Nanjing Autos and SAIC tie up to be announced soon
Published December 17, 2007
Here is an excellent article from the Birmingham Post, saying what we have been believing will happen for the past few months: The creation of a British Chinese Leyland.
Click continue reading, to see more.
A full takeover of Nanjing Automobile by its domestic rival Shanghai Automotive will be sealed on Boxing Day, The Birmingham Post has learned. The two companies – which have competed over the MG Rover legacy – have agreed in principle to a merger to create a Chinese automotive giant. Under the terms of the deal Nanjing Automobile Corporation would own no more than 15 per cent of Shanghai Automotive Industry Corporation.
But sources said the deal would not affect NACs plans to restore vehicle production to Longbridge and relaunch its version of the MG TF early next year. The deal would create the biggest Chinese automotive maker, with a combined production of more than 1.6 million vehicles. It would be a step towards creating a national Chinese car champion that would eventually compete head-on with global giants.
The Beijing government is seeking to strengthen the industry by encouraging tie-ups and mergers. No names have been decided for the new joint company, although East Ocean Company is among those under consideration. A source said: This will be good news for Longbridge. SAIC will bring more products and volumes at Longbridge will be higher than before. It is a logical move. SAIC is much bigger than NAC and has more money. Joint groups could work together on the engineering and research and development.
The takeover could also pave the way for NACs blueprint for Longbridge, which will see part of its portion of the old South Works site redeveloped. A new design centre could be set up, to house the 250 engineers who have been working for SAIC at Ricardos site in Leamington. The source added: Instead of having two separate R&D centres there could now be one. The total investment in R&D, manufacturing and sales and marketing will go up.
No new buildings will be constructed under the blueprint, although existing offices will be refurbished. The blueprint will also include greater capacity for production and a better logistics and quality control. This will be necessary as part of the plan is to source more components from China to ensure profitability and reduce the problems the firm has had with defective parts imported from the Far East.
Broken windscreens were among the parts which delayed the relaunch of the TF from this year into 2008. SAIC is thought to have said it does not want to interfere with NACs plans. The source said: SAIC respect NACs plans but will look at how to improve things in the future. That is the Chinese way, one firm will not say I am the boss, they will co-operate.
The long delayed relaunch of the MG TF will still go ahead at either the end of February or the beginning of March under the plan. But the deal, although a takeover, has been approved by both companies. It is like a marriage. If you want to marry someone it is impossible if the other person doesnt like the other one. Once these companies were competitors, now they have become part of one family, which is very good for sales and marketing for example. Of course this is good news for Longbridge, because it means a bigger firm. It means there is going to be more money to develop the next generation of cars. SAIC has some very big ambitions to redevelop this area. It will be giant company, the source added.
A spokeswoman for SAIC said: Apart from a July 26 letter of intent to cooperate with Nanjing Auto, no new agreement has been signed so far. She said she did not know when a deal might be announced.
SAICs ventures with General Motors and Volkswagen are Chinas biggest car sellers, with combined sales of 441,584 cars in the first half of 2007, or 14 per cent of the market. But the company faces tough competition in the commercial vehicle area from local rivals FAW Group and Dongfeng Motor. Nanjing Autos MG brand cars, Yuejin light trucks and Iveco light buses could be valuable additions to SAICs portfolio.