News : January 2008

Want to learn all about the Longbridge tunnels?

Picture: Michael Scott, Photo Addition

DID you know that there was an organization called ‘Subterranea Britannica’? I suspect few people do. It is for people with a deep (pun intended) interest in underground features of any age in Britain, such as mines, caverns, bunkers, ice houses and tunnels.

In its Bulletin of April 2007, pages 3-30 are devoted to a fascinating history of the very complex tunnels and other underground features at ‘The Austin’, Longbridge. This was researched and written by Austin Ex-Apprentice Neil Wedgbury, who did a vast amount of digging (pun intended) amongst various archives and people’s memories – including his own. Neil made full use of the opportunities presented to him as an apprentice in the 1960s to explore much of the tunnel network in person!

The history includes many interesting details of Longbridge’s war time work as well as more recent stories such as the great Tunnel Fire of 1978, with extensive illustrations and photographs. You may have seen the photographs of some of the tunnels taken by 28dayslater after the closure of large parts of Longbridge, but to really understand what these tunnels were about, you need this history.

Find out how you can obtain a copy of the Bulletin (£5 inc. P&P) by emailing Neil on

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News digest


BMW’s Proposals For A Fourth Brand

Triumph’s motorcycle logo is pretty… but BMW have reportedly decided not to relaunch Triumph as a
‘green’ car brand. (Picture: Picasaweb)

BMW: We may need a ‘green’ brand
By Diana T. Kurylko, Automotive News Europe 21st January, 2008

The new US fuel economy standards are squeezing BMW so tightly that it might create a fourth brand to sell ecologically friendly cars. BMW must find a way to satisfy growing pressure for vehicles with lower emissions and better fuel economy, says Stefan Krause, BMW AG’s board member for sales and marketing.

But it must do so without distorting the images of its existing three brands, BMW, Rolls-Royce and MINI. A new green brand could include front-drive cars and crossovers that would not easily mesh with the BMW brand’s rear-drive lineup. Despite its fuel cell research and lineup of sophisticated diesel engines, the company has concluded that the BMW brand should not be stretched too far.

‘We cannot take the blue out of BMW and change it to green,’ said Krause. ‘Maybe we could add a fourth brand.’ In an interview last week with Automotive News, Krause said his company has rejected three green options:

1. Transforming MINI. The brand’s lineup of small cars have good fuel economy, but BMW doesn’t want to risk diluting MINI’s quirky appeal by adding too many models. And although Mini offers a diesel engine in Europe, vehicles with that powerplant can’t be sold in the United States because they don’t meet California emission standards.

2. Buying another brand. BMW evaluated several brands — including Saab and Volvo — but concluded that none of them meets its needs.

3. Reviving a British brand. BMW has shelved proposals to bring back one of the British brand names it owns, such as Riley or Triumph.

Despite talk of starting a green brand, BMW executives are unsure how badly their customers want fuel-sipping vehicles. ‘People go to cocktail parties and talk about being green and then drive home in their M6s,’ Krause said. BMW went public with its deliberations last September, when CEO Norbert Reithofer unveiled his corporate strategy through 2020. Reithofer’s longterm plans included a possible fourth brand.

At the Frankfurt auto show, Reithofer admitted that he and two other executives have been dubbed the ‘greenies’ on the company’s six-member management board. Since then, BMW has been mum on the subject — until last week, when Krause spoke with Automotive News.

TATA And Jaguar/Land Rover

Jaguar-Land Rover ready for new owner
By Arjen Bongard, Automotive News Europe 21st January, 2008

Jaguar and Land Rover are in good shape ahead of their expected sale by parent Ford Motor, said Geoff Polites, CEO of the two automakers. In an interview at the auto show here, Polites declined to comment on Ford’s discussions with Tata Motors about the sale, which is expected to be announced during the first quarter. But he indicated the management team looks forward to working with a new owner.

‘No one in the team has said, ‘I want to go back to Ford,’ ‘ Polites said. ‘The team is pretty committed to do what it set out to do and that would include me.’ Polites was Ford of Europe’s sales and marketing head before taking over as Jaguar-Land Rover CEO in August 2005. He said a cultural change has taken place in the past two years at Jaguar-Land Rover.

He cited continuous improvement as a philosophy that has taken hold in the company and also said he has instilled a spirit of greater openness in the management team. ‘I don’t shoot the messenger; that’s not in my nature.’ said Polites. ‘It’s now part of the culture that bad news gets put on the table real fast and if you get bad news out really quickly, you can deal with it.’

Polites, in line with company policy, said that the Jaguar and Land Rover brands are ‘solidly profitable’ together. Land Rover is expected to post record 2007 unit sales. ‘We are on a roll,’ Phil Popham, Land Rover managing director, told Automotive News Europe last month. Company insiders say that Jaguar, a perpetual lossmaker, will continue to be in the red this year, but will meet its targets. Said Polites: ‘We’ve done a lot of work on our fixed costs and quality. What we now need is to work on the revenue.’

Ford, Tata have issues to resolve
Sources from both sides say they are working out the fine details of Jag-Land Rover sale
John Revill and Tony Lewin, Automotive News Europe 21st January, 2008

The new Jaguar XF soon could be benefiting Tata’s bottom line. The Indian automaker and Ford are trying to finalize the sale of Jaguar and its sibling Land Rover. Ford Motor and Tata Motors still have many issues to resolve as they seek to complete the sale of Jaguar and Land Rover. Earlier this month Ford confirmed it was in ‘focused negotiations’ with the Indian industrial group to buy the two British luxury marques.

Although senior Ford executives told Automotive News Europe they do not expect any problems, several obstacles need to be overcome before any deal is completed. An industry source familiar with Tata told ANE the main things to be resolved were the detailed day-to-day workings of the companies and how the automakers could be untangled from Ford.

‘There are all sorts of issues to be sorted out, but these are mainly fine tuning,’ the source said. ‘I cannot see any of them not being sorted out.’

The talking points

Purchase price: Although neither party has commented on a value for the combined businesses, experts have speculated on a price tag in the range of €1 billion to €1.5 billion. The fine details still have to be resolved, although this is not considered a major issue. Tata has the resources to complete a deal — in cash if necessary. One industry source said: ‘The purchase price was agreed some time ago.’

Ford’s long-term stake: Ford kept a 20 per cent stake in Aston Martin following its sell-off of the carmaker in 2007 and could be looking to do the same with Jaguar-Land Rover to keep influence over policy and sourcing. But Tata may want a full buyout. If that happens Ford will maximize the cash raised for its turnaround.

Status of Ford-group suppliers: Ford and Jaguar-Land Rover unions require that the next owner continue to source major components such as engines and transmissions from existing Ford sites.

Status of non-Ford suppliers: Will Tata look to leverage the benefit of lower cost suppliers in India? This could lead to some problems with the existing supply chain in the UK and Europe. But the industry source tells ANE: ‘There are no negotiations with the suppliers; they will stay exactly the same.’

Location of Jaguar-Land Rover headquarters: This is a highly emotional and political question, although Tata is unlikely to risk moving taking head office functions from the UK — at least in the short to medium term.

Future of the management team: The industry source said the management was likely to stay exactly the same. That is what happened when Tata bought steelmaker Corus in 2007. ‘They will keep the management in place; that is what they want. They want to keep the people who understand the business.’

Future relations, technology access: Peter Cooke, KPMG Professor of Automotive Management at Buckingham University in central England, told ANE: ‘The key issue is the ongoing supply of components and powertrain and how much Tata will have to pay for the benefit it is getting from Ford’s research.’ Cooke said this would be separate from the purchase price and would involve detailed negotiations.

He said: ‘They will have to agree on engine prices and a formula for buying the research. This deal will have a lot of future commitments.’

New fears over Longbridge
Jon Griffin, Birmingham Mail 22nd January, 2008

TWO-and-a-half years after it was bought by Nanjing, Longbridge has yet to deliver a single car to a UK showroom. Today, unions said they had ‘grave concerns’ over the future of the Chinese-owned world famous car plant. And Nanjing, which has now merged with former rivals Shanghai Automotive Industry Corporation, refused to make any comment on the timescale for the re-launch of the MG.

The firm’s spokeswoman Eleanor De La Haye said she was no longer ‘fully briefed’ on the long-awaited resumption of volume production at Longbridge. The UK’s top union car industry organiser Dave Osborne said he had written to bosses at Nanjing pressing for an urgent meeting with the plant’s Chinese bosses. Unions revealed that a previous letter in November expressing concern at the ‘painstaking’ progress of the re-launch of the MG brand had been brushed aside.

Mr Osborne, national automotive industry secretary for the T&G arm of Unite, said: “I had written to the company to say that we wanted a meeting because we felt that progress on the relaunch of the MG brand was painstaking to say the least, if not non-existent: ‘I sent that letter in November. I have heard nothing since, only to say that they were extremely busy. Last week, I sent them another letter trying to find out if we are still dealing with Nanjing or if there are now some others who are currently responsible for Longbridge. We had a big media event in May last year; they had the press in and showed off three cars that were hand-built. I do not know how far it has got since then.

‘We have grave concerns at the lack of progress on re-launching the brand. Now, in the light of recent events, we are requesting an urgent meeting to understand the status of the Nanjing and SAIC relationship. As I understand it, SAIC have taken over Nanjing. We hope that SAIC’s plans for Longbridge are a lot more positive than Nanjing’s have turned out to be.’

Mr Osborne added: ‘This just confirms our view that we believe that the administrators should have sold the assets of Longbridge to SAIC.’

Nanjing beat SAIC to the race for the car factory in July 2005, just over three months after it closed with the loss of 6500 jobs after racking up £1.4bn of debts.

Nanjing ‘gag’ over relaunch
Jon Griffin, Birmingham Post 22nd January, 2008

NANJING’S plans to bring Longbridge back from the dead were today shrouded in mystery after Chinese bosses muzzled their UK press manager. Eleanor De La Haye, Nanjing UK corporate communications manager, said she was no longer ‘allowed’ to reveal details of Nanjing’s plans for Longbridge. ‘At this moment in time, I am not fully briefed about what the short-term or the long-term plan is, in terms of a timescale,’ she said.

‘There has been some speculation that we do not stick to our deadlines and I want to put a stop to that. I cannot comment because I do not want to drip feed information.’

Ms De La Haye said she could no longer comment on when volume production would relaunch at Longbridge, or how many employees were on site. She said all efforts were now being put into the merger of Nanjing and SAIC, announced in late December. ‘I think that that process is going to take some time. As a corporation, we are absolutely delighted at the merger – the focus is on merging these two companies together,” she said. “There are lots and lots of things happening. We are running an active recruitment drive, but I do not have the exact figures.

‘There are a lot of reciprocal visits between Shanghai and Longbridge, and Longbridge and Shanghai. They are getting the measure of the business and what we can achieve.’

In September last year, the Birmingham Mail revealed that up to 60 hand-built MG TFs had at last rolled off the Longbridge production line. But the motoring world continues to wait for the UK showroom debut of the model.

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News digest


TATA and Jaguar/Land Rover

Jaguar dealers: No fears over Tata sale
By Michael Knauer, Automotive News Europe 14th January, 2008

BONN – Jaguar and Land Rover dealers in Germany say they are far less concerned than their US counterparts about the looming sale of the elite British brands to India’s Tata Group. Media commentaries on both sides of the Atlantic have predicted that a sale to Tata would erode the two brands’ aura of exclusivity, while some American dealers have publicly called on owner Ford Motor Co. to find another buyer. The two luxury brands are part of Ford’s Premier Automotive Group.

Georg Hilgers, managing director of the Jaguar and Land Rover dealer group in Germany, says the central question is how the Indian manufacturer of trucks and small cars will manage the luxury brand. ‘Provided that the new owner understands that Jaguar and Land Rover will always connote a piece of British nobility, we have no reason for worry,’ Hilgers said.

For now, the mood among dealers is positive. ‘That’s because everyone knows that Tata is a solvent company.’ Hilgers said. By comparison, Ford’s tight financial condition has always been a source of concern for dealers, he said. Hilgers said examples of Ford’s sometimes penny-pinching management blunders include the unpopular Jaguar X-TYPE, the result of a clumsy attempt to leverage platform savings.

In addition, Hilgers said, dealers prefer Tata to a private equity investor. ‘Jaguar customers even in Germany feel closely tied to their dealers and have a strong claim to exclusiveness,’ he said. ‘We don’t want to lose that with a sale.’

Germany’s 94 Land Rover dealers are even more relaxed than the country’s 56 Jaguar dealers about an Indian acquisition, Hilgers said. ‘Ultimately, the decisive factor for the customers is that production remains in the UK,’ he said. ‘Where the parent company has its seat is secondary.’

Land Rover ‘strongly in profit’
Automotive News Europe/Reuters 14th January, 2008

DETROIT (Reuters) – Ford’s Land Rover luxury unit ‘is strongly in profit at the moment,’ the unit’s managing director said on Sunday. ‘We haven’t found the ceiling yet in some of (the emerging) markets,’ Phil Popham told Reuters in an interview on the sidelines of the North American International Auto Show, adding that he sees ‘positive signs for this year.’

In 2007, Land Rover’s global sales increased nearly 18 percent to 226,395 vehicles, driven by a 96 per cent increase in sales in Russia and a 143 percent increase in sales in China. Ford does not break out the financial results of individual brands.

Popham said the British brand, which sells luxury sport utility vehicles, last year sold around 30,000 vehicles in markets it did not even have a presence in five years ago. The brand is planning to expand its dealership network, improve infrastructure such as warehousing and add more people in emerging markets, Popham said. Land Rover expects Russia to be a leading market, along with the United Kingdom, he added.

Popham also said the brand sees growing potential in India and is looking at the market for additional growth. ‘India is a market we are considering,’ he said. Land Rover along with sister luxury brand Jaguar is in the process of being sold by Ford, which said earlier this month that it had selected India’s Tata Motors as the frontrunner to buy the units.

Ford, which bought Land Rover from German premium carmaker BMW in 2000, has said it expects the sale of the unit and Jaguar to close in the first quarter. Popham said he does not expect any changes due to the impending sale. ‘Our assumption is business as usual,’ he said. ‘The management board of Land Rover has met with all our bidders.’

Popham also said the brand is committed to improving its quality, which has been lagging other nameplates the past few years. It was placed last in J.D. Power’s 2007 Initial Quality Survey, logging 170 problems per 100 vehicles, but was the most improved brand in the study.

Jaguar expects much stronger 2008
Automotive News Europe/Reuters 14th January, 2008

DETROIT (Reuters) – Ford’s Jaguar unit expects to see a far better year in 2008 than 2007 largely due to the upcoming launch of its XF luxury saloon, the unit’s top executive said on Sunday. ‘In 2008 we are expecting a much stronger year in terms of sales,’ Mike O’Driscoll, Jaguar managing director, told Reuters on the sidelines of the Detroit auto show. ‘The previews for the XF have been great, as has the reaction of potential customers.’

CJ O’Donnell, Jaguar’s head of global marketing, said widespread fears of a potential US recession has not had any impact on prospective sales, with advance orders for the new XF sedan – which starts at around $50,000 – already above 6500 worldwide. The XF is due to start going on sale at dealerships in some markets at the end of February or early March.

‘So far the orders have come predominantly from people who have never touched and never driven an XF,’ O’Donnell said. Jaguar saw its US sales slide 24 per cent to 15,683 vehicles in 2007, which O’Driscoll said was due to the discontinuation of sales of its X-TYPE model in this market. O’Driscoll said he was unable to make any comment on negotiations between Ford and India’s No. 3 car maker, Tata Motors, which has been named as the front runner to buy Jaguar.

Jaguar sales in China in 2007 totaled around 1000 vehicles, which O’Donnell said put the country just inside Jaguar’s top ten markets. ‘Within three years China should be in our top five markets and some would argue it will be in our top three,’ he said.

Jaguar is not present in the Indian market but O’Driscoll said the company plans to enter it ‘within a few years.’

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Land Rover LRX: a big hit in Detroit


The sale of Jaguar and Land Rover to India’s Tata Motors Limited appears to be progressing well but the two British-based companies clearly demonstrated a ‘business as usual’ approach at this week’s North American International Auto Show (NAIAS) in Detroit.

Land Rover unveiled the LRX Concept late on the opening day of the NAIAS and, in doing so, scored what was widely regarded as one of the biggest hits of the show. The LRX Concept hints at the compact off-roader which may well become Land Rover’s new entry model if the company’s new owners give the car the go-ahead.

The three-door LRX matches handsome, purposeful, looks to a clean 2.0 litre turbodiesel hybrid powertrain which produces only 120g/km of CO2 emissions. The hybrid system incorporates an integrated Electric Rear Axle Drive (ERAD) so that electric drive alone powers the car at speeds of up to 20mph. However, unlike other hybrid technologies used on other SUVs, all four wheels remain mechanically driven.

This year marks the Land Rover marque’s 60th Anniversary and the LRX Concept was displayed alongside a 1948 Land Rover. Land Rover’s Managing Director, Phil Popham, emphasised the links between the old and the new, saying: ‘LRX is in every respect a Land Rover, but it’s a very different Land Rover’ and adding that ‘at this stage, LRX is purely a concept, designed to help us develop our thinking as well as gauge customer reaction — but this feels like a hugely exciting direction to take.’

The LRX was the first Land Rover to be developed by the company’s own Design Team since Gerry McGovern became Director of Design. Gerry McGovern maintains that ‘LRX is a design born out of passion for the brand, but it is different, relevant, engaging and exciting — because Land Rover has never built ordinary cars.’

AROnline understands that one of the key terms of the Tata Motors/Jaguar and Land Rover deal may well be a provision precluding Tata Motors from closing any of the two companies’ plants in the UK for a period of five years. However, while such a stipulation will safeguard jobs at Halewood and Solihull in the mid-term, AROnline reckons that all three plants will be needed if the LRX does, as widely expected, become the LR1 and Tata Motors chooses to re-launch the Rover marque in Britain and Europe.

Indeed, if the predicted re-introduction of the Rover brand occurs, the prospect of a C/D segment Rover-badged Jaguar X-TYPE replacement with input from, say, Land Rover’s Design Team must be a pretty enticing one…

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Tata Indica V3: a Rover 25 successor?


The announcement of the Tata Nano at last week’s Auto Expo in New Delhi may well have attracted more global media coverage than any other new car launch in recent history, but even the most seasoned Automotive Industry journalists present seem to have rather overlooked the simultaneous debut of the Tata Indica V3.

The new Tata Indica V3 is larger than the current V2 being 3795mm long (as opposed to 3675mm), 1695mm wide, and 1550mm tall. There should be more interior room, too if the wheelbase of 2470mm (as opposed to 2400mm) is anything to go by.

Styling has been brought nicely up to date, featuring distinctive wide-eyed stylised headlamps with a pronounced signature Tata grille at the front and slim, full-length, tail lamps at the rear. The centrally-located instrument cluster is probably the most distinctive element of the interior.

Tata Motors Limited says that the new Indica V3 will be available with a new range of ‘world-class’ diesel and petrol engines which will include a new 1.3-litre Quadra-Jet common rail direct injection diesel engine, and a 1.2-litre Safire MPFI VVT petrol engine, which will be manufactured in the new Fiat-Tata JV company’s plant at Ranjangaon in Maharashtra. The car will also have a five-speed gearbox with overdrive and twist-beam suspension.

The Indica V3 will hit the Indian market during the latter part of 2008 at a higher price point than the current Indica V2, which will remain in production. However, AROnline believes that if, as seems likely, Tata Motors obtain the IPRs to the Rover name as part of the company’s acquisition of the Jaguar and Land Rover marques, there’s a real chance that a re-engineered Rover-badged version of the Indica V3 will be launched in Britain, if not Europe, during 2009.

Indeed, if AROnline’s forecast does become a reality, the Tata Indica V3 may, at least in the near to mid-term, have greater significance in Britain and Europe than the currently higher profile Tata Nano…

More photographs of the Indica V3 on

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Brian Griffin


BRIAN Griffin, son of BMC engineer Charles Griffin, and long-time Rover engineer himself has recently died following a short battle with Cancer. To MG enthusiasts, he will be primarily remembered for his work on the MGF project, turning into the fine-handling car that it was – but his involvement with the company is much more far reaching than that.

Rob Oldaker told AROnline, “I have known Brian since the early 1970s, but only worked very closely with him in the MG Rover era, where he worked for me as Motorsport Manager when I was asked to set up MG Sport & Racing Ltd alongside my day job of Product Development Director — Brian became my real right hand man, and very good he was at it too! Of course I knew Brian’s career throughout the period from 1970 to 2005 (apart from when I left to join Cosworth in 1993 and subsequently Bentley before returning in 2000).

“Brian’s greatest contribution being the MGF mainly developed at a time when I was not at Longbridge.

“Brian approached every project with the brain of an entrepreneur and delivery was always accomplished with great enthusiasm once he was happy with the concept. He was one of those guys who often supplied the answer to a question before the question was asked — a wonderful attribute, highly valued by myself. He was one of those quite rare people who looked at every angle to try to find solutions to solve issues in the most efficient way and often went just outside the rules to do so — in his roguish way!

“When Sport & Racing was begun, he was perfect for the job since, as everyone knows, motorsport success can only be accomplished in a single minded way where nothing must be allowed to get in the way — and large company rules sometimes don’t fit well with the motorsport approach to life — Brian, always with humour, played the game extraordinarily well and delivered so many worthwhile programmes and ideas. To Brian, thinking outside the box was very normal — in fact, he was never in the box!

“He was highly popular with those who worked around him and had that great attribute of getting on equally well with those above and below him in the organisation — what you saw was what you got. A good team leader and a great team player who loved nothing more than to ‘bring on’ the new or younger members of the team, by giving them appropriate responsibility — there will be many who can thank Brian for their individual steps up the ladder.”

We send our condolences to Brian’s family and friends.

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Have your say…

If you worked with Brian or want to relate your thoughts, please drop us a line

WHAT a bloody nice man he was. Between him and his father, they have been the backbone of BMC>MG Rover engineering. When I complained of a Sport & Racing product (a front splitter fitted to the ZR) he gave me his home phone number and said he’d sort me one out (admittedly for a small charge, but painted) How many other engineers would do that and invite you into their home?

His engineering into the BMW MINI will never be truly revealed; he was very sore about the subject when it was raised in conversation, much to Rob Oldaker and Adrian Guyll’s amusement and my embarrassement. He gave us his free time to talk at MGCC MGF Register events and was there to advise anyone who asked him about anything at the Sport and Racing sale – completely unpaid (and univited).

At Silverstone one year, he told me he couldn’t work for anyone else after a lifetime batting for BMC as his wife looked on, unamused. So sad and a true waste of talent when MG Rover went under.


I WAS very sad to hear of the passing of Brian, after an illness borne bravely and quietly. The softly spoken man with a twinkle in his eye was possessed of a dry wit, great skill and was always a pleasure to be with. Brian would always find time to come and chew the cud and was equally popular among his colleagues and outsiders alike.

Of course he came from a motor engineering background in as much as his father, Charles, was one of the few who had earned the respect of his staff, of Issigonis and other senior engineers and management in equal quantities – not an easy task and one rarely matched by many others. The Griffin family had been based in the Oxford area, and Brian’s first exposure to cars was Cowley-based, but the family moved to the Midlands in the 1960s when the BMC powerbase shifted to Longbridge.

I first came across Brian back in 1993 when I was writing the early draft of my book ‘MG The Untold Story‘. I had been told that Brian was someone I should speak to, and so phoned the Longbridge switchboard. The charming brummie girl on the other end of the phone said, ‘oh, that’ll be Broyan Griffin – Chief Engineer PR3’ which certainly let me know I was on the right trail! Understandably I didn’t get to sit down with Brian to talk about ‘PR3’ until shortly after the MGF – the end result of that programme – had reached pre-production phase.

I remember sitting down in a Longbridge office equipped with table, chairs, a large glass ashstray, two cups and a big steaming pot of strong black coffee. Empty at the start of our session, that ashtray was full to overflowing while my notebook was bursting at the seams with anecdotes. That was the first of many occasions; in later years, Brian backed off the ciggies but he never lost his sense of humour, dedication to practical engineering and his love of motorsport.

Many occasions saw Brian behind the scenes at MG motorsports events or factory-backed race programmes and he was one of the key people at MG Sport & Racing before the business sadly folded. Everyone who has cherished an MGF or indeed a TF owes a debt of gratitude to Brian.

Cheers mate!


More pictures of son-of-RDX60 appear…


SAIC/ROEWE’s plans to become China’s first successful car exporter seem to have taken another step closer to reality, as further images of its new 550-Series midliner appeared on the ‘net, revealing a credible looking saloon. Although it’s closely related to the RDX60 project, the conservatively styled, and seriously re-engineered W261 project has been developed in the UK and China to appeal to a global audience.

Powered by a 1.8-litre version of the K-Series engine, now mass-produced in China by SAIC, the 550 will sit usefully beneath the 750-Series, which has proved to be a modest success in the China, already selling 16,000 units in the first nine months of production. The big unanswered question about Europe is when will it appear – and 2009 is still looking favourable, now that SAIC owns the MG marque; a much more Euro-friendly banner to sell its cars under.

So, is the son-of-RDX60 going to be the new MG ZS? And will it be known as the MG 5? Certainly the dealers in the UK are still out of the loop on this one, although it’s clear that MG’s marketing team led by Steven Cox are playing a waiting game – despite, we hear, talking about a three car model range…

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Tata Nano: a 21st Century Ford Model T?


TATA Motors Limited’s Chairman, Ratan Tata, today unveiled his company’s People’s Car, the Tata Nano, at New Delhi’s Auto Expo and, in doing so, delivered on his promise to produce an Rs 1-lakh (c. £1300) car. The Nano, which will hit the Indian market during H2 2008, will be sold for 100,000 rupees (excluding VAT at 12.5 per cent and delivery charges) in standard form.

The four-door, four-seat Nano has the following dimensions: Length: 3.1m, Width: 1.5m and Height: 1.6m and bears more than a passing resemblance to the Mitsubishi i. Indeed, like the Mitsubishi, the Tata Nano has a rear-engined, RWD, powertrain but has a two cylinder, all-aluminium, 623cc petrol engine with Bosch multi-point fuel injection producing 33PS and a four-speed manual transmission. Tata Motors claim that the Nano delivers 50mpg, meets Euro IV emissions regulations and has a maximum speed of 65mph. The Nano will be available in both Standard and Luxury versions with a wide range of body colours and other options including air-conditioning.

Tata Motors maintain that the Nano’s emissions and safety performance exceed India’s current regulatory requirements and believe that the model will create a new segment between that country’s predominant scooters and conventional entry level City/Minicars.

Indeed, India’s reliance on basic two-wheeled transport inspired the People’s Car concept. Ratan Tata: ‘I observed families riding on two-wheelers — the father driving the scooter, his young kid standing in front of him, his wife seated behind him holding a little baby. It led me to wonder whether one could conceive of a safe, affordable, all-weather form of transport for such a family.”

However, while Tata Motors’ main focus will be on the Indian market for the next two years, the company then intends to export the Nano to Africa, Latin America and South East Asia. Indeed, during a post-launch Press Conference, Ratan Tata confirmed that the Nano had been developed with Europe in mind and met ‘the offset-frontal and side-impact tests international markets require.”

AROnline believes that such a European launch may even be vital to the Nano’s model cycle profitability and understands that any European versions of the Nano would have larger engines, including a diesel option, and more advanced features. Ratan Tata has been quoted as saying: ‘You can have a version that sells for two or three times the price of the base car. I don’t see this, over time, as being any less profitable than an ordinary car.”

Ratan Tata really does seem to be about to follow in the wheel tracks of Henry Ford’s Model T by playing a significant role in bringing the Developing World’s transportation firmly into the 21st Century. Any critics with environmental concerns should, perhaps, remember that Tata Motors are expected to have pre-production prototypes of the Compressed Air Technology CAT-engined car being developed with Moteur Developpment International (MDI) of France running later this year (See News Digest: 9th January, 2008). AROnline reckons that a CAT-engined Tata Nano must be on the cards.

Ratan Tata’s vision, in any event, suggests that Tata Motors would be worthy custodians of Jaguar and Land Rover if that company does acquire the two marques from Ford. Ironic then that Jaguar and Land Rover’s destiny should rest with the company behind the 21st Century’s Ford Model T…

Tata People’s Car website

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News digest


TATA and Jaguar/Land Rover

Tata confirmed as Jaguar front-runner
By Amy Yee and Bernard Simon, 3rd January, 2008

Ford Motor on Thursday confirmed it was ‘committed to focused negotiations at a more detailed level’ with Tata Motors, India’s largest carmaker, about the sale of Jaguar and Land Rover, its two UK-based luxury brands. Half a world away, in more ways than one, Tata prepares to publicise its long-awaited Rs100,000 ($2,500) ‘one-lakh” car at the Delhi auto show next week.

The two initiatives highlight the potential benefits of diversification but they also underline the risks of managing vastly disparate businesses. Efraim Levy, automotive analyst at Standard & Poor’s equity research arm, said Tata would be able to invest in Jaguar and Land Rover in ways Ford could not afford to. The Indian group would also expand its global presence and increase its prestige.

However, Mr Levy added, Tata faced the risk that ‘these brands could distract management and divert funds needed to focus on its growing home market, where we see Tata’s light vehicle segment facing market share challenges’. Tata’s offer for Jaguar and Land Rover is said to be in the range of £900m to £1.1bn. The Indian group said it was ‘very positive about the prospects of this business going forward’.

However, a deal is not a foregone conclusion. Ford cautioned that ‘a considerable amount of work’ remains. Continuing talks will cover about 40 separate items, ranging from engine production to information technology systems. And the US carmaker suggested it was keeping the door open to two rival bidders: One Equity, the private equity firm whose bid has been led by Jac Nasser, a former Ford chief executive; and Indian automaker Mahindra.

Ford put Jaguar and Land Rover on the block last year as part of a scheme by Alan Mulally, its chief executive, to focus on its flagship Ford brand and to insulate the Detroit carmaker’s balance sheet from a continuing cash drain from North American operations. The US group does not disclose detailed financial data about particular brands but has said Jaguar and Land Rover combined earned a ‘small’ profit in the third quarter of 2007, due mainly to cost reductions. Tata is already the dominant producer of commercial vehicles in India and it has increasing sales in the small car segment. It also collaborates with Fiat to introduce medium-priced vehicles into India.

The two historic brands would provide Tata Motors with distribution marketing networks in western markets, particularly the US. And the powerful visibility of the brands would help put Tata on the map in terms of western consumer awareness. However, Tata has already encountered resistance at Jaguar and Land Rover. The head of a Jaguar dealer group in the US voiced concerns that an Indian owner would tarnish the car brand. Also, some analysts question how Jaguar and Land Rover would fit with Tata’s utilitarian portfolio of buses, trucks and small cars.

‘I’m confused as to what either party gets out of it,’ said Michael Tyndall at Nomura Securities in London. ‘Tata gets recognition on the global scene. You could argue that it gets technology expertise. But… overlap between the two company’s product portfolios is practically zero.’ Tata’s passenger cars consistently rank at the bottom of authoritative quality and satisfaction surveys conducted by JD Power, a consultancy.

‘If someone as big as Ford hasn’t managed to resolve [problems at Jaguar and Land Rover], I would be slightly concerned,’ said Mr Tyndall.

Additional reporting by Joe Leahy in Mumbai, Copyright The Financial Times Limited 2008

‘Tata is best for Land Rover and Jag jobs’
By John Revill, Birmingham Post 4th January, 2008

Tata would be the best guarantor of jobs in the Midlands if it completes the purchase of Jaguar and Land Rover, it was claimed last night. The Indian carmaker also looks to be best placed to take the two brands forward as Ford battles its own shrinking sales in the US. According to figures yesterday, sales of Ford cars in its American heartland were down 9.2 per cent in December, taking the overall car sales down 11.9 per cent to 2.918 million during 2007.

Within that, Jaguar continued to struggle with sales down two per cent in December to 1,522, while the year to date saw a 24.2 per cent fall at 15,683. Land Rover sales were also down in the US – 18.7 per cent during December to 4,887, although in the year to date they were 3.7 per cent up at 48,550. Peter Cooke, professor of automotive management at the University of Buckingham, said: “Given the way the pound/dollar relationship has gone, with the dollar slipping, the preference for keeping jobs in the UK would be Tata.

‘If the American firm One Equity had bought Jaguar-Land Rover there was a real risk of jobs being exported to the US. Tata is more likely to be there for the longer term, which is the preferred situation. It would use Land Rover and Jaguar as a base for the development of premium products themselves and in the longer term I would expect Tata products to come to the UK.’

Jaguar employs 2200 at its factory at Castle Bromwich, where it makes the XK, XJ and new XF car, while Land Rover employs 5700 at the Lode Lane plant in Solihull making the Discovery, Range Rover and Defender 4x4s. The firms share the Halewood site in Liverpool, which employs 2200 people making the X-TYPE and the Freelander, as well as R&D sites at Gaydon in Warwickshire and Whitley in Coventry.

Prof Cooke said he expected Tata to keep Jaguar-Land Rover, develop the companies and put in more money for development. ‘When you look at how they operate with other companies they let them get on with it. They bought Corus and Tetley tea and they helped those businesses develop. Tata is already a global company, and is going to be even more of a global company.’

Prof Cooke said Tata definitely had the funds to take Jaguar-Land Rover forward. ‘They paid cash for Corus, so they are definitely big enough. This is a further sign of the orientalisation of the motor industry.’ Tata would help Jaguar and Land Rover to grow in south Asia as well, where many people’s first cars were luxury vehicles. Prof Cooke was positive about Ford’s records at the two companies.

‘Ford’s stewardship has kept them both afloat, the problem for Ford was its losses in North America. I think Ford would have liked to keep them on; the most successful players all have a really top-of-the-range brand.’ He did not think Indian ownership would damage sales at Jaguar or Land Rover, with both having sufficiently strong brands.

In the future Jaguar will need more investment and continue its move up-market, while both companies needed help to reduce emissions to meet new EU controls. ‘With a company that is not in trouble behind it, they will be able to do that. Tata is a huge IT company for example and electronics is becoming increasingly important in cars. Land Rover is going great guns at the moment, but can only thrive with Tata’s global distribution experience. Lots and lots of Land Rovers are sold in India. Both have a string of new products being developed, and that will continue, it will even accelerate.’

Everyone would win from the deal, added Prof Cooke.

‘Tata gets two global brands, it gets global distribution in markets it has not had strength before like Western Europe and North America. It gets amazing engineering capability, and the acquisition brings global credibility to Tata. Jaguar-Land Rover gets to stay in the UK, and get the access to funding they need, while Ford gets the money they need, although maybe not as much as they wanted.’

Land Rover staff still in dark over Tata buyout
Birmingham Post 4th January, 2008

Confusion continued to reign among Land Rover workers as their shift at the Solihull plant ended last night. News that Tata Motors were Ford’s preferred bidders was included in a note from Geoff Polites, chief executive of Jaguar Land Rover, apparently circulated to staff yesterday morning. It stated that Ford, who own the to Midland car manufacturers, ‘will proceed with further substantive discussions’ with the Indian firm, which also own steel firm Corus.

But the mood outside Lode Lane as the day shift clocked off was one of indifference and scepticism, with many employees claiming not to have seen or heard about the letter. Pete Corfield, of Sheldon, who works in the paint shop, said: ‘I’ve seen no note today, we’re always the last to know, but if this means we keep our jobs we’ll be happy, but I suppose we’ll just have to wait and see.’

Sonia Rose, who was ferrying colleagues home, added: ‘The only thing we want to hear is that our jobs are safe, but this is the first I’ve heard about it.’ Daniel Turvey, who lives in Billesley, Birmingham, and works in the bodyshop, echoed his colleagues sentiments. ‘We’ve not heard anything and I think people will take a lot of convincing over this, although I would like to think that whoever buys us will keep the staff on,’ he said.

Dwayne Edmonds, of Chelmsley Wood, who also works in the body shop, added: Mostly people are just worried about getting paid. Until now we didn’t know if we were going to be sold or not, so hopefully this announcement will be good news for everyone.’

However Kevin Allford, of Shard End, who works in the T5 body shop, had read the letter but admitted ‘it doesn’t put my mind at rest.’ He added: ‘We hope this will go ahead but really it’s just another set of bosses. I may sound jaded but I’ve worked here for 15 years for three different firms – Aerospace, BMW and Ford – so what happens next we’ll have to wait and see.’

Robert Hanrahan, of Acock’s Green, who also works on the T5 assembly line, said: ‘I’ve heard we’ve got Tata taking us over and I suppose whatever will be, will be, and as long as our jobs are safe I guess it’ll be business as usual.’ Despite the mixed reception to the news Nick Seale, principal fellow at Warwick University’s International Manufacturing Centre, claimed it ‘will take a lot to derail this deal now’.

‘Although this is not the final deal, the two firms still have a lot to do, but Ford have selected Tata to go on to the final stages, which I think is positive,’ said Mr Seale. ‘It might take more time but it would take a lot to derail this deal now, but this should at least remove uncertainty for the workers and unions.’

Tata wants Ford man for Jaguar-Land Rover
Ray Hutton, The Sunday Times 6th January, 2008

RATAN TATA is expected to appoint a senior Ford executive to run Jaguar and Land Rover, the two British carmakers that he is on the point of acquiring. Ford last week confirmed, as revealed by The Sunday Times in November, that Tata was preferred bidder for the British marques. The American group is selling them as part of a major restructuring plan. Senior industry sources said last week that Tata was likely to name a top Ford executive in Europe as chief executive of the Jaguar-Land Rover group. The current chief executive is Geoff Polities, an Australian car-industry veteran.

It is understood that Tata plans few immediate changes to the businesses, with the UK operations and model plans kept intact. Tata will this week reveal the scale of his automotive ambitions when he unveils his long-awaited ‘people’s car’. The ‘one lakh’ car (one lakh equals 100,000 rupees or about £1225) is specifically for India and neighbouring countries. It is a small, four-seater hatchback intended as a step up from motorcycles and three-wheelers. The price is about half that of the cheapest new car on the Indian market.

It has a steel chassis and plastic body panels, and is powered by a 660cc two-cylinder engine.

British brand sale a good deal
By Mark Phelan, Detroit Free Press 6th January, 2008

Ford’s announcement that it’s working to sell its Jaguar and Land Rover operations to India’s Tata Motors is the best news fans of the prestigious British brands could hope for, and potentially a darned good deal for Ford and Tata, too. On the other hand, Shanghai Automotive Industries Corp.’s plan to use a British assembly plant that last built MG and Rover cars to launch SAIC’s presence in Europe could set the Chinese auto industry back years.

The difference between the two deals comes down largely to expertise and expectations. For all their flaws, Jaguar and Land Rover have their devotees. Land Rover’s strong model line appeals to status-hungry shoppers around the world. Jaguar is about to launch it’s most promising new car in years, the luxurious and technically advanced XF sport sedan. Both brands use systems that would improve Tata’s other vehicles.

Tata, as India’s largest automaker and part of the family-controlled business that is India’s biggest conglomerate, brings its own strengths to the deal. It has substantial financial resources, manufacturing know-how, planning and home field advantage in a growing market for luxury vehicles. SUVs may be out of fashion in Hollywood, but Bollywood is booming. And India’s software moguls want fast and sophisticated cars as much as anybody in San Jose, California.

If Ford structures the deal so it keeps an interest in the brands, the sale could also be a step toward giving the Dearborn automaker a larger presence in India. SAIC’s infatuation with MG, Rover and Austin-Healey is harder to figure out. Like many Chinese companies, SAIC, which has excellent car-making joint ventures with GM and Volkswagen, seems to understand that it’s easier and faster to buy a brand than to build one from scratch.

But these brands have about as much appeal as Yugo — which is also for sale, by the way. It’s been decades since Rover sold meaningful numbers of cars outside Britain. MG and Austin-Healey never did. There’s some affection for little sports cars like the MG Midget and Austin-Healey’s bug-eyed Sprite, but among a very few people, most of whom also remember leaky roofs and overheating engines.

Believing any of those brands will establish SAIC as a major player in Europe flies in the face of even the rosiest reading of their histories. Other companies have foundered while trying to pull the Rover Group — which included MG and Austin — out of the whirlpool. The British group nearly sank BMW in the 1990s. A decade earlier, Honda saw Rover as its ticket to developing luxury cars and formed a joint venture whereby a Rover factory built Acura Legends and a Rover version of the car called the Sterling. The quality was so poor that German dealers refused to take Legends built at the British plant, and Sterling flopped in the United States.

Tata’s probable acquisition gets it two strong brands. It’s harder to see the upside for SAIC.

MPs sound Tata warning
By Jonathan Walker, Birmingham Post 7th January, 2008

It is too soon to celebrate the sale of Land Rover and Jaguar to Indian group Tata Motors, the MPs representing thousands of automotive workers have warned. Lorely Burt (Lib Dem, Solihull) said a successful bid by Tata would be good for West Midlands employees because the group had a history of buying businesses and maintaining existing workforces.

But the MP, whose constituency includes the Land Rover plant, said: ‘This is not yet a done deal.’ Siôn Simon (Lab, Erdington), whose constituency includes the Jaguar plant in Castle Bromwich, said: ‘There are no guarantees at this stage, but Tata is the most likely to understand that we can only make Jaguars in the West Midlands and Land Rovers in Solihull.’

Business leaders across the Midlands have welcomed the announcement by Jaguar and Land Rover owners Ford that Tata is the preferred bidder for the carmakers, which employ 13,500 in the Midlands. The decision places Tata ahead of rival bidders Mahindra and Mahindra and One Equity Partners. Ms Burt said: ‘This proposed acquisition looks like a win-win, not only for Ford and Tata but for the tens of thousands of workers whose jobs depend on the continuing presence of Jaguar and Land Rover in the UK. Tata’s usual method of operating is to maintain workforces and manage from a distance. They will benefit from access to advanced technology and their first motor vehicle acquisition outside Asian car markets. Ford should benefit from continuing to supply Land Rover and Jaguar with engines and the workforce should benefit from the retention of production in the UK.’

But she added: ‘This is not yet a done deal. There are still important matters to be agreed. It may be a little while yet before a final agreement is reached.’

Mr Simon stressed the importance of selling the businesses to a buyer such as Tata which has a history of making vehicles. The firm manufactures commercial and passenger vehicles ranging from passenger cars to buses, mainly in India. He said: ‘Many people in Birmingham and the West Midlands have been telling me how strongly they would prefer Jaguar and Land Rover to be sold to a vehicle manufacturer which will take a real pride in the brand, the technology and the workforce. But we can’t count our chickens until they’re hatched.’

Research and development cited as huge incentive for Tata’s Ford acquisitions
Shanghai Daily 7th January, 2008

TATA Motors Ltd, the Indian auto maker in talks to buy Ford Motor Co’s Jaguar and Land Rover units, will slash years off its research and development by acquiring the luxury brands. This call comes from a major investor who is buying the stock, Bloomberg News reported. Ford selected Tata as the preferred bidder, putting India’s largest truck maker in a position to take over two iconic British brands. Talks will continue, the two companies said on Thursday.

‘It’s a big bet by Tata to get global and be recognized as a global player,” said R.K. Gupta, who manages US$150 million of stocks as the chief investment officer of Credit Capital Asset Management in New Delhi. “They can get technology, which would have taken years if they tried to do things on their own.’ Tata, which has developed only one car so far, needs new technology to compete with overseas auto makers led by General Motors Corp that are spending £3bn to build plants and develop models in India. An overseas acquisition gives the Indian company a leap-frog into technology for cars and sport-utility vehicles that Tata can use in the local market, Gupta said.

Gupta, whose funds already own 20,000 shares of Mumbai-based Tata, plans to purchase more stock, he said. Buying Jaguar and Land Rover would give Tata a presence outside Asia and provide access to new technology. Tata began making cars in 1999 with the Indica hatchback, India’s first locally designed and manufactured car. All the other cars the company sells are derivatives of the Indian. Tata and the United States auto maker will hold ‘further substantive discussions,’ Ford Executive Vice President Lewis Booth said in a statement on Thursday. Ford, of Dearborn, Michigan, may fetch as much as £1bn from a sale, according to Cantor Fitzgerald. Ford, the world’s third-largest auto maker, wants to sell the brands to focus on its money-losing North American business.

Tata’s bid reflects a ‘new guard’ in auto making, said David Cole, chairman of the Center for Automotive Research in Ann Arbor, Michigan. Jaguar and Land Rover are ‘a signal of wealth,’ he said. ‘Everybody is going to notice.’ Land Rover, which is making money for Ford under seven years of ownership, sold its first all-terrain vehicle in 1948, a year after India won independence from Britain. Jaguar, with roots in the 1920s and known for sports cars such as the 1960s E-type, has lost money for Ford since being purchased in 1989.

The talks come less than a year after the 139-year-old Tata group, led by Ratan Tata, bought steel maker Corus Group Plc for £6.5bn. That made Tata Steel Ltd one of the world’s top 10 steel producers. ‘These are complex discussions and there is still much work that needs to be done,’ Tata said in its statement on the Ford talks. ‘We are pleased by the progress in the discussions to date.’

Ford doesn’t disclose financial figures for Jaguar and Land Rover, whose biggest markets are in the United Kingdom and the US. Land Rover sold about 226,000 vehicles last year and Jaguar 60,000, spokesman Mark Truby said on Thursday. US Jaguar sales dropped 24 per cent, while Land Rover gained 3.7 per cent. Tata Motors rose as much as 2.2 per cent on the Bombay Stock Exchange and traded one percent higher at 801.95 rupees (US$20.48) at 9:57am local time yesterday. The stock was the second-worst performer on India’s benchmark Sensitive Index last year.

Ford dropped 15 US cents to US$6.45 on the New York Stock Exchange on Thursday, and the shares have slid 14 percent in the past 12 months. The Ford and Tata statements didn’t mention other bidders. Mahindra & Mahindra Ltd, the number three auto maker in India, and JPMorgan Chase & Co’s One Equity Partners LLC buyout unit also sought to buy the units, insiders said in September.

China Watch
The SAIC Group/NAC Merger

Shanghai Automotive to buy diesel engine maker
People’s Daily 4th January, 2008

SHANGHAI: Shanghai Automotive Industry Corp (SAIC), one of the country’s largest automakers, said yesterday it will buy 50.32 per cent of Shanghai Diesel Engine Corp, a subsidiary of Shanghai Electric. The deal is likely to boost SAIC’s capabilities in the commercial vehicle sector, according to analysts. SAIC inked a stock transfer deal with Shanghai Electric last Saturday, it said in a statement to the Shanghai Securities Exchange yesterday. The deal, valued at 923.4 million yuan, is based on Shanghai Diesel’s net assets on September 30, it said.

Shanghai Electric will no longer hold any stake in Shanghai Diesel after the transaction. The purchase is pending approval from authorities and the regulator. ‘The deal should benefit both SAIC and Shanghai Diesel,’ said Zhang Xin, an analyst at Guotai Jun’an Securities. ‘SAIC can take a controlling stake in a major diesel engine manufacturer for much less than the cost of building a new engine manufacturing plant,’ he said.

The deal will also enable Hong Kong-listed Shanghai Electric to focus on its core business of equipment manufacturing, Zhang said. Shanghai Electric said yesterday that Shanghai Diesel was facing mounting market pressure and the chances of a business recovery were slim due to its failure to work closely with major carmakers and shipbuilders in China, which have strong demand for diesel engines.

Founded in July 1947, Shanghai Diesel is a large-scale State-owned manufacturer of diesel engines, fuel-burning systems and diesel generator sets. The company employs over 4,000 staff and has net assets of 3.7 billion yuan, according to its website. The Shanghai-listed engine manufacturer suspended trading in August last year when Shanghai Electric began talks with SAIC over the Shanghai Diesel purchase.

China Business News reported yesterday that SAIC’s plan is for Shanghai Diesel to focus on developing both vehicle and industrial engines, with significant enlargement in its production and sales capacity. SAIC aims to build Shanghai Diesel into the engine manufacturing base for its commercial vehicle sector to facilitate commercial vehicle production using its own patents.

Shanghai Diesel shares resumed trading in Shanghai yesterday, soaring 10.02 percent to close at 19.99 yuan. Backed by the news, shares in SAIC jumped 1.84 percent to close at 27.17 yuan.

Zero interest loans to rev up SAIC car sales
Shanghai Daily 8th January, 2008

SAIC Motor Co Ltd has started offering car loans on its self-owned Roewe sedans as the Chinese badge slowed in sales with intensified competition. GMAC-SAIC, jointly formed by GMAC, the car loan unit of General Motors Corp, and SAIC Finance Corp, will provide the auto finance, SAIC Motor said in a statement yesterday.

Consumers buying a 2.5-litre Roewe 750 sedan, priced from £15,600, could be given the lowest down payment of £2000 and zero interest for the first year. The offer began last week and will run until the end of next month, the statement said. The car loan is part of SAIC’s leveraged efforts to rev up Roewe’s struggling sales since it began the domestic sales in March last year as China’s benchmark model for self-owned cars.

Sales of Roewe 750 slowed to 595 units in November, compared with an April high of 2347 units, according to figures from Union of Passenger Car Market and Information. Its sales totaled at 17,000 units last year. However, rival models such as Honda’s Accord and Toyota’s best-selling Camry with a 2.0- or 2.4-litre engine posted average monthly sales of more than 10,000 units last year.

‘China’s self-owned car models still lack of competitiveness against foreign brands,’ said Jia Xinguang, former chief analyst from China Association of Automobile Manufacturers. Jia also said Roewe 750 also takes on Nanjing Auto’s MG 7 series as they are overlapped models based on the same platform from the bankrupted British car maker MG Rover Corp.

India watch

Rendered specuation: the 1 lakh car. The real thing gets unveiled tomorrow. (Picture: Overdrive, July 2007)

Tata Motors’ £1250 car puts India on map
Automotive News Europe/Reuters 8th January, 2008

Only ten years ago, India’s Tata Motors Ltd unveiled its first car, a hatchback that established the truckmaker’s credentials as a carmaker. On Thursday, the £3.9bn company unveils its boldest initiative yet, a car that will sell for just £1250, less than half the cheapest car on the market. Dubbed the ‘People’s Car’, it will determine Tata’s place in the global automotive arena, where the battle is increasingly being fought in emerging economies such as India, China and Russia.

The new model, using re-engineered plastics and modern adhesives, is a far cry from the premium Jaguar and Land Rover brands Tata is negotiating to acquire from Ford Motor Co. Tata Motors’ drive to produce a cheap, no-nonsense, small car was born from close observation of a local market where millions often ferry families of four, plus baggage, on motorbikes and scooters.

Critics initially derided Tata’s 100,000 rupee, or 1 lakh, price target, more so as oil and steel prices rocketed. But global carmakers have taken note and are scurrying for their own versions to meet growing environmental and cost concerns. ‘The product has rightfully gained a lot of international attention,’ said Mohit Arora, managing director for India at research firm JD Power Asia-Pacific, who will fly in from Singapore to see the car being unveiled by Chairman Ratan Tata.

‘It’s a big, big deal for Tata Motors, and will be recorded in history books, whether or not it does well.’ Volkswagen, Toyota Motor Corp, Honda Motor Co and Fiat have since said they are looking to build low-cost cars. And the Nissan Motor Co and Renault alliance, which has done well with its no-frills Logan sedan, is developing a £1500 car with Bajaj Auto Ltd, a local Tata rival.

‘Scepticism has given way to imitation,’ said Ashutosh Goel, auto analyst at Edelweiss Securities. ‘Every global car maker has realized the need to be in the emerging markets with a model like this for mass volumes, if not at 100,000 rupees, then perhaps at 150,000 rupees,’ he said.

The ‘People’s Car’ hits the market at a time when oil prices are near £50 a barrel, a move to fuel-efficient ‘green’ cars is gaining momentum, and drivers wallow in nostalgia with the revival of the Fiat 500 ‘Cinquecento’ and BMW’s MINI. In Italy, the cheap and efficient Fiat 500 replaced the scooter for millions, and its 2007 relaunch won a warm response.

In India, the mini Maruti 800, made by a venture of the government and Japan’s Suzuki Motor, played a similar role in the 1980s, offering a modern alternative to the limited options available. Today, helped by rising middle-class incomes, small cars, led by models such as Maruti’s Alto and the Hyundai Santro, make up more than two-thirds of a domestic car market that should nearly double to two million units a year by 2010.

‘Small cars have always been popular in India, even when oil prices were low,’ said Ashvin Chotai, Asian auto analyst based in London, who will be at Thursday’s unveiling in New Delhi. ‘Globally, higher oil prices are accelerating a shift towards compact and small cars, and regulatory developments such as C02 standards in Europe, and congestion and parking constraints are reinforcing it,’ he said, adding this was not a short-lived fad.

But environmentalists worry that a car so cheap could be more damaging, adding more pollution and increasing India’s dependence on oil imports. Anumita Roychoudhury, at the Centre for Science and Environment in New Delhi, has said the shift to greater car ownership could be a ‘timebomb ticking away. When you lower the price that drastically, how will you be able to meet safety and emissions standards?’ she told The Observer newspaper, adding, to Reuters: ‘It’s just not sustainable, whether from an environmental point of view or in terms of congestion.’

Tata, which has said the four-seater ‘People’s Car’ will have a 600cc engine, will have an initial production run of 250,000 units. It expects eventual annual demand of 1 million cars, which may be assembled by dealers or satellite units. Tata Motors may also export the car, which would probably sell well in Africa and South and Central America, Chotai said.

With car ownership in India at just 8 per 1000, there is huge potential to upgrade two-wheeler owners, who bought about seven million bikes and scooters in 2006/07. An entry-level motorbike costs 35,000-40,000 rupees. Already, South Korea’s Hyundai, which will have the capacity to make 600,000 cars annually, has made India a small car production hub, and Suzuki is increasing its capacity to one million units a year.

They will be closely watching reactions to the Tata car. ‘The quality of the initial launch must meet minimum expectations of the global industry, otherwise the whole project could be discredited,’ Chotai said. But even a thumping success will not have all carmakers rushing to build low-cost models.

‘The need for an affordable product exists across markets, but we seldom see a mass shift downward,’ Arora said, pointing to healthy sales of premium brands in India’s booming economy. Still, Tata is best placed to deliver a small, practical and affordable car. ‘If Tata can’t develop and produce a car at a price of less than £1500, it’s very unlikely any global company will be able to do it,’ Chotai said, pointing to India’s low production costs, cheaper wages and competitive components sourcing.

‘And if the vehicle concept can’t work in India, it’s extremely unlikely to work in any other part of the world.’

French compressed air car set for take-off in India
Automobile News Europe/Reuters 7th January, 2008

A car that runs on air? What seemed like a pipe dream may soon become reality as Frenchman Guy Negre hopes versions of his compressed air car will be produced in India this year by Tata Motors after a 15 year quest for backers for his invention. Negre believes the time is right for his design with oil prices at record highs and pressure on carmakers to improve the fuel efficiency of their vehicles.

‘It is clear that with oil at £50 a barrel this will force people to change their use of fuel and pollute less,’ Negre told Reuters in an interview at his firm Motor Development International (MDI), based near Nice in the south of France. ‘My car is zero pollution in town and almost no pollution on the highways,’ he added, saying the vehicle could travel 60 miles at a cost of 70p in fuel.

The former Formula One motor racing engineer’s invention depends on pressurised air to move the pistons, which in turn help to compress the air again in a reservoir. The engine also has an electric motor, which needs to be periodically recharged, to top up the air pressure. The bottles of compressed air — similar to those used by divers — can be filled up at service stations in several minutes.

Extended range

The latest versions of the cars — MDI made an entire series of prototypes of engines and vehicles — also include a fuel engine option to extend the car’s range when not in reach of a special power plug or service station. Tata, India’s largest carmaker with revenue of £3.6bn in its last financial year, concluded a deal in 2007, investing £15bn. Pre-production in India is set for 2008, Negre said. The vehicle, protected by some 50 patents, will cost £2200-£3000. Using composite materials, it will weigh not more than 330kg and its maximum speed is over 90mph.

‘The lighter the vehicle, the less it consumes and the less it pollutes and the cheaper it is; it’s simple,’ Negre said. MDI’s models which typically have a rounded shape a bit like a speech balloon in a cartoon include the Minicat urban vehicle, the Citycat for longer distances with an added tank for ethanol, diesel or bio-fuel and a taxi version. Negre said he aimed to set up mini factories in regions where the car is used. ‘No transport, no parts suppliers. Everything will be made at the place of sale in production units that can make one car per half hour,’ said Negre.

‘That is more profitable, more ecological than the big factories of the large carmakers.’ Negre is not the only inventor working on compressed air engines. Urugay’s Armando Regusci, Australia’s Angelo di Pietro and South Korea’s Chul-Seung Cho have also produced designs. But Negre has the backing of Tata, whose global ambitions were last week underscored when it was named preferred buyer of the Jaguar and Land Rover brands from Ford Motor Co.

Tata shares up on Jaguar/Land Rover


SHARES in Tata Motors Ltd rose more than 2 per cent today after India’s top bus and truck maker was named as the front-runner for Ford Motor’s Jaguar and Land Rover brands, but analysts remained wary. At 0705 GMT shares in Tata Motors, also India’s number three carmaker, were up 0.7 percent at 799.90 rupees in a Mumbai market up 1.1 percent, having earlier risen as much as 2.2 per cent.

The stock is up about 30 percent from a 19-month low of 616.65 rupees struck in August, hit about a month after news of Tata’s interest in the luxury brands was first reported. Still, the stock remained below a seven-month high of 840 rupees hit in October, and some analysts expect the current gains to be short-lived.

‘There is a little less uncertainty, perhaps, but it is still too premature to say if it will be positive or negative for Tata,’ said Ramnath S, an analyst at SSKI Securities, which had recently downgraded the stock to ‘neutral’. Another analyst said the stock movement was ‘bizarre’. ‘This is just an initial reaction. We still don’t know the costs and charges related to it, like pensions, warranties and forex exposure, which could be a long-term negative,’ said the analyst with a foreign brokerage, who asked not to be named.

Ford said yesterday it would proceed with ‘focused negotiations at a more detailed level’ with Tata, but did not disclose any financial details. Tata Motors edged ahead JP Morgan-backed One Equity Partners and an alliance of buyout firm Apollo Partners and local rival Mahindra & Mahindra in what could be the year’s first big-ticket deal for an Indian company. Analysts expect that Tata Motors, which is set to unveil the world’s cheapest car next week in India, will pay between £750m and £1bn for the two marques.

That may be too high a price at a time when Tata Motors is in the midst of an ambitious expansion plan and its dominant commercial vehicle business is taking a hit from high commodities prices and a slowdown in demand, Ramnath said. ‘You’re looking at a mountain of risk even without the deal.’

Iconic brands

Indian firms announced nearly £11.5bn worth of outbound deals in 2007, according to Thomson Financial data, short of a record $24.7 billion in the previous year. Tata Motors is vulnerable to greater competition at home. Foreign vehicle makers including Daimler, Nissan Motor Volvo and MAN AG have struck local alliances for a bigger presence. Tata Motors, which has a joint venture with Fiat for cars, engines and transmissions in India, is also facing heat from top carmaker Maruti Suzuki India Ltd, Hyundai Motor, Renault and Volkswagen.

But at least one analyst was optimistic about the deal. ‘This is not money down the drain as some investors are viewing it,’ said Ashutosh Goel at Edelweiss Securities, which has a ‘buy’ rating on the stock. ‘There has already been a significant improvement in their financial performance and these are iconic brands,’ he said, pointing to the brands’ proprietary technologies and positive reviews of planned new models.

Shares in Tata Motors, which has a market worth of nearly £4bn, trade at 17.6 times forecast earnings, compared to 20.9 times for top utility vehicle maker Mahindra, whose shares fell as much as 3.7 per cent to 805 rupees yesterday.

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Ford says Tata front-runner to buy European brands


Jaguar XF will soon be the jewel in Tata’s crown…

By Mathieu Robbins and Pete Harrison

Ford has announced that India’s Tata Motors Ltd is the front-runner to buy its European brands Jaguar and Land Rover, which the U.S. carmaker is selling to counter mounting debt. ‘Ford is committed to focused negotiations at a more detailed level with Tata Motors concerning the potential sale of the combined Jaguar/Land Rover business,’ said Lewis Booth, Ford executive vice president with responsibility for Europe.

‘There is still considerable work to do and while no final decision has been made, we will proceed with further substantive discussions with Tata Motors over the forthcoming weeks.’ An acquisition by Tata would represent the latest instance of an Indian company buying a high-profile European industrial target as companies on the subcontinent flex their financial muscle to expand abroad.

Tata Steel, for example, last year bought Anglo-Dutch steelmaker Corus for £6.2bn. Ford said in November it expected to wrap up a sale of Jaguar and Land Rover by early this year, disbanding its stable of European premium brands that has been an inconsistent performer. Fitch Ratings said last month it estimated Ford’s debt will this year have grown by more than $21 billion since 2001, when new debt to be issued to the automakers’ health care benefits trusts is included.

Ford regards Tata as a long-term owner that will invest in the units and Ford’s UK labor unions backed it over its rivals in November on the grounds the workforce’s best interests would be served by a partner with an established presence and background in manufacturing. While price decides most auctions, the views of the unions and the UK count in this sale because Ford, which has other UK units and considers the country one of its larger markets, is keen to maintain good relations with both, a source familiar with the matter said.

The talks with Tata are not formally exclusive but the goal is for the companies to thrash out the final details of a deal in coming weeks, the source said. Tata Motors, India’s top vehicle maker, said it was pleased with the progress of the talks. ‘We hope both parties can reach an agreement in the forthcoming weeks, though these are complex discussions and there is still much work that needs to be done before that position is reached,’ Tata said.

The source familiar with the matter told Reuters earlier on Thursday that Ford was set to name Tata Motors as the front-runner to buy Jaguar and Land Rover. Tata, along with Mahindra & Mahindra and US-based private equity firm One Equity Partners, had emerged in November as the last bidders left in the race for the two luxury brands.

The three final bidders have spent recent months locked in talks with Ford, the unions and the British government, which is keen to safeguard the manufacturing jobs Jaguar and Land Rover sustain in the UK, sources familiar with the matter have said. UK union Unite, which represents Ford UK workers, said on Thursday that it wants more discussions with Ford and Tata about job security for its members.

‘There are also crucial issues around wages, terms and conditions and pensions to address before any final decision is considered,’ said Unite’s joint general secretary Tony Woodley in the statement.

(Additional reporting by Rina Chandran in Mumbai; Editing by David Holmes and Erica Billingham)

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News digest


TATA and Jaguar/Land Rover

Faces of Enterprise: Ratan Tata
By Jo Johnson,

AFTER celebrating his 70th birthday on Friday, Ratan Tata would in the normal course of affairs be facing mandatory retirement from the Tata Group. Two years ago, however, India’s most respected and acquisitive conglomerate extended to 75 the age until which non-executive directors could serve, giving the man who has transformed it over the past 16 years a new lease at its helm. Although corporate governance purists at the time criticised the change as retrograde, it is a decision that few investors now regret.

Mr Tata will be one of the most visible faces of the new India in 2008. He was on Friday waiting to hear whether Tata Motors, a truckmaker that has diversified into passenger cars, had been successful in its offer for Jaguar and Land Rover, luxury brands put up for sale by Ford. In the wake of this year’s audacious £6.5bn purchase of Corus by Tata Steel, the Indian company’s bid for these two prestige marques has again highlighted the risk-taking verve of one of India’s most ambitious corporate empire builders.

The news will come as Mr Tata prepares to unveil the most keenly awaited car ever to roll off an Indian assembly line. Tata’s small car, which the Cornell-trained architect helped design, is slated to appear at the Delhi Auto Show on January 10. It will sell for Rs100,000 (£1,275) – a rupee figure known in India as one lakh – and bring motoring to a mass market. With a new plant in West Bengal able to make 250,000 a year, the one-lakh car will more than double Tata’s car capacity. ‘Mr Tata encourages us to take big, calculated risks,’ says Ravi Kant, Tata Motors’ managing director.

In 1991, when he succeeded his uncle, JRD Tata, a man who was to India what Fiat’s Giovanni Agnelli was to postwar Italy, few expected the group to survive the onslaught of liberalisation. It earned most of its money in stodgy domestic industries dependent on the centrally planned ‘licence raj’. The government told companies how much they could produce and protected them from foreign competitors. The family held only small stakes in many of the 300-odd group companies. Powerful barons ran the main businesses as rival fiefs.

Mr Tata was forced to earn rather than command respect. A shy man, he rarely features in the society glossies, drives himself to work in a Tata car and has lived for years in a book-crammed, dog-filled bachelor flat in Mumbai’s Colaba district. His gentle, kind manner engenders loyalty. Tata remains unfocused – he is arguably the glue that binds a sprawling assortment of stakes in 98 companies – but it is professionally man­aged and globally competitive: more than 60 per cent of its forecast £25bn sales this year are overseas.

Some have reservations about his bid for Jaguar and Land Rover and the one-lakh car. Although Tata’s offer for the British brands has received an endorsement from union shop stewards in the UK, some analysts worry about the strategic logic. Dealers in the US have warned of image issues. ‘My concern is perception and perception is reality,’ Ken Gorin, chairman of the Jaguar Business Operations Council, told a US newspaper. ‘I don’t believe the US public is ready for ownership out of India for a luxury car brand such as Jaguar.’

While the one-lakh car will help Tata Motors to renew an ageing passenger car product line, many fear it will be a mixed blessing for India. At a time when the country’s infrastructure can barely cope with existing traffic, a new era of mass motoring will bring with it worsening urban congestion and pollution. Mr Tata stresses the benefits of safer transport for tens of thousands of families that currently move around on single motorbikes.

Osamu Suzuki, chairman of Suzuki Motor, which owns Maruti Suzuki, India’s largest passenger carmaker, recently said that anyone selling a car that cheaply would have to scrimp on safety and emission standards, compromising their responsibilities as a manufacturer. Mr Tata disagrees. ‘We’re producing a car that will be no more polluting than a motorcycle,’ he says. ‘As we’re not going to produce millions and millions of them, inundating the country, we will not be adding to the carbon footprint on a per-passenger basis.’

Between the cost of the average two-wheeler and entry-level cars such as the Maruti 800, which retails for about £2500, there is still a big gap and Mr Tata plans to fill it. New roads will follow, the company argues, and so too, in time, might a more environmentally friendly small car, although not for the bottom of the pyramid. ‘The only reason we didn’t make the one-lakh car a hybrid, for example, is that it could not have been priced at one lakh,’ Mr Tata says.

Snubs have tended to spur the Tatas to greatness. When Jamsetji Tata, the group’s founder, proposed making steel girders for the Indian railways in 1907, Sir Frederick Upcott, a colonial administrator, famously offered to eat every rail it made. A hundred years later, with Tata snapping up the remains of the British steel industry, westerners scoff at their peril, risking the wrath of a government and business community that sees the group, two-thirds of whose shares are held by charitable trusts, as a role model for corporate India.

Orient-Express, a New York-listed hotels-to-trains group, learnt this too late this month after it rejected a tie-up with Tata’s Taj hotel chain, saying a link with the Indian group would tarnish its premium brand image. Kamal Nath, India’s commerce minister, railed against discrimination, Indian media spoke of quasi-racism and Venugopal Dhoot, president of the business lobby, Assocham, accused Orient-Express of arrogance. Mr Tata, ever dignified, describes the Orient-Express response as ‘unfortunate’.

Suhel Seth, a brand consultant, says US targets are playing a race card: ‘They can’t fault Indian managements, because Indians are running global corporations. They can’t fault our valuations and they can’t fault the size of our consumer market. So instead they’re raising a cultural bogey to defeat a decent business proposition.’

Does Mr Tata have the fire in his belly for a further five years of this? ‘Not really,’ he answers. ‘In an ideal world, after the small car has been launched and is successful, that would be a nice time for me to exit.’

Ford is in ‘focused negotiations’ with Indian carmaker over British brands
Tony Lewin, Automotive News Europe

Ford Motor today told Jaguar and Land Rover workers that it is in ‘focused negotiations’ to sell the brands to India’s Tata Motors. Ford of Europe Chairman Lewis Booth said in a statement: ‘Ford is committed to focused negotiations at a more detailed level with Tata Motors concerning the potential sale of the combined Jaguar Land Rover business.’

Booth added: ‘We will proceed with further substantive discussions with Tata Motors over the forthcoming weeks with a view to securing an agreement that is in the best interests of all parties concerned.’ Ford put Jaguar, a sports car maker, and Land Rover, which makes SUVs, up for sale in June. Booth’s statement is the first time Ford has revealed the identity of potential buyers for the brands.

Tata will now gain access to more in-depth financial information on the two companies, which will allow it to adjust its eventual offer to Ford. Tata said today it was pleased with the progress in talks with Ford. ‘We have had positive discussions so far with Ford concerning the possible purchase of Jaguar/Land Rover and we are now entering a period of more focused and detailed negotiations,’ a spokesman said in a statement. ‘We are pleased by the progress in the discussions to date and very positive about the prospects of this business going forward,’ the statement said.

The statement from Tata said the discussions were complex. ‘We hope both parties can reach an agreement in the forthcoming weeks, though these are complex discussions and there is still much work that needs to be done before that position is reached,’ it said.

Tata is India’s leading producer of commercial vehicles and number two in India for passenger cars. In 2006 it built 580,000 vehicles, of which 54,000 were exported. Acquiring Jaguar Land Rover is part of an ambitious expansion program aimed at making Tata a major player in the global auto industry.

The SAIC Group/NAC Merger

Shanghai Auto buys Nanjing in bid to become worldwide force, By Mure Dickie in Beijing

Shanghai Automotive Industry Corporation (SAIC), China’s largest carmaker, is to take over the vehicle assembly and parts operations of rival Nanjing Automobile in a move officials intend will create an internationally competitive national champion. Under the deal, SAIC’s Shanghai-listed unit SAIC Motor will pay £143m for the core operations of Nanjing Auto, which include the British MG brand. Nanjing Auto’s parent will also get a stake of just under 5 per cent in SAIC Motor.

The long-discussed acquisition brought to an end Nanjing Auto’s disappointing carmaking joint venture with Fiat, with the Italian group selling its 50 per cent stake but planning to continue co-operation on commercial vehicles and -components. SAIC, which runs major joint ventures with Volkswagen of Germany and General Motors of the US as well as producing its own vehicles, has long been seen as unenthusiastic about the idea of acquiring the much smaller and financially weaker Nanjing Auto. However, the deal offers some obvious synergies: the two companies bought different parts of the UK’s Rover when it went bankrupt and sell almost identical versions of the old Rover 75 under rival MG and Roewe brands.

Company officials said the deal met government calls for consolidation in China’s overcrowded motor industry and would give SAIC Motor the scale to compete internationally. “Today, a great aircraft carrier fleet is raising its sails and setting forth,” said Wang Haoliang, chairman of Nanjing Auto’s parent, the Yuejin Group. Company officials said further cost savings would be generated by “unifying” procurement, sales and production operations.

‘From the point of view of profitability… there will of course be some effect, but that will not be too big and will be temporary,” said Hu Maoyuan, chairman of SAIC Motor. SAIC Motor said it would combine all Nanjing Auto’s units with its own, but would continue to make full use of both brands and of the smaller company’s MG operations in the UK.

‘The British business will become a new platform for SAIC’s overseas operations. From now it will be a -window for SAIC in Europe,’ said Chen Hong, SAIC Motor president. Beijing, which sees the development of a domestic motor sector as a key industrial policy goal, has long pushed for consolidation among China’s many – often small – car companies in order to establish a small number with sustainable business models.

As part of the deal, SAIC and Yuejin will also set up a joint venture to control Nanjing Auto’s component parts, services and trade businesses, the companies said.

China creates global car giant with merger
Birmingham Post 27th December, 2007

Chinese companies Nanjing Automobile and Shanghai Automotive Industry Corporation completed their £143m merger yesterday in an attempt to create the country’s first “world class” automotive company. SAIC is already China’s biggest car company and builds a revamped version of the Rover 75 in Shanghai, while Nanjing owns the rights to MG and plans to start low volume production of sports cars at the old MG Rover factory at Longbridge early next year.

The deal is aimed at building the combined group into a world-class producer with unprecedented scale in China, SAIC said in a statement yesterday. As part of the merger, Italian car group Fiat will sell its 50 per cent share of a joint venture with Nanjing, it was announced. Fiat is known to be unhappy with Nanjing’s acquisition of the MG assets as well as with its link up with SAIC.

The two companies will, however, continue to collaborate on building commercial vehicles and production of components.

Welcoming the merger, Birmingham City Council leader Mike Whitby said: ‘I look forward to the biggest car producer in China playing a significant role in investing in Birmingham … and providing a real boost for car production at Longbridge. It’s great timing with the Longbridge Action Plan, our vision for Longbridge as an eco-town creating 10,000 jobs.’

The future that Longbridge deserves

The sheer scale of the regeneration that will take shape on the former MG Rover site in Birmingham over the next 15 years should not be under-estimated. Technology parks, factories, a new shopping centre and community facilities, 1,500 houses and 10,000 jobs are not to be dismissed lightly. It will be, to quote the city council cabinet regeneration member, a brand new town.

What’s being proposed, worked out in a unique collaboration between three councils following a public consultation exercise covering 25,000 people, would appear to be the perfect answer to critics who feared the Rover site would be occupied by little more than a collection of warehouses and retail parks. The architects of the Longbridge Area Action Plan should be congratulated for taking a far more holistic view of what is required, opting for a sustainable community-led scheme underpinned by decent housing and a sensible mix of jobs. If all of the potential is fulfilled, this scheme will bring a life-changing influx of economic wealth to one of Birmingham’s poorest suburbs.

One local Councillor remains unconvinced, pointing out that only about half of the jobs on offer will be industrial and high-technology employment. This, it is suggested, is a betrayal of a council promise to devote the whole of the former MG Rover site to such uses. It is understandable that some community activists retain a nostalgic longing for a return to the days of volume car production at Longbridge, a site which in its heyday employed more than 15,000 people. But the councils would have been holding out false hopes if they had promised to do any such thing.

The plan launched today is the very best that could have been achieved in difficult circumstances, reflecting a sensible balance between jobs and houses. Meanwhile, the little of Longbridge’s car making capacity that does remain was strengthened yesterday by the expected completion of the merger between Chinese companies Nanjing Automobile, which plans to resume production of MG sports cars early next year, and its bigger rival SAIC.

SAIC, which is building its own version of the Rover 75 in Shanghai, said the deal was aimed at turning the combined group into a world class carmaker. The Chinese have quickly learned the lessons absorbed by the Japanese in the 1960s – which is, if they want to be global operators they have to build cars in or close to the markets they aim to penetrate.

SAIC-NAC merger to strengthen Longbridge operations 31st December, 2007

The merger agreement just signed by Shanghai Automotive and Nanjing Automobile will strengthen the functions of R&D, sales and marketing and manufacturing at Longbridge under SAIC control. ‘The UK business is vital for SAIC to enhance its multinational operations competence,’ said a release issued by the NAC UK office on 28 December, which continued, ‘Following the integration there will be a further input of resources into Longbridge. With the TF being the first product launched, it will be followed by other new MG products.’

‘The British business will become SAIC’s new platform for overseas markets and a window of SAIC toward Europe,’ Chen Hong, president of SAIC was reported to say. In China, the SAIC-NAC merger has been the first step towards consolidation among the many Chinese vehicle producers controlled, as were SAIC and NAC, by municipal governments.

SAIC takes over MG plant in England
Lan Lan, Automotive News

SAIC Motor Corporation has taken control of the British assembly plant of another Chinese automaker, Nanjing Automobile Group Corporation gearing up to produce MG roadsters. SAIC wants to use the plant in Longbridge, England, to build sales in Europe. SAIC is General Motors’ production partner in China.

‘The British business will become SAIC’s new platform for overseas markets and a window of SAIC toward Europe,’ says Chen Hong, president of SAIC. SAIC said last week in China that it had acquired Nanjing Automobile Corp., which owns the rights to the MG brand. Nanjing’s plant, now owned by SAIC, had planned to reintroduce an MG roadster in Europe.

Separately, Fiat Auto and Nanjing said that they had dissolved their partnership in China that produces passenger vehicles. They are keeping a joint venture that produces commercial vehicles in China. In Britain, SAIC’s R&D centre will be consolidated with Nanjing Auto’s operations at Longbridge. SAIC plans to establish R&D, production and sales operations for Europe.

Chen says production of MG models in Longbridge will start soon. SAIC plans new MG models for Europe, he says. ‘We will thoroughly consider the requirements of European customers and EU regulations when we develop our new products and continue to improve MG brand’s image in Europe,’ he says. In June, Nanjing showed some MG TF two-seaters assembled in Longbridge. But full-scale production has not started as Nanjing has strived to achieve high-quality production. The midengined roadster was traditionally England’s best-selling budget sports car.

Production at Longbridge ceased in April 2005 when MG Rover failed. Nanjing Auto bought MG Rover’s assets in 2005 for about £53m. The Chinese company then spent an additional £25m to get the aged Longbridge plant ready for production.

China Watch

Chinese engineers need more experience
Alysha Webb, Automotive News China

By pushing SAIC Motor Corporation to acquire Nanjing Automobile Group, the Chinese government aims to create a company that can compete with the likes of General Motors and Volkswagen AG. The combined entity, created last week, has resources galore. What it lacks is experience building cars, which will surely slow its progress.

A few weeks ago, I was chatting with Wang Dazong, vice president in charge of R&D at SAIC Motor Corporation, about reports of problems with the engines in the first Roewe model. Roewe is SAIC’s own-brand car. We were at a conference at Jiaotong University in Shanghai. SAIC has had some problems with noise and the engine suddenly shutting off, Wang acknowledged. ‘It is part of any launch process,’ he said.

Perhaps. But SAIC suppliers I spoke with also blamed inexperienced SAIC engineers. SAIC clearly has the financial resources to hire experienced engineers from other companies. It hired engineers from the former MG Rover and works closely with engineering firm Ricardo Plc. But it still had problems. The experience issue also came up in a recent conversation with an executive from Honda Automobile (China) Co., which builds the Jazz small car for export to Europe. Honda still brings engineers from Japan to China to work at the plant.

‘There is a problem with the Chinese engineers because they are so young,’ said the Honda executive. Chery Automobile Co. employs thousands of engineers and buys everything from transmissions to lighting from foreign suppliers. But the engineers don’t have the skill yet to get the technologies to work well together in the car. It turns to suppliers such as Borg Warner Inc. for help.

‘Chery’s engineers are very young — half are new graduates,’ says Freeman Shen, who until the end of 2007 was head of Borg Warner China. Suppliers tell me that Nanjing Auto, which was one of China’s earliest automakers, had many veteran engineers engaged in reviving the MG brand. But they don’t have experience building cars for Western consumers.

Nothing beats experience when it comes to building a great car. And that’s something the Chinese automakers won’t have for a while.

SsangYong In The UK

Paul Williams appointed as MD of new SsangYong UK import company

Former Kia UK Managing Director Paul Williams has been appointed as the Managing Director of Koelliker UK, the new importer and distributor for SsangYong in Britain, whose predecessor was placed in administration in late December. Mr Williams joins from a consultancy assignment with the Chinese brand Landwind’s German-based European importer, having previously headed Daihatsu’s and Mitsubishi Motors’s UK sales efforts in succession.

Koelliker UK is planning an immediate relaunch of the specialist 4X4 South Korean brand, which sold only 1,299 units in the year to end November 2007. Motor Trader reports that Mr Williams hopes to increase the UK SsangYong network from 60 dealers at present to 100 franchises by the end of 2008. Koelliker UK’s Italian parent imports and distributes SsangYong, Kia, Hyundai and Mitsubishi in Italy, and also represents SsangYong in Austria and Hungary. The new UK operation has already acquired some assets from the defunct SYUK including its head office in Fleet, Hampshire, vehicle stock and its parts centre in Luton.

Williams told Motor Trader the new company would keep ‘as many staff as possible’, and he confirmed that Koelliker is planning to bring other brands to the UK. ‘This is a bridgehead for other brands – some of which could be Chinese,‘ he said. The SUV manufacturer SsangYong’s controlling shareholder is SAIC, which finalised merger terms with Nanjing Automobile Corp. in late December, but the presence of Koelliker in the UK market suggests SAIC is not planning to integrate SsangYong with the MG or Roewe distribution networks in Europe.

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Welcome to our new US Editor


Richard Truett’s a Brit car fan… stateside.

AROnline’s global reach has just taken a significant step forward with the welcome addition of Automotive News’ Engineering Reporter, Richard Truett, to the editorial team. As regular readers will know, Richard’s been a long-time contributor to AR, and it took me far too long to come up with the idea of Richard becoming a regular who can shape what we produce on this website.

As you can see from today’s Have Your Say entry, Richard’s BMC>MG credentials are most excellent. However, more than that, he’s well connected in the motor industry and truly has his finger on the pulse of the JLR/Tata situation – in fact, even as we were penning our Tata/Rover-revival story, Richard was putting the questions to the people who matter in the USA.

Richard is clearly a huge asset and will be contributing news, features and historical items in addition to filing regular reports on his impressive BMC>MG fleet. He’s already been chomping at the bit to get his Sterling 827SLi up and running again, plundering the usual UK sources, so how can the man be denied? He’s one of us…

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MG 7 prices reduced in China

China Car Times

MG 7 is now something of a bargain.

China Car Times feels that we’ve been unfair on the MG7, now we’re seeing more of them out on the road (3, to date in Qingdao) we can see that is clearly the best looking sedan in the sub 200,000rmb price range, despite the MG 7’s age, it still has a lot of class about it – the way it hugs close to the road like a Jaguar and the quality of the paint finish is really second to none.

There’s just no comparing the MG7 to the likes of other sub 200,000rmb sedans, like the VW Passat, and the Focus saloon, both of which are very widespread in China. The Passat and the Focus saloon feel, and look like sub 200k cars, but the MG7 has looks of something approaching the 600k and up category (we’re still thinking of Jaguar here)

To boost sales, MG are knocking 3000rmb off the price of the MG7, which makes the MG7 pretty much the cheapest ‘luxury’ car in its class in China. Prices are now as follows:

* 1.8T Standard – £11,095
* 1.8T Luxury – £12,450
* 1.8T Luxury Sports – £13,150
* 2.5 V6 Luxury Flagship (Lengthened model) £20,680

If China Car Times was shopping for a sedan, we’d know what we’d buy – The luxury MG7 for 180,460rmb in that champagne like color.

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SsangYong UK goes bust

Fifth Gear

TThe promising SsangYong Wz – SsangYong UK’s current difficulties suggest that the car’s prospects
of success would be greatly enhanced by the use of the MG badge in Europe.

SsangYong UK went into receivership just before Christmas, which is probably not great news for recent buyers of its models. The letter from the administrators says that the company has ceased to trade, but ‘certain assets’ were purchased by a company called Koelliker UK. This company only came into being in September 2007, but it may be a division of the current SsangYong importer in Italy, also called Koelliker. Hence, the good news is that SsangYong will almost certainly continue in the UK, under new management.

SsangYong has been crippled in the UK by the Band G road tax rate, which starts at 225 g/km of CO2. The SsangYong Rexton, the company’s biggest seller, is rated at 228 g/km of CO2. That is not an issue for a Range Rover, but for a 4×4 sold on the basis of being good value, it is a major problem.

SsangYong itself is owned by the Chinese manufacturer SAIC, which wants to turn SsangYong into a major brand. This development shows what a long journey the Chinese still have to make.

AROnline believes that SAIC’s plans for expansion into Europe would be enhanced by the use of the well-respected MG marque in place of the low-profile SsangYong brand…

Keith Adams

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