1 December 2004

MG Rover is only weeks away from clinching a deal with the Shanghai Automotive Industry Corporation, (SAIC) according to company bosses. However, the optimistic reports of a deal that broke last week have led to a raging controversy culminating in an ‘official SAIC spokesman’ denying that a deal was about to be rubber-stamped by the Chinese government.

Autocar has established that MGR has already sold the rights to the Rover 75 platform and production line and the Powertrain division’s engine technology to SAIC. It’s not been revealed to what extent SAIC now owns the 75 and the engine range and whether these rights extend beyond the immediate Chinese market. Newspaper reports have insisted the deal was completed for just £40m.

MGR also told us that it has agreement from BMW for the Rover brand to be handled by SAIC in China. MG Rover owns the MG brand outright, but BMW still has the last say on the use of the Rover badge. Initially SAIC will produce the 75 badged as a Rover for the Chinese luxury car market.

The deal to sell the British technology came about because the Chinese government didn’t want domestic manufacturers simply licensing other car makers’ technology. Because SAIC now ‘owns’ the 75 platform, it satisfies the government’s demands.

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The nub of the rescue deal for MGR seems to be that SAIC will revive plans to create a VW Golf-size platform from the 75 platform. MGR will piggyback SAIC’s massive product development investment in a range of new cars; while SAIC is happy with a saloon, MGR will develop a three- and five-door hatch from the programme.

MGR says its Golf rival could arrive in 14 months, but the company has to survive in the meantime. A big branding push and further product updates will be rolled out in the new year.

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