Nothing new really
China could swallow Rover brand name following collapse
Neil Behrmann In London
9 April 2005
Business Times Singapore
(c) 2005 Singapore Press Holdings Limited
SHANGHAI Automotive Industry Corporation (SAIC) could produce some Rover-branded cars in its own plants after the collapse of MG Rover.
The stricken UK company is on the brink of liquidation after talks to forge a joint-venture deal with SAIC failed and the British government refused to provide a 100 million (S$308 million) bridging loan.
But motor industry sources believe that SAIC could have brand rights on small and possibly other Rover cars because it had already paid 67 million to MG Rover last year.
Some motor industry specialists believe, for example, that SAIC's payment last year has secured it the brand name of Rover 25, a small car.
The brand issue, however, is up for interpretation as details of the complex negotiations between MG Rover and SAIC have not been revealed.
SAIC was expected to pay MG Rover about 200 million, including the 67 million which was transferred last year.
In return, it was to receive the full rights to the Rover brand name, Rover's K-series engine technology, and the rights to make Rover models in China.
In terms of the failed deal, the joint-venture partners aimed to design and build four new models, the first of which would be a medium-sized car.
'In the end, SAIC made it clear that they were not confident about the future solvency of MG Rover, and therefore there was no reasonable prospect of a deal,' said UK Trade Secretary Patricia Hewitt.
Rover needs to sell about 180,000 cars a year to break even. Last year, sales fell to 110,000 cars.
BMW, the German motor group, sold an already ailing MG Rover to Phoenix Venture Holdings, a consortium of four executives, in 2000 for the nominal sum of 10. BMW, however, still owns the name as it merely licensed the brand to Phoenix.
Thus, PricewaterhouseCoopers, the expected receivers or administrators of a bankrupt MG Rover, could offer the design division of MG Rover team to SAIC, which would also negotiate a new Rover brand name licence from BMW.
Meanwhile, the collapse of MG Rover leaves the West Midlands of England facing 6,100 job losses at the MG factory and 15,000 supplier jobs vulnerable.