News : July 2007

MG3 caught testing in China… again

MG Enthusiast magazine

With the MG7 saloon now in production in China and the TF roadster in Longbridge, it was only a matter of time before the range was further expanded to include the popular ZR – a sporting hatchback that was still very much a market leader in the UK at the time MG Rover went into administration back in 2005.

Although production of the hatchback might be some time off in Nanjing’s factory, it’s a comparatively easy task as the tooling has already been shipped out as part of the transfer of operations to China last year.

Our sources within the new factory tell us that several MG3s have been hand-built for testing and development, but a full production run may have to await further investment – or the results of the proposed SAIC/NAC merger.

Chinese carmakers moot merger

Mure Dickie in Beijing, Financial Times

Shanghai Automotive Industrial Corporation (SAIC) has signed a memorandum of understanding with the parent of rival Nanjing Automobile under which the companies will discuss “all-round” co-operation and a possible merger of their auto operations.

Such a merger would bring together two state-owned companies currently competing head-on in China, with saloons based on designs and technology acquired from defunct British carmaker MG Rover.

It would also be a boost for Chinese government efforts to promote consolidation in the auto industry as part of its strategy of cultivating domestic champions capable of effectively competing with international rivals.

SAIC’s listed arm, Shanghai Automobile, said in a statement that the MOU had been signed after “friendly, frank and honest” talks between its parent and Nanjing Auto’s controlling shareholder Yuejin Auto Group. However, Shanghai Auto stressed that the MOU did not “constitute any substantive commitment” and there were “numerous uncertainties” about the prospectsfor future co-operation.

Nanjing Auto has long been seen as an acquisition target for rivals such as SAIC, which is China’s largest carmaker and produced 1.34m vehicles last year, according to state media. Shanghai Auto is determined to build its own-brand car business and recently began producing a version of the Rover 75 saloon based on rights acquired before the UK company went bankrupt.

However, Nanjing Auto surprised Shanghai Auto by winning the bidding for MG Rover’s operations and its famous brand, and is also producing a model based on the Rover 75 for the Chinese market. SAIC is seen by some as unenthusiastic about acquiring or merging with Nanjing Auto, which is financially weaker and whose joint venture with Fiat of Italy is seen as one of the domestic industry’s also-rans.

Shanghai Auto’s statement made clear that the impetus for co-operation came from the government, saying the MOU was “in accordance with strategic requirements for development of the Yangtze River Delta”.

Hu Maoyan, Chairman of SAIC, said in April that his company was looking forward to cooperating with Nanjing Auto and that state assets should be used “more efficiently and effectively”. Institutional interests often make Chinese state companies resistant to efforts by Beijing to promote consolidation or to restrain competition.

Local leaders in Nanjing and Shanghai – the two most important cities in the Yangtze Delta – could also prove unwilling to accept any loss of influence over companies that they see as pillars of the industrial development.

MINI Clubman unveiled

THE wraps have finally come off the MINI Clubman, and as can be seen from the picture, the challenging styling of the new hold-all will at least mean more space inside for people and their luggage. Although there’s little information to accompany these new press pictures, it’s a safe bet that the Clubman will be priced at a premium over its smaller brother – perhaps around £1000.

You’ll not be able to clamber out of those ‘suicide’ rear doors without opening the front doors first – a real boon for safety, but we don’t think that back seat passengers will find themselves desperate to get out, as they might in the standard car, given the 80mm wheelbase stretch – although as predicted several months ago, that rear door opens into the traffic in left-hand drive markets, such as the UK.

The launch happens at the end of September, and we’re hoping to be there…

MG’s dealer plans start to take shape

MG Enthusiast magazine

Following hard on the heels of the news that Longbridge has re-opened, and will be resuming production of the popular TF roadster later this year, it has emerged that a number of high profile dealer chains have applied for franchises – including one big-name surprise.

First of the dealers to go public on their MG franchises were Luffield Cars and the Merritts Motor Group. The news was welcomed by marque enthusiasts, who saw this as an important step in the re-launch of the MG marque in the UK. The first product to be sold through NAC-MG’s dealerships will be the TF 500LE, recently launched to the public at the Silverstone International show.

However, it has emerged that the MG Owners Club Workshop Limited had also been successful in its application to become a dealer – under the banner Advantage MG. The MGOC’s workshop is a massive operation, with a thriving spares and servicing department – and selling and supporting brand new MGs is a perfect extension to this thriving business.

The next few months will be instrumental in re-establishing the MG TF in the UK market, and how the dealer network is rolled out will be central to this. At the time MG Rover went into administration in April 2005, it remained the country’s most popular two-seat roadster.

The question remains – will that popularity return after a two and a half year absence from the marketplace?

Jaguar and Land Rover to see up to six bids


FORD is expected to receive up to six indicative bids for Jaguar and Land Rover on Thursday, kicking off a surprisingly competitive auction of the UK luxury carmakers. Cerberus Capital Management, Ripplewood Holdings and One Equity Partners are among private equity groups understood to be planning bids.

At least one trade buyer is thought to be planning an indicative bid. Hyundai of South Korea and Tata Motors of India are likely contenders while Renault Nissan of France is thought to have backed away. Any trade buyer is thought to be interested in only one brand. One Equity’s partners include Jac Nasser. The former Ford chief executive established Ford’s Premier Automotive Group, which owns the two British brands and Volvo.

The auction could move quickly. Ford hopes to select two final bidders in the next couple of weeks to begin due diligence on Jaguar and Land Rover. Ford is also considering a sale of Volvo, its third European car brand, to cut massive debts. But it is unlikely to make any decisions on the Swedish business until the UK assets are sold.

Ford would prefer to sell the two brands, which share many management functions, together but is prepared for separate sales. The sale of Jaguar and Land Rover is likely to be controversial, especially given that private equity is the favourite. Buy-out groups have come under attack in the UK, where they are accused of cutting jobs, stripping assets and operating secretively.

Trade unions have insisted that Ford keep a stake in the companies and that any bidder keeps the three UK factories involved open. The car sector has become particularly attractive to buy-out firms as it is one of the few areas where valuations are low. Average enterprise value-to-earnings multiples for automotive buy-outs fell from 6.2 in 2005 to 5 this year, while valuations for all takeovers rose from 8.2 to 8.4.

Buy-out firms already own automotive companies worth more than $50bn (£24bn), said Alix Partners, the restructuring firm. But most are parts suppliers rather than carmakers. Private equity firms have moved up the supply chain recently to buy the carmakers themselves. Cerberus paid $7.4bn in May for DaimlerChrysler’s US-based Chrysler business.

Sales at lossmaking Jaguar dropped 21 per cent in the six months to June compared with a year earlier. Land Rover sales were flat in that period. The two together sell only 300,000 cars annually. Alchemy Partners, which bid for Rover in the UK seven years ago, and Carlyle, which owns a string of auto suppliers, have ruled out making bids.

New ‘big’ Austin-Healey to be a ‘clean sheet’ design?

CLIVE GOLDTHORP’s research suggests that Austin-Healey and MG will probably be the only moribund sports car marques to make a return under Chinese leadership…

WE have always reckoned that the short-lived Jensen S-V8 built by (the still to be dissolved!) Jensen Motors Limited in Speke, Merseyside was, in effect, an update of the original ‘big Healey’ concept for the Noughties. However, informed speculation within the Jensen and Jensen-Healey community has now raised the possibility of a connection between the Jensen S-V8 and NAC MG’s recently announced ‘big Austin-Healey’ JV so we decided to investigate!

Jensen Motors Limited’s Administrators, PKF in Liverpool, have supplied us with a Schedule of the Intellectual Property included in the sale of that company’s remaining assets back in June, 2003. These assets comprised not only the Jensen, Jensen-Healey and Interceptor names but also the ‘New Jensen Car Design (SV-8)’ and ‘New Jensen Car Design (Coupe).’

PKF have also confirmed that all the IPRs previously owned by Jensen Motors Limited (in Administration) were sold to a Swiss-based company in or about January, 2004. Switzerland Hyland Automotive Technologies AG now also appears to be in liquidation and so, presumably, the aforementioned IPRs have been offered for sale again. We reckoned that, in view of the speculation within the Jensen and Jensen-Healey community referred to above, there was a chance that any new NAC MG/HFI Automotive/HAC ‘big’ Austin-Healey might just be based on the Jensen S-V8…

However, an informed source has now confirmed that the recently announced JV between NAC MG UK, HFI Automotive Limited and Healey Automobile Consultants Limited does not extend to the Jensen or Jensen-Healey marques and that the new ‘big Healey’ currently under development is an entirely new design which has nothing in common with the Jensen S-V8 design. A representative of the Jensen Owners’ Club told us that the Jensen S-V8 was affected by significant development issues so that has to be viewed as encouraging.

Our research to date, nevertheless, suggests that the IPRs in the Jensen and Jensen-Healey marques may have been acquired by Healey Automotive Consultants Limited from Switzerland Hyland Automotive Technologies AG (or that company’s Liquidators) – Donald Healey’s ‘family have guarded his precious brand with all the fervour of a Nike or Armani,’ which is why the Speke-built Jensen S-V8 was not launched with the Jensen-Healey name as originally intended.

The Healey family may, in view of the foregoing, have been advised to purchase both marques/trademarks in order to ensure that a similar dispute does not arise at some time in the future. Donald Healey was, of course, Chairman of the original Jensen Motors Limited for a period during the early 1970s…

Tritec engine venture sold

BMW-Chrysler engine venture comes to an end


MINI Convertible still powered by the Tritec engine. For how much longer?

THE German carmaker BMW has transferred its 50 percent stake in Brazilian engine joint venture Tritec Motors Limitada to DaimlerChrysler’s Chrysler Group division, BMW said on Thursday. It gave no financial details for the deal, which requires regulatory approval.

“Chrysler Group has assumed the responsibility for exploring long-term options for the Tritec operations whereby all possible alternatives for continuing the business for the long run are under analysis. This may include a sale of the facility to a third party,” it said in a statement.

Founded in 1997, Tritec makes 1.4- and 1.6-litre four-cylinder petrol engines for BMW’s Mini brand and some Chrysler models. Large-scale production started in January 2000. The plant’s annual production capacity is around 250,000 units, a statement said.

A spokesman for BMW said the company would replace the motors with those built through its engine partnership with French carmaker PSA

‘Chinese Leyland’ takes a step closer?

SAIC poised to purchase NAC?


Reports in China suggest that Shanghai Automotive Industry Corp (SAIC) is once again in talks with Nanjing Automobile Corp (NAC), the owners of the MG marque and the Longbridge factory.

The deal is being backed by Chinese government, which wants to see more cars sold in export markets. Are we looking at the creation of a latter day MG Rover based in the Far East?

SAIC, which pulled out of a joint venture with MG Rover in its dying days, is keen to join forces with NAC as part of a concerted export drive. SAIC sells a Ricardo-developed facelift version of the Rover 75, called the Roewe 750. NAC-MG builds a lightly revised version of the MG ZT from tooling taken from the Longbridge factory in 2005.

The Shanghai-based company has local government backing in its plan to bid for its rival – in a move that will unite the two companies, which produce almost identical cars. According to the China Daily newspaper, SAIC Chairman Hu Maoyuan told a shareholders’ meeting that both SAIC and NAC hope to join forces to make better use of their resources.

Hu also said both Shanghai and Nanjing governments have supported the move. Shanghai vice-mayor Hu Yanzhao led a delegation to Nanjing two weeks ago to work it out. The central Chinese government, which has been pushing for consolidation of Chinese auto makers, has approved the merger.

NAC chairman Wang Haoliang, announced that the door was always open to SAIC, but rather than a straightforward takeover, he would prefer to set-up a joint venture company. However, such a move would not strengthen either company, and in terms of a global strategy, could prove counter-productive.

NAC-MG recently confirmed to businessmen in China that production of the MG7 (nee MG ZT) would not resume in Longbridge, leaving the Birmingham factory to concentrate on the production of sportscars – possibly under the Austin-Healey as well as MG brand names.

The merger would make sense, and could see the end of two companies producing near-identical cars powered by the same cloned K-Series engines (independently built) – and medium car development would be concentrated on the Roewe 450, which is closely related to the ill-fated MG Rover RDX60 prototype, which was finally shelved when that company collapsed into administration in 2005.

Currently, NAC-MG is testing prototypes of the MG ZR, but exports of that to Europe could prove tricky given that it has been around since 1995. Still, it hasn’t stopped the Chinese restarting MG TF production.

Industry analysts agree the merger would be good for both companies, both in terms of finances and efficiency – and the MG brand is a far more saleable prospect in overseas markets than the rather contrived effort from SAIC, Roewe…

Could SAIC be about to buy NAC – and where would that leave Longbridge?


Quite amazing the way the Chinese Politicians seem determined to manage their industry with even worst skill than ours showed in the late 1960s and 1970s. We have the a state owned company talking about buying another state owned company in what can only be a wooden dollar transaction of state money.

Also why have they waited until after SAIC has built from scratch all the tooling and NAC have built a new plant to house the old Longbridge tooling before the Chinese civil servants decide to get together. One can only think that one of the key consultants from the UK they are using is Tony Benn with this level of lunacy.

GRAHAM ARISS, Gothenburg

SAIC linked to Jaguar and Land Rover

Birmingham Post

Shanghai Automotive Industry Corporation (SAIC) is rumoured to be talking to Ford about the possibility of buying Jaguar and Land Rover.

The fact that the Chinese automotive giant is interested in the two West Midlands-based units of Ford’s Premier Automotive Group has trickled down to Tier One suppliers to Ford, a source told The Birmingham Post. “SAIC seems to be a credible candidate to buy both Jaguar and Land Rover because the luxury car sector is booming in China as the country gets richer,” he said. “Not only that, China is seen as a base for getting Jaguars and Land Rovers in Australasia and Japan in greater number.”

Neither Ford nor SAIC could be contacted for comment, but speculation about the future ownership of Jaguar and Land Rover has been rife ever since Ford announced earlier this month that it had appointed advisers to look at a raft of options for the two businesses. These are believed to include an outright sale or a joint venture deal with a partner to share the cost of developing new models.

As a perennial loss-maker, Jaguar has long been regarded as a candidate for a sell-off as Ford fights to rebuild its fortunes in the wake of falling sales and heavy cash losses in the US. The company, which builds three of its four models at its Castle Bromwich plant in Birmingham following the closure of its historic Browns Lane site in Coventry, is believed to be on the verge of making money after abandoning its ill-fated move into the volume end of the luxury car market in favour of selling high-spec, high-margin cars in fewer numbers.

But its sales are haemorrhaging and it badly needs a vibrant new model to sit alongside the successful new XK sports car. That should come later this year when the replacement for the S-Type saloon comes on stream. Land Rover, in contrast, is making money as sales boom. But the two businesses are so closely entwined in managerial terms that Ford will have to bundle them together in order to achieve a sale.

In China, SAIC is believed to be discussing a link-up with Nanjing Automobile Corporation, the company behind the relaunch of MG and which recently began making cars at Longbridge two years after the crash of MG Rover.

Keith Adams

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