Shanghai Automotive Industry Corp (SAIC) has again extended an
olive branch to Nanjing Automobile Corp (NAC), SAIC's bidding rival
for the MG Rover project two years ago, in a move that's believed
to result in a merger of the two automakers.
SAIC Chairman Hu Maoyuan told a shareholders' meeting last week
that both SAIC and NAC hope to best utilize the domestic and global
resources, cooperate and complement each other and avoid redundant
construction.
Hu also said both Shanghai and Nanjing governments have
supported the move. Shanghai Vice-Mayor Hu Yanzhao led a delegation
to Nanjing two weeks ago to work it out.
The central government, which has been pushing for consolidation
of Chinese automakers, has also endorsed a merger.
While both SAIC and NAC have been talking about cooperation, no
tangible progress has been made so far.
NAC Chairman Wang Haoliang, former deputy Party chief of
Nanjing, had earlier said his company never shut the door for
cooperation with SAIC. He said NAC wishes to jointly run the MG
Mingjue project. Negotiations will determine if NAC will give up
the controlling stake in the project.
Shanghai-based National Business Daily reported that a central
government document about the merger of SAIC and NAC has already
reached the Shanghai Municipal Government. The document ratified
NAC as the base for MG Rover production, without clarifying the
exact stake of each side.
Industry analysts say the upcoming merger will create a win-win
situation for both. While it will make both automakers more
efficient, it will help NAC ease its financial strains in expanding
MG production and help SAIC better tackle the world market with the
MG brand.
The two automakers vied for Britain's automaker MG Rover in
2005. While NAC won MG Rover's fixed assets such as production
lines and technology, SAIC got its design blueprints for two car
models - Rover 25 and Rover 75 - as well as the intellectual
property rights for all Rover auto engines.
With Rover technology, SAIC launched its Roewe model last year
and started marketing the sedan early this year.
NAC also started selling its Ming Jue sedans three months ago.
It's a sports model based on MG technology.
(China Daily June 27, 2007)
