Nanjing plan to boost MG relaunch

Jun 29 2007 By Jon Griffin, Birmingham Mail

NANJING could link up with rivals SAIC in a "gentleman's agreement" to bolster the relaunch of MG at Longbridge.

The Chinese owners of the MG brand are in discussions with their Shanghai rivals in a deal potentially worth hundreds of millions of pounds.

Nanjing Automobile Corporation, which bought the Birmingham-based company for £53 million after the collapse of MG Rover, is negotiating with Shanghai Automotive, which lost out on the original sale two years ago.

But Nanjing spokeswoman Eleanor De La Haye stressed today that talks were at an early stage and could pave the way for a "gentleman's agreement" rather than a full-blown merger.

"I am not convinced that anything would be put in writing. It may a working partnership, some form of gentleman's agreement.

"I do not think that it is any secret that the Chinese Government has asked Shanghai and Nanjing to talk.

"NAC MG is in a unique position of being the first Chinese car firm with an international brand. There are talks at the moment about merging some of the cost bases and some of the technologies.

"Any agreement would have obvious knock-on effects for Longbridge."

An industry source said: "The Beijing government is very keen for this to happen. Why have two companies making very similar cars?

"There is the obvious synergy of the brands: SAIC has Roewe -which is what it calls its Rover 75s - and Nanjing has MG. It doesn't make sense to make the same car under two different names."

The production line at the Longbridge plant was formally launched last month by Nanjing after lying idle following the demise of Rover but no date has been announced for the resumption of volume production.