China Update: SAIC and Nanjing merge; MG now in control of GM's partner

[nadepalma]

We have been anticipating this -- I've posted other threads on this subject.

But now it seems to have gone through -- and SAIC will have acess and ownership to western auto-brands like Austin and MG.

I wonder how this will play out ultimately...and if they will reap an enormous benefit from having established and recognizable brands to sell in world-markets.

SOURCE: Forbes
China's SAIC signs merger deal with Nanjing Auto

BEIJING (XFN-ASIA) - SAIC Motor Corp (SHA 600104) parent Shanghai Automotive Industry Corp (SAIC) signed a final merger deal with Nanjing Automobile (Group) Corp, the companies said in a joint statement.

According to the statement, SAIC (nyse: SAI - news - people ) Motor will pay 2.095 bln yuan to Nanjing Auto's parent Yuejin Motor in exchange for the vehicle and core auto parts assets of Nanjing Auto, which owns the MG car brand.

In return, Yuejin Motor will receive 320 mln shares of listed SAIC Motor from SAIC, equivalent to about 5 pct of the company.

SAIC and Yuejin Motor will set up a new joint venture -- Dong Hua Co -- to take over some other assets, including component, services and trade businesses from Yuejin Motor.

Yuejin Motor will hold a 25 pct stake in the joint venture, according to the statement.

SAIC, China's biggest car maker, said the deal is aimed at building the group into a 'world-class' firm having unprecedented scale in China.

SAIC chairman Hu Maoyuan told a media briefing that Nanjing Auto's current return on net assets is less than that of SAIC's listed unit, SAIC Motor.

'(The acquisition of Nanjing Auto) will not significantly impact the profitability of SAIC Motor, as the new Nanjing Auto assets only account for about five pct of the listed company's total,' Hu said.

Hu said production and sales at Nanjing Auto will triple by the end of 2010.

He said separately that SAIC will also increase cooperation with Italy's Fiat (nyse: FIA - news - people ) SpA, Nanjing Auto's current partner.

After the SAIC-Nanjing Auto merger, Fiat will be bought out of its 50-50 joint venture with Nanjing Auto.

'Fiat and Nanjing Auto have reached consensus (on the ending of partnership) and Fiat is giving up its stake in the venture,' said Yu Jianwei, president of Nanjing Auto.

'But cooperation with Fiat will continue in commercial vehicles and auto parts manufacturing,' said Yu. Nanjing Auto also has a commercial vehicle joint venture in China with Fiat's Iveco SpA.

Prior to the SAIC-Nanjing Auto merger, Fiat expressed concerns over Nanjing Auto's investment in the MG brand, independent from Fiat.

In August, Fiat signed a memorandum of understanding with China's Chery Automobiles to set up a 50:50 joint venture in China. The new venture is expected to produce and distribute Fiat's Alfa Romeo and Fiat brands as well as Chery cars.

After the merger, SAIC will also revive operations at UK sites of the defunct MG, including research, production and marketing operations, SAIC's Hu said.

MORE HERE

[nadepalma]

Commenting on the two new brands with the same UK origin, Hu said that SAIC will maintain the MG and Roewe dual-brands in the future with different market positioning.

This is just stupid -- they have no reason to maintain Roewe -- they should just end that brand and concetrate on MG.

Or if they must buy down the investment, the smarter thing to do is to switch the Roewe badge for an Austin badge and call it a day.

Maintaining both makes no sense at all....

[alveress]

How long before SAIC dumps GM as a partner? Anyone else think they will once they get everything they need from GM?

[SUPERBADD75]

Originally Posted by alveress

How long before SAIC dumps GM as a partner? Anyone else think they will once they get everything they need from GM?

of course they will. it is a Chinese venture, isn't it? they will get the knowledge they need from GM, steal a few things, and move on without GM.

[mbukukanyau]

its time for GM to aquire SAIC

[nadepalma]

Originally Posted by mbukukanyau

its time for GM to aquire SAIC

Not likely to happen as long as China is a communist nation. The government will simply not allow it.

However, if they government falls and they move to an "open market" then perhaps so. I could see GM or someone else taking a huge stake in them.

But this is unlikely to happen anytime soon....as enticing as it may seem.

Plus, I wonder what GM would do with those British marques IF they WERE to take them over?

[Stéphane Dumas]

Originally Posted by nadepalma

We have been anticipating this -- I've posted other threads on this subject.

Prior to the SAIC-Nanjing Auto merger, Fiat expressed concerns over Nanjing Auto's investment in the MG brand, independent from Fiat.

In August, Fiat signed a memorandum of understanding with China's Chery Automobiles to set up a 50:50 joint venture in China. The new venture is expected to produce and distribute Fiat's Alfa Romeo and Fiat brands as well as Chery cars.

After the merger, SAIC will also revive operations at UK sites of the defunct MG, including research, production and marketing operations, SAIC's Hu said.

MORE HERE

On a lightly off-topic side, I spotted a French article about the divorce of Fiat with Nanjing and the re-marriage with Chery http://www.leblogauto.com/2007/12/na...hery-fiat.html

Not likely to happen as long as China is a communist nation. The government will simply not allow it.

However, if they government falls and they move to an "open market" then perhaps so. I could see GM or someone else taking a huge stake in them.

But this is unlikely to happen anytime soon....as enticing as it may seem.

Plus, I wonder what GM would do with those British marques IF they WERE to take them over?

I guess GM might offers some "MG" package sport group or on a more realist solution, they could sells the names rights to another automaker.

[monza164]

An MGX roadster based of Kappa

Don't tell me i'm the only one that thought of that.

[johnny smallblock]

I don't think SAIC will jump ship from GM. As much as they may want to be an independant company selling cars worldwide, in the US they would sell more if they designed micro cars for Chevy, then if they struck out on their own.

[t-rex]

When Nanjing bought out Rover group, they got all the former BMC-Leyland-whatever brand names, except Vanden Plas in a few markets. That means there's the real possibility now that SAIC, which owns half of PATAC (the company that develops the Chinese GM products), could very possibly not only launch products under the Austin moniker, but other long-beloved brands such as Triumph, Riley, and Wolseley.

Chinese design is growing by leaps and bounds. What took the Koreans and Japanese twenty years to accomplish, the Chinese will likely have done in ten. At each year's Beijing Auto Show, the new Chinese designs seem be decades ahead of the products shown at the previous year's show. If the Chinese can get quality and crashworthiness of their products up to Western standards, selling them globally under familiar brand names will be ONE shrewd move. It'll be an odd world in a few years, as we'll have Indian Jags and Land Rovers and Chinese Austins and Triumphs plying the Earth's thoroughfares...

[GMfan1111]

I knew this would go through and like a typical Chinese venture SAIAC will take the best designs GM has move on and then proceed to make cheap knockoffs of the designs they stole in the first place After all nearly all of chinas automakers ripoff American or Japanese designs its commonplace

[mbukukanyau]

Originally Posted by nadepalma

Not likely to happen as long as China is a communist nation. The government will simply not allow it.

However, if they government falls and they move to an "open market" then perhaps so. I could see GM or someone else taking a huge stake in them.

But this is unlikely to happen anytime soon....as enticing as it may seem.

Plus, I wonder what GM would do with those British marques IF they WERE to take them over?

Sad, becouse Chinese companies have been buying American companies, like Gateway and maytag...
When will we ever learn? If we cannot buy them, they should not be able to buy us

[aldw]

Triumph is owned by BMW, and Tata now has Rover, so that means you may see a Rover comeback, but not Triumph.

[skylark68]

Originally Posted by mbukukanyau

Sad, becouse Chinese companies have been buying American companies, like Gateway and maytag...
When will we ever learn? If we cannot buy them, they should not be able to buy us

Gateway maybe, but Whirlpool ended up acquiring Maytag. Haier tried to buy Maytag but at the last minute Whirlpool got it. Just don't buy any Haier fridges at Wal-Mart. The domestic large appliance industry is still in fairly good shape, one of the few left.

[t-rex]

Originally Posted by aldw

Triumph is owned by BMW, and Tata now has Rover, so that means you may see a Rover comeback, but not Triumph.

Crap, that's right. I think BMW got Riley too.