News : January 2006

Nanjing presses ahead with MG Rover plans

Automotive News

NANJING Automobile is going ahead with plans to build cars based on MG Rover designs despite a continuing battle over who owns the intellectual property rights.

In 2007, the Chinese company plans to build 13,000 cars based on the Rover 75/MG ZT lower-premium sedan. It also plans 7,000 MG TF convertible sports cars. Nanjing’s Rover 75-based cars will be mostly sedans that will be called the MG 7. They will also build some station wagons called the MG 7T.

Nanjing plans to start serial production in March 2007. It intends to build the MG 7 in both China and at the former MG Rover factory in Longbridge, England. The sports car will be assembled in China and sold in both China and the UK, says a supplier source. By 2011, Nanjing hopes to assemble 85,000 MG 7s a year and 25,000 MG TFs. Nanjing will source as many parts as possible in China for both models to keep costs down, says the supplier source.

Nanjing is already seeking price quotes from suppliers in China, including many who are already making parts for a version of the MG 75 that will be assembled by SAIC Motor Co., a subsidiary of Shanghai Automotive Industries Corp. In 2004, SAIC bought from UK automaker MG Rover the intellectual property rights to the Rover 75 and 25 models, plus several engine families. SAIC hoped to buy Powertrain, MG Rover’s engine production subsidiary, at a bargain after the company filed for bankruptcy. But UK bankruptcy administrators instead chose Nanjing as the purchaser.

SAIC sources say the agreement under which SAIC purchased the intellectual property rights of the 75 has loopholes that allow Nanjing to also make the sedan. That means there could be two copies of the Rover 75 on Chinese roads in a few years.

But industry insiders say Nanjing and SAIC will eventually be forced to cooperate in building Rover-based cars. Indeed, the Chinese government has already told the two to work things out, say sources close to both companies. Many doubt that Nanjing can achieve its ambitious production plans alone. MG Rover’s Longbridge plant closed in April 2005 after the financially troubled British carmaker collapsed. Nanjing bought MG Rover’s assets last July for £54 million (€79 million).

Nanjing’s production plan
2007 2011
MG 7 (Rover 75) 13,000 85,000
MG TF sports car 7000 25,000

A new MINI derivative confirmed for production

Expect the production version to look considerably tidier than this rather chitzy prototype, as unveiled at the Detroit Motor Show…

A PRODUCTION car based on the MINI Concept Traveller has been confirmed today as the latest model to join the MINI range. A production vehicle will be on the road within the next three years. Dr Michael Ganal, member of the Board of Management responsible for sales and marketing, made the announcement at the North American International Auto Show (NAIAS) in Detroit.

Inspired by the positive feedback for the MINI Concept Traveller at the Frankfurt and Tokyo motorshows in 2005, the new MINI will be a modern interpretation of the classic Mini Traveller and Countryman versions of the Sixties. It will offer increased interior space and functionality, as well as all the typical MINI characteristics, especially the driving fun and opportunities for personalisation. The car will be modelled on the concept but the final design for series production is still to be defined.

Each version of the Traveller has displayed creative new technology, as well as bringing country-specific themes to appeal to the local tastes of different motorshow audiences. MINI Concept Detroit is based on a winter sports theme designed in the colours of the United States of America flag. The roof rack and boot has convenient fixings for carrying snowboards, skis and mountain bikes.

MINI is now in its fifth year since launch and for the first time it has sold over 200,000 vehicles in one year. Representing an 8.7 per cent increase over 2004, MINI sold 200,400 cars in over 70 countries. Over 700,000 MINIs have been sold worldwide since 2001. The USA has been one of the major successes for the car. Since the MINI went on sale in March 2002, each year has seen a year-on-year growth and 2005 set another record. 40,820 MINIs were sold in the US, an increase of 13 per cent over 2004, enabling the USA to hold its ranking as the second biggest market for the MINI after the UK. The UK sold 44,780 MINIs in 2005.

Coventry revived in Oxford?

Triumph revival on the cards?

MINI Speedster image mocked-up back in 2001 – could something like this form the basis of the next Triumph?


BMW’s Design studios are currently preparing a number of two-seater MINI sports car concepts for evaluation, as the company is keen to expand the British marque’s market penetration, as well as avoid the expanding dealer network being reliant on a single range of cars. Most significantly, is that the sports cars – and the very strange small off-roader offshoot – will be based upon the existing model’s platform, with the possibility of wearing either MINI or Triumph badges – the Germans are acutely aware of the value of the Coventry-based marque in today’s market.

Sources state that the sporting concept looks promising, with pleasing styling – the designs (one of which carried the MINI-MAXImum moniker) are retro-modern in style, but with a nod to the past, carrying traces of Triumph TR4 and Stag in places. Sources in the USA have also confirmed that MINI distributors over there have been told to expect ‘some very big surprises’ in 2006/7, stating that ‘more than one new model is planned.’

This could be a huge fillip for MINI and Oxford, as production continues to run at record levels, even though the current model is heading for replacement by the R56 this summer. Expansion of the MINI line is expected anyway, with the probable emergence of a new Countryman/Traveller version, and possible new ‘Moke’ on the horizon, so the apearance of the sports car is by no means guaranteed.

Speculation about Triumph’s return seems to have been sparked by the news that Graham Farmer, the owner, of the New Triumph trademark is currently being pursued by BMW’s legal team. According to one insider, the NewTriumph business was set-up with the intention of relaunching sports cars. He said: “…it seems the chap who started New Triumph badgered BMW for months about making a ‘New GT6’, based on a design he developed using the old Z3 structure. This was around 2002, he wanted the car built in Britain and the USA. BMW said ‘no’, so he went off and did it anyway. Farmer started New Triumph as a way of pressuring BMW to do something with his designs…’

As one noted observer remarked: “BMW has been quite cagey about whether or not it would ever do another ‘Triumph’. But what a shame if we don’t get a new MG to go up against it…”

Review of the year: 2005

MG Rover finally takes its last swig at the Last Chance Saloon and shuffles off into the sunset…


Longbridge production line stands idle – this memorable photo was taken by a couple of members of the 28DaysLater UK UE Urbex Urban Exploration Forums back in November, and cemented the feelings of many people that Longbridge will never be the same again…

THE old cliché, ‘what a difference a year makes’ could not be more apt to describe the calamitous fortunes of MG Rover during 2005. As we stand at the end of 2005, MG Rover is no more, and a few remnants have been picked up by the Chinese company Nanjing Automotive Corporation (NAC) for a paltry £53m. Rewind just one year to Christmas 2004, and it finally looked like the beleaguered car company was facing a brighter future in a collaborative venture with the Chinese company, Shanghai Automotive Industry Corporation (SAIC).

John Towers had gone on record to state that MG Rover and SAIC were about to sign a deal with in excess of £1bn, which would see future production of MGs and Rovers in China as well as the UK. The interview had been given on BBC Radio 4’s ‘Today’ programme, where he told presenter: “We are about to sign a deal with SAIC which will cement MG Rover’s future.”

Details of the deal were spread across the financial press, which stated categorically that there would be a £1bn investment from the Chinese into the venture, which would provide crucial liquidity for the MG Rover, thus securing 6100 jobs at Longbridge. If all this inward investment seemed too good to be true, the line being spouted by ‘off the record’ sources at MG Rover were that it would give ambitious SAIC a solid base in Europe as it sought to broaden its global reach.

This was a view also backed up by the then MGR communications director, Daniel Ward. He told The Independent that SAIC will own 70 per cent and MGR 30 per cent of the joint venture, and the aim was to produce one million cars per year. He added: “It is not a takeover, it’s a partnership”.

A shaky start to 2005

SAIC was pushing ahead with the joint venture as late as March 2005, as these documents produced for the MG Rover dealer network clearly demonstrate. Look closely, and you’ll see that Nanjing intended to take a 20 per cent stake in the venture…

It all sounded so good – and although MGR executives denied it, there were great expectations that the deal would finally be signed by the end of January 2005 – with off-the-record sources claiming it was the deadline they were all aiming at. There were dissenting voices in the press, of course, but in the whole, most MGR watchers felt that the deal would go ahead, remaining optimistic. Although the company would once again be owned by an overseas company, at least it would allow the Rover name to continue, and jobs to remain at Longbridge.

As we moved into 2005, the optimism of John Towers’ proclamation soon became tempered, by rumours that MGR was rapidly descending into a financial crisis brought on by falling sales. As it was, SAIC management quickly began to make it known that their investment was far short of the £1bn Towers was talking about, and in the end, it amounted to the £67m it paid to purchase the Intellectual Property Rights (IPRs) for the 25- and 75-series cars and the K-Series engine – and the pledge of another £133m to get the RDX60 into production…

However, the deal’s prospects still looked good, even if the end-of-January deadline came and went.

Senior managers at MGR called in dealer principals and suppliers to allay their fears about the company’s finances, by revealing a number of upcoming models, as well as confirming that the deal with SAIC would be going ahead as planned. In fact, one journalist who visited the site in March had been told quite succinctly that the deal was all but signed – and because it was multi-faceted, and consisted of a large number of contracts, MGR wanted the all documents signed before going on the record.

Meanwhile, the design department was getting frustrated. RDX60 had been on hold since 2003, and although a full-size running mock-up had been built in 2003, production remained far-off. The design department headed by Peter Stevens wanted to show the world the new car, before it was too late – and in an amazing move in February, leaked one of its own images to the press in order to confirm that the project wasn’t dead in the water. It was a mocked-up image, but it did what was intended of it – to get the media talking about the product, and not the politics…

Desperation sets in

A measure of desperation was behind the ‘leaking’ of this image to the UK’s press. It was obviously in in-house fake, but got the press talking about RDX60 after a long period of inactivity…

MGR was now desperate to get the Chinese on board, knowing that there was no way it could fund productionisation of the vitally important new car without a fresh injection of cash. As recently as 2005, however, management had been sticking to its claim that it could get the car into production on its own.

Internally, all was not well. In November and December of 2004, MGR finance people were asked to compile asset registers for the 25- and 75-series cars. These would detail all the usual production information in addition to more unusual variables – such as how big and heavy the tooling was, and what kind of containers they could be shipped in. Suppliers were also telling us that the 25 and K-Series engine would definitely be shipped out to Shanghai, and plans were at an advanced stage.

Job insecurity within the plant increased after this news spread – just in time to meet a number of internal restructuring moves, which would see a number of white collar job losses. News stories continued to question why the deal wasn’t yet signed, and as we moved into March, it became clear that the Chinese were still unhappy about the deal with MGR. A working party left Longbridge to try and put things back on course, but things were beginning to look increasingly grim. At the end of March, a team of senior Department of Trade and Industry officials, sent with the blessing of Tony Blair, joined them in their efforts to save the deal…

The week from hell

At the beginning of April, and within the space of one short week, it all went wrong.

The seeds of MGR’s final destruction were sown on March 31, when stories about the deal faltering were broke in the media. Suppliers reacted immediately by halting deliveries and cancelling all forward orders – as far as MGR was concerned, there was now no money left in the kitty to dig itself out of this situation. As it was, suppliers had threatened to take this action back in November, and it was only the raft of premature announcements about the SAIC deal that persuaded them to stay in the game…

On Monday, April 4, the story had gone into meltdown, with The Independent reporting that MG Rover would be forced to call in administrators by the end of the week unless an emergency £100m loan is made available from the Government. Once the story went public, any chance of doing a deal with SAIC appeared to be dead – even if MGR’s pleas for emergency funding from the government were acted upon.

During the week, negotiations between MGR, SAIC and DTI representatives continued, but made little progress. The Government confirmed that in order to keep the deal alive, the Department for Trade and Industry (DTI) offered an emergency bridging loan of £100m, the idea being that the extra finances would keep MGR in business long enough to cement the deal. John Towers flew out to Shanghai to join in negotiations, and made a passionate plea to the Chinese to close the deal – but after fevered negotiations, the deal was called off because Phoenix management was unable to confirm that MGR were in a position to remain solvent for the next two years…

On Thursday April 7, it was over. At 11.00am, Birmingham local radio announced car production had been suspended at Longbridge, and news rapidly spread. The suppliers’ issue was now in the public domain, and was seen as another nail in MGR’s coffin. The DTI’s offer of £100m was dependent on SAIC remaining in the game, but now it had withdrawn from the negotiating table, there was nowhere left for MGR to go. DTI Secretary, Patricia Hewitt travelled up to Longbridge to clarify the company’s current situation and at 10.15pm that evening she closed the coffin lid shut for good by announcing that MG Rover had ‘called in the receivers’…

The following morning, it was made official – Phoenix confirmed it had called in the administrators – PricewaterhouseCoopers (PwC) – and made the statement that it would be trying to secure the best possible future for MGR and its employees. Stunned employees didn’t know what to do, and many congregated outside Q-Gate waiting to hear any further information. Any last hope that the government would step in and save the company were quashed that evening, though, when Tony Blair and Gordon Brown turned up at Longbridge and ruled out a government buy-out – election, or no election.

John Towers returned from China, and was still talking in terms of a deal being reached…

5000 redundancies

Tony Lomas, a senior insolvency partner at PwC recalled: “By Saturday, our team had a fairly clear idea of the company’s true financial state. There had not been enough money to pay suppliers the cash on delivery they had demanded. There was not even enough to pay another week’s wages. It was clear that we were going to have to make 5,000 redundant on the Monday morning.” After what was probably the worst weekend of their lives, Longbridge employees returned to work on Monday, April 11, only to be sent home again on full pay. The DTI bought workers a short reprieve by loaned PwC £6.5m to finance operations for a further week, although this would possibly be added to if a potential suitor could be found, or SAIC was encouraged back to the table.

No deal was reached, and at 10.52am on April 15, and with final confirmation that SAIC were not going to negotiate after a week unsuccessfully attempting to get the Chinese back on board, PwC announced that it would be making 5000 Longbridge workers redundant, while it continued to prepare MGR’s finances for the administration process.

As has subsequently been revealed, a few cars have subsequently rolled off the production line since the production freeze, but not a significant number.

In the following weeks, PwC worked out that MGR’s total liabilities were £1.4bn, and that most of its creditors would receive a tiny amount of money owed – if anything at all. It was a dark scenario, and because MGR didn’t own much in the way of assets (only the production lines could be truly considered assets suitable for sale), there were few parties seriously interested in buying the remnants from PwC (after sifting 200 expressions of interest). In the end, it came down to a three-horse race between SAIC, Nanjing Automotive Corporation (NAC) and David James (Project Kimber).

Nanjing turned out to be the dark horse. According to Tony Lomas, they were serious: “By the end of June I had an unconditional bid from it for the whole company.” James came back with a lower offer for the whole group, and SAIC insisted it only had eyes for Powertrain. Privately, SAIC sources were saying that they did not consider NAC’s bid to be serious one. It was not until the last week of the sale that SAIC finally realised it was about to lose out.

Lomas added: “By the end of July, I was satisfied that Nanjing could pay, so I was running for the line with their bid while trying to encourage the others to do more. The week before we were due to sign, I called them both and said, ‘look, we are very close.’ This finally prompted an offer from SAIC for the whole business. But it was not an unconditional one and not as high as that of NAC. On the Friday night (July 22) when we were about to sign, the SAIC offer was still conditional and still less than Nanjing. And Nanjing was running out of patience.”

Sold to Nanjing

Longbridge production lines are being shipped out to China…

Just after 7.00pm that evening, Tony Lomas announced NAC as winning bidders following a three-and-a-half-month sale process, and confirmed that once again, Longbridge would be under foreign ownership, for the grand price of £53m. That MGR’s new owners were going to be Chinese was never in any doubt, but surprised everyone that it wasn’t SAIC that took the reins of what was left – thereby completing the process of exporting MG Rover to China that it started in the Autumn of 2004.

The company had joined forces with the Uk-based design consultancy, Arup, to produce a number of production proposals with which to woo PwC – and they seem to have worked. The designs looked good – and as one correspondent confirmed: “What you didn’t see at the press launch was that some of the drawings showed cars wearing AUSTIN badges.”

Immediately after the sale, SAIC announced that if Nanjing was to get the cars into production, the two parties would need to talk, otherwise it would protect its £67m investment in the courts if necessary. As it was, SAIC was busy setting up a new factory near Shanghai to build its own version of the 75, known internally as the SAC528.

It was a controversial state of affairs, and one that has yet to be settled as we move into 2006.

Nanjing has been busy removing the production lines from Longbridge, and has confirmed that it will be producing ‘our’ cars in China under the MG and possibly Austin model names. Shortly after the sale was confirmed, NAC announced it had joined forces with GBSC (another bidder to PwC, which was headed by Powertrain boss, Fraser Welford-Winton), and was deadly serious about restarting production in Longbridge with a little help. As for SAIC, it also intends to produce the 75 in Shanghai, although it is still a matter of debate as to what badges it will wear, as BMW owns the Rover marque name, and will only allow its use by another manufacturer if the price is right.

Despite much skepticism from the press, NAC has gone on the record as saying that it intends to restart production at Longbridge, and this is an opinion backed up by many people who have dealt with its management, but it remains a huge undertaking. There are British workers still at Longbridge who are assisting NAC with its plans, and they are convinced that the Chinese are determined enough to push through their plans.

We await the developments with anticipation, because this time last year, we all knew Longbridge would be Chinese owned – what we weren’t prepared for was the legendary British factory not actually producing any cars under its new management…

Without doubt, 2005 will be a year to remember for all the wrong reasons.

Arup’s take on future MG Rovers…

Keith Adams

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