News : MG Motor UK posts increasing losses in 2011

Carole Nash Classic Insurance Specialists

The latest batch of production MG6s

MG Motor UK’s Longbridge operation has lost £4.6m during 2011, deepening of the financial deficit of £392,000 posted in 2010. The disappointing performance follows a year of poor MG6 sales – which, the company warns, won’t improve until the arrival of the turbodiesel ‘6, B-segment MG3 and C-segment MG5.

This time last year MG Motor UK reported that it had cut its annual deficit from over £12.7m in 2009, but this positive performance has been arrested. Managing Director Hao Wang said in his Annual Report for 2011: ‘The company generated a turnover of £11,363,000 in 2011. Revenues from vehicle sales increased by 18 per cent in 2011 over 2010.’

Mr. Wang added: ”The significant increase in operational loss was due to the reduction in parts sales and other income from group companies in 2011. Sales in 2011 were 304 units while 230 units were sold in 2010. It has been a challenge to introduce new models in the UK market.’

MG Motor UK PR and Events Manager Doug Wallace said work had recently started on a £1.5 million redevelopment of the Design Centre to double its size, allied to other investments in the Powertrain Test Centre and the factory ahead of the debut of the diesel MG6. ‘We are still very much in the early stages of building – we are building quite nicely,’ added Mr. Wallace.

[Source: Birmingham Mail]

Keith Adams

Keith Adams

Editor and creator AROnline at AROnline
Created www.austin-rover.co.uk in 2001 and built it up to become the world's foremost reference source for all things BMC, Leyland and Rover Group, before renaming it AROnline in 2007.

Is the Editor of the Parkers website and price guide, formerly editor of Classic Car Weekly, and launch editor/creator of Modern Classics magazine. Has contributed to various motoring titles including Octane, Practical Classics, Evo, Honest John, CAR magazine, Autocar, Pistonheads, Diesel Car, Practical Performance Car, Performance French Car, Car Mechanics, Jaguar World Monthly, MG Enthusiast, Modern MINI, Practical Classics, Fifth Gear Website, Radio 4, and the the Motoring Independent...

Likes 'conditionally challenged' motors and taking them on unfeasible adventures all across Europe.
Keith Adams

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41 Comments

  1. If JLRs phenomenal growth continues perhaps it could take on the Longbridge Lease from St Modwen to build the proposed Jaguar rival to the 3 series. Let MG/SAIC retreat to concentrate production and sales of its cheap and nasty cars in Asia Pacific

  2. This is no way to run a business. They may as well pack up now. This is proof alone that SAIC just muddle from crisis to crisis. I feel sorry for the handful of staff there, who will clearly be expecting a redundancy notice before much longer

  3. Would be unfair if MG makes the turn while SAAB could not be rescued.
    SAAB had far more technology, a very good name (…no Leyland history ) and were well recognized on export markets.
    MG is homemarket only, has a positive heritage that ended some 30 years ago.

  4. not surprising really, it does depend a little (a lot) on how the company is structured for example if 200+ employees at Longbridge are directly responsible for the partial production of of 200 cars, then it certainly wont add up financially. if 20 employees are responsible for the partial production of 200 cars and the lease lease on the building / construction halls, well to be honest it probably wont stack up still. SAIC will be counting on long term investment, and depending on TAX rules in China(and the UK) then it might suit them to make a loss in the UK. As ong as someone is paying the bills then i guess they will carry on. pressumably the BTCC will be a cost to them (with some long term gain one would hope). I actually think MG should offer some variance in the front and rear body panels eg a choice of front and rear end looks different tail lights / head lights and a better raod going body kit (thiese tweeks should be trivial for them). remember the last of the Rover Minis where you could dress you own mini with a choice of Grills?

  5. If they were a stand alone UK company I would be worried but they are not.

    £4.6m to SIAC is petty cash and they probably consider it cheap for the kudos ‘Britishness’ brings their cars in China.

    I do wish they had a UK marketing department though!

  6. Yes, but they made substantial losses on the genuine manufacture of around 120,000 cars, with around 6,000 employees, in their last year. That’s equivalent to around 360 years’ production volume at current rates!

  7. Hmmm.. typically short termist (British) thinking responses here. It’s possibly still far too early to know exactly what is happening other than what’s happened over the past two years. Even Jaguar’s comeback was no instant success story.

    I call it the ATP (train) attitude.. if it doesn’t look like it’s going to be successful, better to throw in the towel now and forget about the future potential.

    Much as we can slate them for not doing this and not doing that, I’m surprised, not at the fact that they’ve made a loss but the fact that they’ve lost so very little (in volume production car industry terms) – Don’t forget that MGR were haemorrhaging cash at nearly £1m *a day* so this is a massive contrast to the old firm.

    The other point is that they have sunk £150m into R&D.. so They must be looking 5 years ahead at least, certainly in design and development. The fact that new quality West Mids/Warks engineering academies are coming on-stream now means that they’ll have an even greater pool of talent to call on when things start to ramp up in future.

    I wouldn’t write them off just yet, although there are certain improvement I’d make to get the company get back on track.

  8. Perhaps I am being a little simplistic here, and am not in full posession of the facts. But if they want to sell cars here in the UK, would it not be a good idea to actually market them?
    The only reason I know MG/SAIC’s cars exist is because of AR-Online!
    (oh and I saw one in Cornwall)

  9. Saab had their own technology? Ok, they were far more serious about making cars than BL/ARG/ETC never was, but they used british technology ( Triumph engines!)then Opel/Vauxhall, and italian Fiat diesel engines. If Saab had any flaw, that was precisely the lack of technology of their own.

    The major contribution of Saab to the civilization was to prove what british engineering could achieve, without british unions and management involved of course.

  10. @15 You don’t know much about SAAB do you? Agreed they used other manufacturer’s engines (Ford V4 originally, then the slant-4 developed with Triumph, then GM engines), but they were so much more than a re-engineered donor engine. How about superb anti-corrosion protection (SAAB taught FIAT how to finally stop the rot in the mid-80s), tranverse FWD in 19847, 1st to offer seatbelts, Light-pressure turbo-charging (APC), industry-leading ergonomics, one of the first sweet-handling FWD platforms, capable of taking some serious power (SAAB 99 – the car the BMW 2002 Turbo should have been), pioneering aerodynamics on the original cars (when SAAB motor was part of the aero company), world-leading crash safety – they were the 1st to offer side protection……and until GM ruined them, beautiful over-engineered cars, virtually hand-built (as were Volvo in those days) by fastidious Swedes……SAAB’s engineering has made it, in one form or another into every modern car. Have a look for yourself:-
    http://www.saabhistory.com/2007/11/16/saab-history-launches-section-on-saab-innovations/

  11. Loose change to SAIC and no-one expects MG UK to be making money right now do they? They have to publish accounts and so they have to put a commentary around it but MG is merely an operation ticking over whilst models come on stream and it’s absolutely no surprise they have made a loss. They have bills to pay, rent, etc and nothing to bring in revenue. Suggesting JLR take over the lease is about the most ludicrous thing I’ve heard today. MG intend to utilise the site when they have the cars to do it with. SAIC want a share of the European market in the next few years and this is how they will do it. It might not work now, next year or the year after but I would be very very surprised if they abandoned MG or the UK simply because of some negative short-termism views.

  12. Lets put this in perspective. Ford Europe is going to make a loss of £500 million this year and Peugeot Group over a £1 billion. Do all these negative readers suggest that both of these great companies shut up shop in Europe? The loss is peunuts compared to overall profits within the SAIC Group that will have made many millions of pounds and sold over 200,000 MG. Roewe cars in Asia. Yes MG sales have been terrible overall, but will improve with new models and diesel technology. Why should not MG succeed with the backing of GM technology, investment and better marketing. SAIC are not going to give up before they have started and there is no point spending millions on marketing a MG6 petrol which has very limited sales potential. Not all of us can afford a Range Rover Evoque or 3 series rival at £30K and my wife has just put her money where her mouth is and bought an MG6 TSE for a very competitive price. She is delighted and we do not recognise the supposed poor quality or cheap asian label. Have you seen how poor value a Kia now is? – we looked at a Kia and for the same kit it would have been £5k more than the MG for truly lack lustre styling and a mediocre interior.

  13. One sometimes sighs at the stupid comments on here.@15 hasn’t got a clue really. @4 really wouldn’t recognise a ‘cheap and nasty car’ if it ran him over. All the comments that SAIC don’t know what doing, should just try and justify those thoughts and comments when SAIC produce over 3.9 million vehicles and have revenues of 33.5 billion dollars. All this in a company that only started in the early 40’s and then had to endure the terrible times of Mao’s revolution.

  14. @19,well written,again all the psuedo auto industry analyst’s are at it again. Man Utd are in the red but are solid gold with the banks,Chelsea are in a sea of red despite being owned by a oligarch, and are still viable business’s in thier own right,servicing thier debt like we do with our credit cards,ok, the auto industry is slightly different,but this debt is no catastrophe,get it into perspective folks for christs sake.

  15. Sorry, but have to disagree in this point. All the things you claim for Saab are just improvements, even if importants, of other peoples technology! And thanks for remind me the Ford V4, just proves my point, the fastidious swedes hand bulid the cars but never designed a new engine from scratch in their whole story.
    Someyhing amazing really, when you realize that were a branch of an aeronautics company and were related to Scania until the end of the 80s.

    Back to the subject, don’t think that the chinese really cares about such peaunut losses. They tend to think in really long long term, while yanks and brits nowadays tend to think in really short time.

  16. But why are so many people so willing to see a Chinese importer succeed (on a site whose tag line is “Made in Britain), where even the most enthusiastic supports of the defunct UK marque appear to understand that Longbridge is only an insignificant outpost of a large organisation that could do very real damage to remaining manufacturers that do truly significant design and manufacturing in Europe and the UK in particular?

    The fact that their penetration in the European market has (so far) been utterly insignificant must be some relief to the far more significant number of UK workers at GM at Ellesmere Port, Ford at Dagenham, Bridgend and Dunton, Honda at Swindon, Nissan at Sunderland etc, etc.

  17. Sorry Rodrigo, you’re not stupid just wrong. SAAB used technology to refine/further a design. Triumph did the same to a design by a Herr Otto, although not as well as SAAB. Messrs R-R, Pratt & Whitney have been doing it since Mr. Whittle.

    Tigger. Willing someone to succeed is not what it’s about. For heavens sake have we learnt nothing from the 60’s and the Japanese. The same attitude is being repeated with the Chinese.

  18. @25 There is example after example on this site of people who have exchanged their loyalty from the defunct MG Rover to SAIC/MG and are desperate for them to succeed.

    Yes, I can see parallels with the Japanese and the 60’s, although this time we have supplied them with the equipment and designs from Longbridge and now we are showing them how to design the cars and hardware for themselves. What could possibly go wrong?!

  19. @26,Nanjing paid the going rate for everything at longbridge,as for loyalty its been tested for years,most notably throughout the seventies with strikes and piss poor quality,if it wasnt assembly workers it was tool setters or electricians and if it was one out all out.A self fulfilling prophecy, no production=no money=no profits and no future investment.so we have done the history,MGR is dead,a shame.
    Like any free market all the other car makers will have to stay in shape look at Renault,i see more new Viaro’s and masters than Clio’s and Meganes.Peugeots are no longer disirable and that fall out could be traced back to when they stopped making thier own shock absorbers and so spoiled some great drivers cars.Anyone of the above big players could pull out in an heartbeat if it suited them,GM in detroit could not care less which plant shut in europe,they play all the regional governments and we won,its the bottom line to them that simple.Wasnt Honda Swindon plant still on a three day week for some reason?
    As for supporting industry how many of you have a dyson vac that the inventor so shamelessly shipped production overseas because they could be made cheaper?

  20. @27, francis Brett,

    re the Dyson vac- I seem to remember James Dyson mumbling something about the inability of British companies to provide him with the appropriate coloured flex and moulded plug.

    Not a fan of his products- they usually come in hideous colours such as lime green and purple (on the same product!), are not intuitive to use, and seem to fall to pieces quite easily. Not only that, when he launched the ugliest range of washing machines known to mankind (also available in purple- as if anyone has a purple kitchen!) it was incredibly unreliable, and soon after he stopped making the parts needed to keep the damn thing going. It was a stupid design anyway- with ‘contra rotating drums’- ie so the body of your shirt gets twisted in one direction, whilst the arms get twisted in the other- anyone else see the flaw there?

    I’ve no idea why he seems to regard himself as some kind of national treasure.

  21. A reported trading loss for the year is hardly surprising given the low level of sales. However, I don’t agree with comments like “..you may as well pack up and go home now…”. The very slow progress is perhaps hard to understand but surely early losses are to be expected – SAIC is currently at the “investment” stage of a long term plan.

    One does wonder though at what outwardly seems very slow progress. Even with petrol 6 alone surely there could be more sales push, promotional activity!

  22. @25 and every kind of transportation are derivated from the wheel, invented by some brilliant mesopotamian bloke, when britons and the whole of Europe for that matters still were in the trees…

    Anyway, it’s unbelievable how much SAIC use the MG “britishness” to try to sell their cars, not only about design and “technology”, but about it’s heritage. Wonder how much of british could have the MG3 and MG350, really…

  23. @27 Nanjing picked up what they needed from MG Rover for a pittance by very clever negotiation. The final death blow came when the Phoenix consortium negotiated away most of their intellectual property rights for peanuts and when there was no where left to go, the Chinese picked up everything that they really came for for next to nothing from the receivers.

    To add insult to injury, the company that held out false hope to MG Rover and ultimately dealt the final blow is, somehow, held out as a saviour as it employs a handful of people, working in a rented shed, on the Longbridge site putting completed Chinese engines into equally completed Chinese built bodyshells.

    On the subject of Dysons, I’ve owned them since 1994 and they have been the most reliable and well built vacuums that I’ve ever used. I was sad to see manufacturing go abroad, but I’m sadder still to see how little protection he gets from Patent laws where he’s now, effectively, the unpaid R&D department for Hoover who seem to rip his products off with virtual impunity!

  24. Sorry but this is just a drop in the ocean.Remember the cost of starting up,running the BTCC team etc.The end of 2012the new diesel comes on line and during next year we will see the MG3 released and possibly the MG5.Things are slow at the moment but I think 2013 will see a “new start” for MG.

  25. @31,of course those clever chinese,they seen the company was in more shit than Julian Claries finger,whom would blame them,the rot started with the mergers and BAE (which arguably BMW saved)P4 gave the company five more years.

  26. @ 33 “in more shit than Julian Claries finger”

    Yuck, now that’s a vision I want to get out of my head!! Unfortunately, I can’t think of a more accurate way of describing it.

  27. Just a little aside, James Dyson may have been the first to use cyclone technology in a domestic vacuum cleaner but he did not invent the tchnology. Kodak were using an almost identical system in their first photocopiers in the mid 1970’s for waste toner recovery. In fact it it still used in the latest high speed digital printers in the same way.

  28. There is a reason that Chinese MG are making a loss – the cars are seriously crap. Currently, they make Hyundai and Kia look attractive. The MG6 looks like a poor man’s Insignia. especially from teh rear and the forthcoming MG5 could be the new Hyundai i30….
    The engines are rubbish being low on power and greedy on petrol and there is no diesel model. They may well improve with age [remember the Hyundai Pony] but I doubt that I’m ever going to hanker after one.
    I feel sorry for the British workers.

  29. @36 I wouldnt count on the british workers wanting your concern. Aye,remember the Pony,and over 20+years later where they are now.But look at the poor mans insignia-so soon.

  30. @ Rodrigo – Rover used a Buick designed engine as its mainstay throughout the 60s, 70s and 80s, albeit in improved form. It could be argued that without the Buick V8, Rover may have been eclipsed by Triumph in the BL big car stakes. A car company is about so much more than the engine. A large proportion of car makers sell each other Diesel engines these days – a good case in point being Alfa Romeo – but through development and tailoring to AR’s driving characteristics, it still feels like an Italian engine. How does that diminish SAAB’s engineering achievements? Have you not read the link I posted? Or any reviews of SAAB’s milestone cars?

  31. These figures actually aren’t that bad in terms of the number of cars completed at Longbridge. Consider the huge losses Saab continued to make in its brief independent days based on the sale of a mere 5,000 cars; it was vast and far more disproportionate than MG’s figures. Longbridge’s figures may also be much less as a proportion to the number of vehicles sold than those for Lotus Cars.

    Many car makers, usually much bigger than MG Motor UK Ltd’s operation at Longbridge, have posted a loss in recent years although we have not automatically suggested they should “shut up shop” because of it.

  32. @davis13… an MG6 estate with a diesel – yes that sounds a good idea. I havent heard anyone else suggest that. It’s rear hatch bodystyle would suggest an attractive version could be produced a’la Insignia/Astra Tourer.

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