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Last Updated: Monday, 23 April 2007, 15:52 GMT 16:52 UK
Chinese hopes for revived Rover cars
By Steve Schifferes
Business reporter, BBC News, Shanghai Motor Show

Roewe 750
The Rover 75 is born again as Roewe 750

The two Chinese firms that were vying to buy MG Rover's Longbridge factory have shown remodelled versions of the Rover 75 at the Shanghai Motor Show.

Nanjing Automobile Corporation, the Chinese firm that bought the UK car company in 2005, was showcasing its new model sedan, the MG7, and has told the BBC that it plans to eventually export the model around the world as well as producing it for the Chinese market.

The company also plans to launch new models in both 2008 and 2009, badged as the MG3 and MG5 and based on the Rover MG ZR and ZS saloon car.

Meanwhile, Shanghai Automotive (SAIC), which failed in its bid to buy Rover but acquired the design rights for the Rover 75, has brought out a new version for the Chinese market known as the Roewe 750.

Hybrid concept

SAIC is positioning the 750 as a high-end vehicle, competing with the General Motors' Buick and BMW 3 series, and at the show it was featured in a glitzy video driving through country estates.

We need to use state assets more efficiently and effectively
Hu Maoyan, chairman Shanghai Automotive

The company is also working on a hybrid concept version of the Roewe 750, in line with the government's new emphasis on green policies.

SAIC, which also produces cars jointly with Volkswagen and GM, is one of China's biggest car companies and is eager to expand its own-brand production.

But SAIC's renewed call for co-operation with Nanjing has fallen on stony ground.

On Thursday, SAIC chairman Hu Maoyan said the two companies should share resources in order to develop domestic models more cheaply.

"We need to use state assets more efficiently and effectively," he told reporters.

Tie-up unlikely

An MG car at the Shanghai Motor Show
Nanjing Automobile has high hope for its revived MG models

But Nanjing believes that the strength of its brand gives the firm a big advantage in producing for export as well as for the home market.

Its boss says that such a tie-up would be unlikely, and the company is proceeding with its launch of the new MG in the UK.

Speaking at the Shanghai Motor Show, Nanjing MG managing director Zhang Xin said the company was in the final stages of testing its new MGTF sports car, with a view to restarting production at the former MG Rover's Longbridge factory in the second half of this year.

Mr Zhang said there was "no question" that the company would resume production in the UK "by the middle of the year" once it was sure quality standards were met.

He also said that the company was still in negotiations over plans to build another factory to produce the car in the US, but added there will difficulties over meeting US safety and environmental standards.

Mr Zhang said the company expected to sell around 3,000 to 10,000 cars initially in the UK, but hoped for an increase as MG was a "great brand in the UK".

"We need to understand the UK better," he said.

Doubling capacity

When Nanjing Motors acquired Longbridge in 2005, the plant was producing 110,000 cars a year.

Although final assembly will be in the UK, many key components of the MGTF, including the engines, will be made in China.

Nanjing said it has the capacity in China to make 200,000 cars a year and 250,000 engines.

It wants to double its capacity to 500,000 cars per year by 2010, by spending 1bn ($2bn) and seeking international investors.

The company had previously been known mainly as a truck and bus manufacturer.

Soaring growth

The Chinese government has encouraged domestic car companies to build for export as well as the home market, in the hope of making them more internationally competitive.

Most cars in China are still produced by big multinational car companies such as GM, Volkswagen and Toyota, working in joint ventures with Chinese companies.

But Chinese car companies such as Chery and Geely are rapidly increasing their market share, particularly at the small-car end of the market.

With economic growth of over 10% per year, China's vehicle market is now the second largest in the world after the US, and has been growing by 20% per year, with 8 million vehicles sold in 2006.

Car companies, both foreign and domestic, are expected to launch 140 new models in China this year.


SEE ALSO
Rivals chase GM in Chinese markets
20 Apr 07 |  Business
Chinese plant rolls out first MG
27 Mar 07 |  Business

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