A variety of daily and automotive trade newspaper reports over the future of MG Rover’s proposed tie-up with China’s top car maker appeared over the weekend.
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Summarising daily paper reports, the BBC cited the Financial Times (FT) as saying the deal has been delayed due to concerns by Chinese regulators.
The paper reportedly said Chinese officials had been irritated by Rover’s disclosure of its talks with Shanghai Automotive Industry Corp in October.
The proposed deal is seen as crucial to safeguarding the future of Rover’s Longbridge plant in the West Midlands, the BBC noted, adding that the Observer newspaper said 3,000 jobs could be lost if the deal goes ahead.
The BBC said Shanghai Automotive’s proposed £1 billion investment in Rover is awaiting approval by its owner, the Shanghai city government and by the National Development and Reform Commission, which oversees foreign investment by Chinese firms.
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By GlobalDataHowever, according to the FT, the regulator has been annoyed by Rover’s decision to talk publicly about the deal and the intense speculation which has ensued about what it will mean for Rover’s future.
As a result, hopes that approval of the deal may be fast-tracked have disappeared, the paper said, according to the BBC.
The broadcaster noted there has been continued speculation about the viability of Rover’s Longbridge plant despite the proposed deal, because of falling sales and unfashionable models.
According to the BBC, the Observer reported on Sunday that the deal could result in almost half of Rover’s 6,500 workforce losing their jobs.
The paper reportedly said that Chinese officials believe cutbacks would be required to keep the company’s costs in line with revenues and also said that the production of new models through the joint venture would take at least 18 months.
Separately, Automotive News Europe (ANE) reported that Shanghai Automotive Industry Corp would announce the terms of its acquisition of MG Rover in mid February after the Chinese New Year holiday, according to local sources familiar with the deal.
ANE said the agreement would go beyond the technical cooperation agreement signed in June. MG Rover should eventually be at least 60% owned by SAIC, but the acquisition will occur in several stages, sources told the motor industry trade paper.
After a certain percentage is acquired, continuation of the deal will depend on MG Rover meeting conditions set by Shanghai Automotive.
SAIC is already China’s largest passenger car manufacturer, but those cars are made through joint ventures with General Motors and Volkswagen.
SAIC wants to use MG Rover’s passenger car technology to develop its own SAIC-badged line of passenger cars. The Chinese company aims to produce 50,000 SAIC brand cars by 2007.
The deal will also give it a foothold in the European market.
