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CheeseKitten
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From BBC News Website

MG Rover's Chinese future
Analysis
By Will Smale
BBC News business reporter

As MG Rover prepares to join with state-run Chinese firm Shanghai Automotive Industry Corporation (SAIC), the UK carmaker says it is about to secure the long-term future of its Longbridge plant.

Yet with SAIC effectively taking over MG Rover in a £1bn ($1.85bn) deal that will give it a 70% stake in the merged company, just what is to stop the Chinese firm switching all production to China?

After all, manufacturing costs are obviously markedly lower in Shanghai than they are in Birmingham, and SAIC, China's largest carmaker, has no emotional attachment or loyalty to Longbridge's 5,200 staff.

MG Rover chairman John Towers has said that the future of Longbridge is definitely secured, and that the Chinese see the plant as an integral component.

European importance

"As we all know, it is very easy to sell your business to China, it is very easy just to pick everything up and take them across there," he said.


Rover has got to get new cars onto the market and get them out quickly, otherwise it just won't survive
Automotive analyst Prof Peter Cook

"Our objective, of course, was not to do that, our objective is to produce a partnership where cars are made in China, but also continue to be made at Longbridge."

Automotive expert Professor Peter Cook, from the KPMG Centre for Automotive Industries Management at Nottingham Trent University, agrees, predicting Longbridge will become a specialist site when the deal is completed, expected to be in January.

"I think we might see over time Longbridge focusing on particular models - the upmarket ones, while the Far East building the cheaper price-critical vehicles," he said.

Prof Cook added that he thought MG Rover and Longbridge would both be vital to SAIC because they gave it a foothold in Europe, which remained one of the world's two great automotive market places.

Despite MG Rover making continuous losses since it was bought four years ago from BMW for just £10, Prof Cook said SAIC, which saw 2003 profits increase by 41.7% to 1.5bn yuan ($181m; £98m), was going to do well out of the coming together.

"The Chinese are getting a lot out of the deal, they are getting a brand, getting a foothold in Europe, and getting access to European technologies and management know-how."

Brand value

Professor Stan Siebert from Birmingham Business School, agreed, pinpointing the technological know how at MG Rover as being what most interested SAIC.

He also said Rover continued to have "a really good brand name, even though it has become somewhat tarnished over the last few years".

And Professor Cook believes that instead of there being a future risk to Longbridge, SAIC, which in addition to making its own cars also produces parts for General Motors and VW, may instead consider opening an additional plant in the US.

"There are today three main global car markets - the US, Europe, and the growing Far East market," he said.

"The Chinese are going to want to keep things going in Europe."

Investment boost

But why is MG Rover so happy to sell off its independence?

In stark terms, it simply has no other choice.

A number of its models such as the Rover 45 are now rather long in the tooth and the company does not have the multi-millions required to invest in developing replacement cars.

Instead MG Rover was recently forced to introduce a new super-mini model - the CityRover - which is actually simply a rebadged Indian car.

"Rover is out of line at present," Prof Cook said.

"It has got to get new cars onto the market and get them out quickly, otherwise it just won't survive."
Cant believe noones mentioned this yet! :eek:hwell:
 

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Jib 21 said:
From BBC News Website

"The Chinese are getting a lot out of the deal, they are getting a brand, getting a foothold in Europe, and getting access to European technologies and management know-how."
Management know-how!! Thats a laugh, its the management know how that let to the British car industry being in the state its in now!!

Sure in the 50s we were ahead of the game but by the 60s and 70s people just didnt want cars and bikes that leaked oil anymore and started buying foreign stuff. We didn't change our approach to manufacturing until it was far too late and look where it has got us.

Err, bit of a rant there. Soz.
 

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CheeseKitten
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Discussion Starter · #4 ·
dont apologise mate, thats what the forum is here for, get people talking...
 

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Rover-MG needs money to make new models and chinese have money, while londbridge follow under British control ... it´s not too bad, isnt it?
 

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do we still make any cars atall now?
 

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This was in the news last weekend and if the BBC (and others) bother to actually understand properly, they will find that MGR is not being bought out or merged at all :evil: .
There is a lot of total bollox being talked and written about this. The deal isn't even finalised yet and will require the approval of the Chinese government.

Phoenix Venture Holdings and Shanghai Automotive Industries are to form a third joint venture company which will design cars for MGR and SAIC. MGR are providing the engineering and design knowhow (the Chinese have no experience of designing cars - their car industry has built up making obsolete models under licence), and SAIC are to provide the money(of which MGR have very little at present) Thus SAIC will own 70% of the new company, and MGR 30%.

I do not think that PVH will want to sell MGR off, because my understanding of the situation is that they will have to pay back a lot of money to BMW if they do. Also of course BMW still own the Rover name which would further complicate matters. (Rover is regarded as a prestige brand by the Chinese apparently.

SAIC are the largest car maker in China with over 50 factories in and around Shanghai producing, among others, the 1980's model Passat (licenced from VAG) and a Buick of a similar vintage (licenced from GM)

If you want to see more, I suggest a look at some of the threads posted on MG-Rover.org over last weekend. :)
 

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Jib 21 said:
Cant believe noones mentioned this yet! :eek:hwell:
They have in at least one thread all of it's own.

And SAIC will own 0% of MGR as mentioed above. On the flip side, MGR will probably not own any of the intellectial rights on the new models either.
 

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well unfortunately, if this dont come off there is a very REAL chance that no-one would be able to buy british anymore!!!imho this could be a great thing for mg-rover, they will have the money to get creatin on the new models an they havnt been "bought" like what happened with B*W they will still have some control over happenings an i would rather that than see em go under!!

on the past, i reckon its a british thing what happened, we get to be the best in the worl ant something, but do we improve???? fuck no! lets sit on our arses an watch everyone else catch up and pass us thinking "people will still buy from us cos we were the best" ](*,)
 

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Wonder if the spares prices will come down if they're made in China ? :dunno: #-o

Build quality can't get much worse anyway............But would anyone fancy a CityRover type offering with a ZedR bodykit as the Mk3 Zed ?:eek: :eek:
 

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Rover has always been low on cash-reserves though when you think about it. It's gone from one owner to another...

Morris... BMC... British Leyland... Leyland... Austin... BMW...

Look at the Mini, it ran from production for decades with very little change in the design. And the flaws they had in the early days ran on until they finished production in 2000 'cos they had no money to fix them!!

What the company really needs is a decent board who don't squander more than their fair share of cash into stupidly large pension funds.

In addition, I think the government could do more to help. Perhaps by injecting some cash to develop new models which would help the economy long term due to revenues from exports, not to forget provide many jobs.
 

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DriveBy said:
Wonder if the spares prices will come down if they're made in China ? :dunno: #-o
Spares is no longer soley under MGR's control. It's owned by Acttepillar Distributions.
 

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Stu said:
God Knows.

Meant to be Cattepillar Logistics but fat fingers got in the way.
No worries mate - we all suffer from that problem :wink:

Caterpillar logistics sounds right - I have a parts EPC with that logo on.

I had thought previously that it was just the logo of someone who had registered the disc b4 me.


Now I know it's the outfit that actually controls the supply of spares ](*,)

The things we learn eh ?............... :grin:
 
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