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China Becomes Global Auto Company


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Chinese companies Nanjing Automobile and Shanghai Automotive Industry Corporation completed their 2.095 billion yuan ($285.7 million) merger yesterday in an attempt to create the country's first "world class" automotive company. SAIC Motor will pay for the vehicle and core auto parts operations of Nanjing Auto, owner of the classic MG Rover brand, the Chinese firms' parent companies said in a joint statement.


Nanjing Auto's parent company, Yuejin, will in return get 320 million shares in SAIC Motor, the statement added, equal to 4.9 percent of the Shanghai-listed firm's total shares.


The Yuejin Motor Group is one of tne of the largest companies in China. The company has an annual production capacity of over 180,000 vehicles and has three major vehicle production bases.


The Shanghai Automotive Industry Corporation (SAIC) is a Chinese automobile manufacturer which ranks the third among the "Big Five" Chinese automakers (the other four are First Automobile Works, Dongfeng Motor Corporation, Chang'an Motors, and Chery Automobile).


SAIC partnered with General Motors to form Shanghai GM, SAIC-GM-Wuling Automobile, and the Pan-Asia Technical Automotive Center. SAIC also partnered with Volkswagen Group in the formation of Shanghai Volkswagen Automotive.


SAIC is already builds a revamped version of the Rover 75 in Shanghai, while Nanjing owns the rights to MG and plans to start low volume production of sports cars at the old MG Rover factory at Longbridge early next year.


The Nanjing Automobile (Group) Corporation (NAC) is a state-owned enterprise with history dates back 1947 and one of the oldest Chinese automobile manufacturer.


Nanjing has reached an annual capacity of 200,000 sets of various autos, including over 400 kinds of saloon cars, light trucks, heavy trucks, light buses, off-road vehicles, estate cars, special vehicles and special-purpose vehicles as well as a wide series and multi-type product mix of various chassis, which has developed into four integrated production bases of Yuejin, Nanjing-Iveco, Nanjing-Fiat and Soyat.


On July 22, 2005, the Nanjing Automobile Group purchased the remaining assets of British MG Rover Group for £53 million.


The MG Rover plant at Longbridge was for many years one of the most important factories in Europe and was the largest British owned car manufacturing plant until the bankruptcy of the MG Rover Group. After the factory of Abingdon closed in 1980, Longbridge was also from 1982 the home of MG. Longbridge employed 16,000 ten years ago, down to 6,000 when the company collapsed into administration in April 2005.


On July 12, 2006 senior officials of Nanjing Automobile Corporation announced the revival of the historic MG brand of vehicles, as well as plans to build a new MG product in Oklahoma, with the formation of MG Motors North America, Inc., in a ceremony in Oklahoma City.


The deal is aimed at building the combined group into a world- class producer with unprecedented scale in China, SAIC said in a statement yesterday.


As part of the merger, Italian car group Fiat will sell its 50 per cent share of a joint venture with Nanjing, it was announced. Fiat is known to be unhappy with Nanjing's acquisition of the MG assets as well as with its link up with SAIC.


The two companies will, however, continue to collaborate on building commercial vehicles and production of components.


Welcoming the merger, Birmingham City Council leader Mike Whitby said: "I look forward to the biggest car producer in China playing a significant role in investing in Birmingham ... and providing a real boost for car production at Longbridge. It's great timing with the Longbridge Action Plan, our vision for Longbridge as an eco-town creating 10,000 jobs."







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