23 March 2005

The MG marque has been unexpectedly sold off as part of MG Rover’s joint-venture deal with Chinese car maker SAIC, Autocar can reveal. The long-anticipated deal between the two companies had originally revolved around the Rover brand, outright purchase of the K-series engine family and Rover 25 and rights to produce the 75.

But Autocar has learnt that the MG brand has now been thrown into the deal. This means that a board dominated by SAIC will control the future of the famous marque. MG now accounts for a substantial chunk of MGR’s total sales in Europe, making it crucial to the survival of the European sales network.

More seriously, an agreement to build the vital new medium car at Longbridge is still not sealed. But SAIC is said to be very keen that the new Longbridge operation will be solidly profitable.

Well-placed insiders told Autocar that Phoenix Venture Holdings – the company that controls MGR – is being propped up by cash injections from SAIC as the core car-making business struggles to survive on a day-to-day basis. At the end of last year SAIC paid over around £65m for the ownership of the K-series engine and the Rover 25. In the past few weeks SAIC has stumped up another £80m or so to buy the rights to build the Rover 75 and for ownership of the MG badge. It’s thought the Phoenix share of the joint venture is now around 25 per cent, with the other 75 per cent held by SAIC (and minority partner Nanjing Auto). Production of the Rover 25 is due to end in the UK later this year, before the operation is moved to a new site north of Shanghai. The K-series engine manufacturing operation will be shipped out next year, building engines ranging from 1.1 litres to a new 2.0-litre unit as well as the 2.5 KV6. The revamped L-series diesel will continue to be made in the UK.

The 75 production line will be split, with China building a moderately stretched version of the 75, while Longbridge sticks with the standard and long-wheelbase 75s. 45s will also continue to be made in the UK until the car is phased out.

MGR’s factory site is also being redeveloped, with the West Works site that makes bodyshells for the 25 and 45 due to be closed in early 2006.

Phoenix Venture Holdings will be left with the ownership of the TF roadster, the SV supercar, MG Sport and Racing and the deal to import the CityRover from Indian maker Tata. It will also be responsible for the pension fund and redundancy cover for MGR’s workforce. Ironically, it will have to lease back the right to use the MG badge.

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