China: SAIC & Nanjing Auto seen moving closer to merger

[nadepalma]

I thought that this was interesting and worth posting.

Many of you know that I've taken an interst in China's automotive industry. I have been very interested in what GM (and other Western) automakers are doing, this goes without saying.

But, I've also paid attention to the activities of Nanjing and SAIC -- especially after the collapse of the former MG Rover, Ltd. and the fight that ensured immediately after over the scraps that remained.

I've posted other articles on this such of varying degrees, such as SAIC launching new brand without Rover name-and it's "Roewe"? or GM's Chinese Partner Plans To Compete With GM or MG-R Saga Continues: SAIC considers legal action against Nanjing or MG-Rover Saga: Shanghai vs. Nanjing-A property-rights breakthrough for Westerners?

However, this is more of a follow up to Chinese Competition: SAIC & Nanjing Auto set to Merge and recreate "MG Rover"?

It would seem that the proposed merger is going to go through and that a larger Chinese automaker will emerge.

While SAIC dwarfs Nanjing by leaps and bounds, tiny Nanjing has the rights to the MG nameplate, as well as other recognizable marques like Austin, Wolseley, Morris, and Sterling among others.

In a very real sense, SAIC has the know-how and the brawn, but Nanjing has the intellectual-property rights to certain designs as well as the rights to marques that will not be lost on Western customers.

The company that emerges may very well eventually become a "threat" to western Automakers and a force to be reconed with on the world-stage.

Afterall, it's one thing to worry about Chinese vehicles like "Geely" selling well in Western markets to a group of consumers who instantly know it's a Chinese product. It's another thing entirely to sell an "Austin" or "MG" to the same group of consumers who recognize it immediately. I actually look at this more in depth in Chinese Competition: SAIC & Nanjing Auto set to Merge and recreate "MG Rover"?

A few thoughts:

1). Nanjing has the MG nameplate. MG and Rover sold nearly identical looking cars under MG-Rover, Ltd. As Roewe is the spiritual succesor to "Rover" (which was sold to FoMoCo) and their cars still look very very much like what Nanjing has coming for MG, what will become of the recently launched "Roewe" brand? Will the new/combined company abandon Roewe and just concentrate all their focus on the MG brand? This would seem to make more sense, but what could they have planned?

2). How will this affect Nanjing's proposal to build and sell cars in the US (the MG TF Coupe was to be build in Oklahoma)? Also, the same was to happe in the UK (the MG TF Roadster was going to be build at the shuttered Longbridge plant). Will the combined SAIC/Nanjing follow through on its plan?

3). Nanjing was going to revive the Austin nameplate for a new series of cars and suvs in the near future. Will this accelerate these plans? Will we see Austins poping up in the US and Europe or will SAIC squash it in favor of keeping "Roewe" alive?

Just a few thoughts...

Originally Posted by Automotive News

SOURCE

SAIC, Nanjing Auto seen moving closer to merger
Reuters
November 8, 2007 -- 12:00 CET

SHANGHAI (Reuters) -- The parent groups of SAIC Motor Corp and Nanjing Automobile Group are close to completing a review of each other's assets, bringing them nearer to a planned merger, an SAIC spokeswoman said today.

"The two sides are in the final stage of their audits and asset evaluations, but still need to discuss technical details," said the spokeswoman, who asked not to be indentified.

"There is no timetable for the merger," she added.

A source familiar with the situation, however, said a deal could be sealed before the end of the year.

"A decision could be made next month, as previously scheduled," the source told Reuters.

The source added that one option would be to fold the vehicle production assets of Nanjing Auto, owner of the MG car brand, into SAIC Motor, while Nanjing Auto's components-related assets would be combined with SAIC's parent, Shanghai Automotive Industry Corp.

In return, Nanjing Auto's state-owned parent would take a stake in Shanghai Automotive or its listed unit, SAIC Motor, the source said, although other possible shareholding and structural arrangements were also under consideration.

Nanjing Auto declined to comment.

Nanjing Auto, which manufactures Yuejin brand light trucks as well as Iveco light buses via a commercial vehicle tie-up with Fiat, is currently owned by five state shareholders.

National champions

Beijing has been encouraging consolidation in China's fragmented auto industry, with more than 100 players, to create a few national champions able to compete with global giants at home and overseas.

The SAIC-Nanjing Auto merger, if it goes ahead as planned, would be the first major industry consolidation in recent years in China, the world's second-largest auto market.

The Shanghai Securities News reported today that Fiat had started to pull its employees from Nanjing Fiat, its loss-making car venture with Nanjing Auto, and a dissolution of the joint venture was imminent.

[Greg Burr]

They can realize synergies in copying other designs.

[mbukukanyau]

British Marques are worth almost nothing. Look at Ford falling on itself to get rid of Land Rover and Jaguar, with a full brand spanking new product line

[Bravada]

Sure, with Land Rover being a cash cow. Come on!

[Butz]

Originally Posted by mbukukanyau

British Marques are worth almost nothing. Look at Ford falling on itself to get rid of Land Rover and Jaguar, with a full brand spanking new product line

What's with you and British cars? Why do you dislike them so much?

Back to topic, I see one thing coming from NAC + SAIC, an Auto giant in the making!

[wildgoosechase]

NAC + SAIC + Chrysler ? I doubt that Cerebus wants to stay in the auto business forever.

[chinamonty]

That last point is interesting but Chrysler have a tie in of sorts already.
There are now TV ads for the MG and they are quite well done. The car 9with a european james bondish chap at the wheel) is being followed by police on bikes. It looks like he is escaping from them but then he arrives at what looks like an embassy dinner and the bikes turn out to be his police escort. I am not sure whether it is a new ad or whether they borred something from MG but it is a good ad for establishing a market position. The vehicle looks OK too. Shut line etc look OK.

[Stéphane Dumas]

Originally Posted by wildgoosechase

NAC + SAIC + Chrysler ? I doubt that Cerebus wants to stay in the auto business forever.

Chrysler had currently some plans with Chery and SAIC had sold their part in Chery since 2003.