Chinese Car Deal Raises Hopes for MG Revival

By Fang Yan from the International Herald Tribune

A deal struck this week puts a venerable British motoring brand in the hands of China’s top car maker, raising hopes that Shanghai Automotive Co might do for MG what Germany’s BMW did for the Mini.

Shanghai Auto on Wednesday agreed a $286 million dollar (143.4 million pound) deal to acquire the vehicle and core auto parts operations of Nanjing Auto, an eastern China manufacturer which surprised car enthusiasts in 2005 by snapping up the MG brand and some other assets after the collapse of the British firm, MG Rover.

With a stock market value of $24 billion, Shanghai Auto, backed by parent SAIC, has financial clout roughly equivalent to Italy’s Fiat or Hyundai of South Korea.

“Funding is obviously not a major concern now that the companies are joining forces,” said Chen Qiaoning, analyst at ABN AMRO TEDA Fund Management in Shanghai.

SAIC, which has joint ventures with General Motors and Volkswagen AG in China, already has a connection with the defunct MG Rover.

Last year it introduced the Roewe 750 to the Chinese market. The car is based on technology acquired from MG Rover and is priced to compete with Toyota’s locally-made Camry.

Nanjing Auto, for its part, announced a grand scheme to revive the MG marque when it rolled out its first MG sports cars and saloons, made at a plant in China, in April.

The distinctive MG badge dates back to around 1925 and is part of a rich history of British car manufacturing with a special connection to motor sport.

MG and other British motoring names including Rolls-Royce and Bentley, Jaguar, Aston Martin and Lotus all eventually needed to call upon foreign capital as car markets become more open and costs competition hit home.

Ford and GM of the United States and Japan’s Nissan have big production sites in Britain, but a slew of British marques are in foreign hands.

India’s Tata Motor is set to buy Jaguar from Ford . Volkswagen owns Bentley, BMW owns Rolls-Royce while Aston Martin is owned by a consortium including Kuwait’s Investment Dar . Lotus belongs to Malaysia’s Proton.

Nanjing Auto, which paid 53 million pounds for MG, has plans to return the brand to international prominence and make it fashionable among China’s emerging middle class.

Earlier this year, Nanjing Auto unveiled its first British-built MG TF sports cars at the Longbridge assembly plant, ending a two-year production halt there.

VENERABLE MARQUE

The British production was intended to revive the marque internationally through sales in Europe and British Commonwealth countries, where the MG brand remains a household name.

But financing MG’s revival was clearly an issue for Nanjing Auto.

Zhang Xin, general manager of the Nanjing Auto subsidiary making the cars, said at the time that the subsidiary was seeking outside investors and was willing to sell as much as 50 percent of itself to help fund the project.

A Nanjing Auto executive, who declined to be named, told Reuters on Thursday that it had sold 3,000 MG 7 model cars in China since August — not a large amount for a new model. Overseas sales have not begun, he said.

There is one potential legal cloud on the horizon for the partners as the administrator to a failed Dutch unit of MG claims the European brand rights outside Britain. Wouter Verel at lawyers AKD was not available for comment on Thursday.

SAIC’s ventures with General Motors and Volkswagen AG are China’s biggest car sellers. The SAIC group sold 1.25 million vehicles in the first 10 months of 2007, dwarfing Nanjing Auto’s sales of 79,196 vehicles, industry data shows.

Apart from its majority stake in South Korea’s Ssangyong Motor , SAIC does not have major car sales overseas.

SAIC Motor president Chen Hong told reporters on Wednesday that the Longbridge facility in Britain would serve as a platform for his firm to tap foreign markets with the MG brand.

Inside China, the outlook for the MG brand is complicated by the fact that SAIC has been promoting the Roewe, which uses technology similar to the MG 7 sedan series technology bought by Nanjing Auto.

But analysts believe SAIC may continue selling both Roewe and MG models by aiming at different market segments. MG cars in China have so far been priced slightly cheaper than Roewe cars.

“The next thing we will be focusing on is to clarify the market position of the Roewe and the MG, and differentiate the brands accordingly. That is vital for good sales,” said Liu Ningsheng, spokesman at Nanjing Auto.

While this issue may be resolved, the difficulties faced by the MG brand in the past show relaunching it may not be quick or easy, noted Chen at ABN AMRO TEDA Fund Management.

“They should buckle up and be well prepared for the bumpy road ahead,” he said.

(Additional reporting by Alexandra Hudson in Amsterdam and David Cutler in London; Editing by Marcel Michelson and Andrew Callus)

From the Editor's Desk – February 2008

Welcome to the new members that have joined since the last issue.

We would like to Chic & Terry Holliday, Thomas Dahlfors and Art Isaacs and all of the other contributors to this issue of the Octagon. Also thanks to Art Isaacs for his continued work in answering members’ technical questions and answers. Be sure to send in photos and stories so we can include them in future issues of the Octagon.

You can now find us on the popular networking sites at groups.myspace.com/amgba and clubs.yuwie.com/amgba and in the groups section of facebook.com and friendster.com.

I am happy to inform you that Technical Sections Volume III is now available which continues the great tradition of practical tech advice started with Volumes I and II. In keeping with the times this one is available only on CD for PC or Mac and is available in the Regalia/ Club Store section of each Octagon and on the website at www.mgclub.org.

Another new item in the store is a complete copy of the past ten years of the Octagon available on CD only for PC or Mac.

We have a new and improved club message board. You can access through the club website at www.mgclub.org or directly at board.amgba.com. We have a members only section of the message board. You can use the user id and password on page 3 of each Octagon or you can get a personal id and password. To do so, register and then logon to the message board and send a message to us with a reply in this section or via email. This allows you to access the MEMBER ONLY QUESTION & ANSWER and UPKEEP & PERFORMANCE HINTS area. It also allows you to post items in the FOR SALE and WANTED sections as well as post photos in the MEMBER PHOTOS area.

The club also now has a blog located at blog.amgba.com. Members can publish items or comments to the Blog by logging in as a member. We have a new American MGB Association photo gallery located at photos.amgba.com. The same login is used for the gallery as the Message Board. Members can download photos directly to this gallery.

Members now receive monthly publications. The Octagon is published in February, April, June, August, October and December and the eOctagon is published in January, March, May, July, September and November.

We now offer a 3 year membership or renewal rate which includes a free t-shirt or tech volume III CD. The rate is $95 or $125 for members outside the USA. And in response to many members we now have a 3 year eMembership for $50 which also includes a free t-shirt or tech volume III CD. So save some money and get a free t-shirt or tech CD in the process!

Send us your email address so that we can send you the eOctagon. The eOctagon is sent via bulk email so if you are blocking this type of email you will not get it.

Please send in you stories and photos to be used in the Octagon. You will receive a credit toward renewal or regalia.

Send in your list of spare parts that you have for sale as we send out all lists we have received during the year to members that request lists of spare parts available. These lists are also now appear on our web page in the “members only” section!

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Have a great start to the new year!

Frank Ochal