge is welcome news not just for the company but for the Midlands economy as a whole. New jobs, secure investment and the continuation of a motoring heritage stretching back more than 80 years is an enticing proposition. But sentiment alone will not be enough to guarantee the future success of the company.

When it does come to launch its new products on the market the rejoicing at the brand’s rejuvenation could be short lived because the company is likely to face some stiff competition in the various sectors it has chosen to compete in. The first model will be a European variant of the Roewe 550, which will be equivalent in size to a Vauxhall Vectra.

The 550, which has been designed and engineered by MG parent Shanghai Automotive Industry Corporation at its Leamington Spa-based technical centre, was unveiled to the public at the Beijing Motor Show earlier this year and has been well received. China’s emerging middle classes are increasingly becoming more affluent and desire a status symbol to go with it. The initial success of the Roewe 750, based on the old Rover 75, suggests that the car will find a ready market in China.

However, even upgraded for the European market will that success be repeated here – in what is one of the most competitive and overcrowded motoring sectors. MG has not said where the vehicle’s market placing is likely to be but it is thought that it will pitched against the likes of the class-leading Ford Mondeo and the Vectra replacement, the Insignia, together with others including the Mazda 6, Toyota Avensis, Renault Laguna and Peugeot 407. The MG will have to offer a lot more than the strength of its badge if it is to make inroads against these heavyweights.

However, the company is not deterred by the challenge and the lessons it will learn from the TF LE500 will be invaluable. If it can produce high specification cars very cheaply – something which MG Rover never could – then it may have it unique selling point and hence create a niche in the market. Spokeswoman Eleanor de la Haye said: ‘The success of the Olympics has shown that when China puts its mind to something then it will see it through and make it work.”

Do not under-estimate this. The Chinese are in this for the long-term. There may have been teething problems with the beginning of the project but the acquisition of Nanjing by SAIC has been the making of MG. Behind it now is a company with 33,000 employees and one which sold 1.3 million vehicles in 2006, generating a profit of around £667 million.

Predictions are that the company could be worth around $22bn – something which would make most motor manufacturers drool with envy. The Roewe 550 variant will be brought on-stream very quickly, largely due to the shared platform it will be based on. The tools can be adapted quickly and such is the spare capacity at Longbridge that accommodating production will not be a problem.

It is likely to be a more luxurious offering than the Chinese version, reflecting the more sophisticated European buyer. It will also be badged as an MG, underlining its desirability. The car’s current styling betrays its Asian origins and the European model is likely to be facelifted to reflect different tastes, however, what is underneath the skin is likely to be little altered. The car could be showrooms by 2010 and the company will be able to take advantage of a more mature dealer network by then.

Following the 550 variant will be a new Ford Focus rival – probably the most competitive of all car markets – and then a new supermini, which will have a ready market provided it fulfils the basic requirements of this sector, which is primarily economy – both in terms of price and running costs. In three years’ time there will be a replacement for the TF, which by then will be a 20 year old design. No details on the costings of these models has been proposed but all will have to be carefully marketed if they are to achieve buyers, however, if the Chinese have their way then there will only be one victor.

Longbridge announces new range of cars to be built in Birmingham
Duncan Tift, Business Staff, Birmingham Post 27th August, 2008

MG, fresh from the successful relaunch of its TF roadster, has revealed details of a whole series of new models to be produced at Longbridge. Safe in the knowledge of secure investment from its Chinese parent, Shanghai Automotive (SAIC), the company is planning a new large-size family car, a mid-range/small family car, a supermini and a replacement for the TF. There is even speculation that it could produce an MG-badged SUV, which would be a first in the company’s long history.

The first of the new models will be a variant of the Roewe 550, the large car which is was launched to acclaim at the Beijing Motor Show earlier this year. The 550 already has a strong British pedigree having been designed and engineered at the SAIC Motor UK Technical Centre in Leamington Spa. It is likely to go on sale in 2010 and will be pitched against rivals such as the Ford Mondeo and the Vauxhall Vectra replacement, the Insignia.

The car will look different to its Chinese counterpart but will share the same platform. This will mean it can be quickly introduced to the production line at Longbridge. The company will also have a more established dealer network by the time the car goes on sale and there are high hopes it will be able to compete with its more established rivals. The lessons learned from the sale of the TF roadster are likely to be invaluable as it looks to secure a foothold in what are very different markets to those sought by the sports car.

The next model is said to be a Ford Focus size vehicle, which will pitch the company into the most competitive section of the car market. However, it is relishing the challenge. Spokeswoman Eleanor de la Haye said: ‘MG’s future is secure and there is a commitment to expanding the automotive business both in China and in Europe. We have been on site here for three years and have been through some difficult times but that is behind us and we are looking forward to the future. Although the TF is a relaunch, all the other vehicles will be brand new,” she added.

In addition to the enhanced dealer network – which is likely to comprise around 55 outlets in the UK, the company has improved its production model, set up a new logistics chain, an after-sales service and has the UK-based design centre. The TF will initially be launched in the UK and Ireland but by next spring this will have been expanded to include Italy, Spain, France and Germany and beyond that to other English speaking markets such as South Africa. There is no word yet on whether the sports car will be sold in the United States but it is not ruling this out.

It believes there is vast potential for the sports car and it will act as a flagship for the MG brand throughout the world, while there are hopes that the new models could also find a market outside the UK. The 550 is already proving popular in China, where more than 8,000 have already been sold, despite it only being on sale since April. The TF is also proving a hit with the Chinese, with more than 2500 models already sold.

In the UK, advance orders for the special edition LE500 have been strong, with 80 per cent of the 500 limited run already being snapped up despite the car not going into showrooms until next month. However, British buyers will not have long to get acquainted with the roadster as a replacement is already being planned and the model could be available in around three years time.

2) Jaguar and Land Rover

Jaguar XF wins Auto Express Car of the Year
Birmingham Post 20th August, 2008

ITS Castle Bromwich-built XF medium saloon, one of the biggest successes in the company’s history, was named Car of the Year by Auto Express, the weekly motoring magazine and website. It previously beat rivals such as the BMW 5 Series, Mercedes CLS, Audi A6 and the Lexus GS to take four other major motoring awards.

The man behind the XF, Jaguar’s design director Ian Callum, collected the trophy at a presentation dinner attended by major figures from the British motor industry. Since its launch on the world markets in March, the XF, which ranges in price from £35,000 to £50,000, has helped drive a near-30 per cent rise in sales for Jaguar.

The company is currently producing about 1,000 units of the car a week on a two-shift basis. Orders so far total more than 22,000 with strong demand from the UK, where sales have topped 7000, the US and continental Europe. Mr Callum said: ‘Jaguar is very, very proud to receive this wonderful award. It is the proof that Jaguar is back And the XF is just the beginning of our new story for the future. Just wait until you see the new XJ and beyond.”

The award follows a long period of uncertainty over Jaguar’s future, after it and sister company Land Rover, was put up for sale by previous owner Ford. Its new Indian owners have promised to maintain and develop all the core brand values of the famous British company. And it has promised substantial investment to allow Jaguar to grow and prosper against its fiercest German premier rivals, Mercedes, BMW and Audi.

David Johns, editor-in-chief of Auto Express, said: ‘The XF is truly an amazing car, the car that Jaguar had been promising to deliver for many years. ‘It is a tribute to the British workforce who produces it. And I am delighted for everyone at Jaguar that Auto Express has been able to recognise their skill and dedication with this award.”

Editor Dan Strong said: ‘Jaguar’s XF is a machine that has proved doubters wrong. It’s a car that impresses on every level, from design to drivability, practically to price. ‘But that’s not the only reason why our judges chose this car. Our winner has raised the standards in a class where excellence is considered the norm.”

Tata to sell rights shares to fund JLR takeover
Birmingham Post, 21st August, 2008.

The plan is to sell rights shares worth £517 million, said the company, which is raising money to fund its £1.15bn acquisition of JLR. The board of directors decided on the move, ‘taking into account the current situation in the capital markets and the change in level of prices in the stock markets since May 2008,” it said in a statement.

Tata Motors shares, which ended 0.2 per cent up at 424.05 rupees (522p) in the Mumbai market, are down 27 per cent since May 29 when it announced the fund raising plan. The main share index has slid 10 per cent since. The company said it planned to sell its investments in a phased manner, preferably to group firms, at prevailing market prices over the next six to eight months.

The company, part of the Tata conglomerate, said in July it had sold a 24 per cent stake in its auto component unit to an associate firm and booked a profit of $27 million (£14m). Tata Motors had planned to raise up to 72 billion rupees (£887 million) through three simultaneous but unlinked securities issues but now plans to go ahead only with the sale of two classes of rights shares, it said.

Funds raised through share sales in India in the first six months of 2008 fell 66 per cent from a year earlier to $5.85 billion (£3.01 billion) hurt by falling stock markets, latest data has shown. The main share index is down 28 per cent in 2008. Hindalco Industries, India’s top aluminium maker, last week said it would offer more rights shares than planned to after the stock market slide soured pricing. It hopes to raise $1.2 billion (£618 million).

Land Rover insists future is safe as workers moved to Jaguar
Duncan Tift, Business Staff, Birmingham Post 22nd August, 2008

Land Rover has pledged that the future of the company is safe despite almost 300 of its workers being transferred to production at sister marque Jaguar. A total of 284 workers have agreed to move from the Solihull operation to Castle Bromwich to help with the production of the best-selling XF model.

Concerns were raised that Land Rover’s poor sales could herald major changes within the company. Sales of the famous 4x4s have plunged from record levels this time last year due to the escalating price of fuel and concerns over emissions. Sales in the United States, traditionally one of the firm’s largest markets, have struggled recently while they are also down across Europe.

In the UK, sales declined 38 per cent last month compared with July last year and in the year to date are down more than 14 per cent. However, the vehicle’s popularity in the emerging markets of China and Russia remains strong, while new owner Tata Motors is hoping that it will capture the imagination of motorists in its native India.

Land Rover has become the biggest-selling luxury car brand in Russia, making it the company’s third biggest market after the UK and the US, while China is the Solihull 4×4 specialist’s fifth largest market. One person banging the drum for not just Land Rover, but stablemate Jaguar is Trade Minister Lord Jones of Birmingham. Lord Jones is currently in Beijing for the end of the Olympic Games. However, he has also been extolling the virtues of British goods to the Chinese and has singled out the two brands for particular mention.

JLR’s new chief executive David Smith warned last month that production levels may be cut at the company’s three assembly plants to prevent stocks building up although he said the shift in focus towards the emerging economies marked a major opportunity for not just Land Rover but Jaguar as well. Jaguar spokesman Don Hume said: ‘There is economic pressure on Land Rover at the moment and sales have declined from the high base although it still continues to sell well.

‘As part of the latest round of pay talks we have far more flexibility with the unions than we used to and they have agreed to the workers transferring.” ‘From our view it makes perfect sense and reinforces the flexibility that we have with our workforce. It also allows us to operate Solihull more efficiently,” he added. He said that what was currently happening was that, due to the decline in Land Rover sales, there was less work for production staff.

‘Rather than having workers standing idle and laying them off or producing vehicles for stockpile, what we can now do is transfer workers to where they are needed,” said Mr Hume. ‘We have decided to concentrate on production of the XF at the moment because we can’t make them quick enough.” Since its launch on the world markets in March, the XF, which ranges in price from £35,000 to £50,000, has helped drive a near-30 per cent rise in sales for Jaguar.

The company is currently producing about 1,000 units of the car a week on a two-shift basis. Orders so far total more than 22,000 with strong demand from the UK, where sales have topped 7000, the US and continental Europe. The car has also beaten off strong competition from its German and Japanese rivals to land the coveted Car of the Year award by Auto Express – the company’s first major award since its acquisition by Tata.

Land Rover workers help Jaguar
Graeme Roberts, just-auto 22nd August, 2008

Just under 300 workers have transferred recently from building Land Rover and Range Rover models at Solihull to the Jaguar plant at Castle Bromwich on the other side of Birmingham, in central England. “It’s nothing new, 284 employees have moved to help with production of the XF model,” a Land Rover spokeswoman told just-auto on Friday. The move was reported this morning by local television news.

She stressed all the moves were voluntary, adding that such flexibility had been agreed with workers in the last pay negotiations, about a year ago. “Production has slowed [at Solihull], due to everything that’s going on at the moment, and the XF is in demand so we’re just meeting business needs, really.” Jaguar launched the cutting-edge XF, replacing the retro-look S-type, early this year. Innovations include a start-stop button that elevates a unique centre console-mounted, cylinder-shaped gear selector into position and powers the dashboard a/c vents open on start up.

The new car has been critically acclaimed in all markets in which it has been introduced so far; it was recently launched in Australia. The 2.7-litre V6 turbodiesel is the most economical and the version most popular with UK buyers. Months after the XF first went on sale here, India’s Tata Motors bought Jaguar and Land Rover from Ford.

3) India Watch

Tata says it may move Nano plant due to violence
Automotive News Europe 22nd August, 2008

KOLKATA (Reuters) — India’s Tata Motors said it was prepared to move a plant to make the Nano, billed as the world’s cheapest car, from its eastern Indian site if violent protests continued, despite having invested $350 million in the project. Tata Motors has faced protests and political opposition over the acquisition of farmland for the plant in the eastern state of West Bengal, which have led to cost overruns and threaten to delay the car’s launch.

“What has concerned us is the violence, the disruptions, that has led us to be concerned about the safety of our employees, our equipment and investment, and of the viability of the process,” Chairman Ratan Tata told reporters in Kolkata, the state’s capital, on Friday. Tata said the Nano would be ready to launch in or close to October, but irrespective of the investment made so far, the safety of employees and workers at the site was his main concern.

“If anybody is under the impression that because we have made this very large investment of 1,500 crore rupees ($350 million), that we would not move, then they are wrong, because we would move to protect our people,” he said. “I’ve made a major investment here … to move will be at a great cost to Tata Motors and to shareholders,” he said.

“There is a concern about our people, a definite concern about not being wanted.”

The unveiling in January of the 100,000 rupee snub-nosed Nano was hailed by the state’s ruling Communists, but protests have since gathered steam. Trouble began after the government took over 1,000 acres of farmland for the factory. The government offered compensation, but some farmers with smaller land holdings have refused compensation, demanding that land be given back to them.

Ratan Tata, head of India’s second-biggest private conglomerate, which has interests ranging from software to steel, is known as much for his philanthropy as for being above the political fray. “If there is a view, for various political reasons, that we should not be here or that what we are trying to do should be altered … then we would necessarily face a situation, very reluctantly, where we would have to move,” he said.

Shares in Tata Motors, India’s leading vehicle maker, closed up 1.8 percent at 425.60 rupees in the Mumbai market that rose 1.1 percent.

No plan B

The Nano has already encouraged other car makers including Renault, Nissan Motor, General Motors, Hyundai Motor to plan to make low-cost cars for India and other emerging markets where middle-class incomes are rising. Tata has said he expects eventual sales of one million units of the Nano in India, with exports also contributing later.

“It would seem that many people have a desire to not see that (launch) happen,” he said on Friday. “It’s our desire to see that it takes place,” he said, adding there “was no Plan B” for the roll-out of the Nano at this time. Tata has said the plant at Singur, which was to have an initial capacity of 250,000 units, would be the first, but not the only plant to make the Nano.

The protests reflect a larger standoff between industry and farmers unwilling to part with land in a country where two-thirds of the 1.1 billion population depends on agriculture. The Nano project has been billed as a key to the rejuvenation of industries in West Bengal, where the world’s longest-serving democratically elected Communist government has changed tack after decades of focus on helping agriculture and poor farmers.

Tata, who met state government officials on Thursday, said he had committed to West Bengal in good faith. “I hope West Bengal doesn’t get characterized as a trouble spot, that it doesn’t fall into the same category as some other trouble spots, where there is an urge to leave it alone and not make investments,” he said. The West Bengal government had started talks the Trinamool Congress party, the main political opposition in the state which is spearheading the protests, to try to resolve the dispute.

Mamata Banerjee, the opposition party chief, wants 400 acres (161 hectares) of farmland returned to the farmers, which the government says is not possible to do. On Friday, Banerjee said she would not budge from her demand. “We don’t want anyone to blackmail us. We would continue with our protests,” she said.

Keith Adams

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