Shanghai Automotive Industry on Tuesday refused to comment on the state of its talks with MG Rover, though, according to the Associated Press (AP), state media said the Chinese company had never planned to buy the bankrupt British car maker.
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The original plan to build a joint venture factory with Rover failed due to the British automaker’s financial woes, Xinhua reportedly cited Zhu Xiangjun, vice director of the SAIC’s president’s office, as saying.
In Britain, the talks with SAIC were viewed as a potential lifesaving takeover for MG Rover, which was put into administration, a form of bankruptcy, last week after talks with the Chinese automaker collapsed, the report said.
But AP noted that, typical of secretive state-run companies, the Chinese side has avoided public comment on its negotiations with Rover. On Tuesday, staff who answered the phones at SAIC’s headquarters refused any comment to the Associated Press, saying any statements would be released via Xinhua.
Xinhua reportedly cited Zhu as saying that as part of a preliminary agreement with MG Rover signed in June 2004, SAIC had already paid more than £60 million ($US113 million; €87 million) for rights to technology and branding for the Rover 75, the smaller Rover 25 and K-series engines.
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By GlobalDataHowever, MG Rover’s former owner BMW owns the rights to the Rover name, which it licenses to MG Rover. SAIC would have to get permission from BMW to make Rover cars in China, AP noted.
The joint venture deal broke down due to great differences between the two companies’ assessments of Rover’s assets, Zhu was quoted as saying, AP added.
“SAIC would bear huge costs and risks in acquiring Rover’s assets after it went into bankruptcy,” Zhu said, according to the Associated Press.
Still, the news agency added, speculation persists that SAIC has not given up on acquiring at least some Rover assets.
“Rover Applies for Bankruptcy; SAIC Still Interested in Buying Assets,” said a Monday headline in the state-run newspaper China Business News which, AP said, cited an unnamed source close to SAIC whom it said told Chinese reporters that the Chinese automaker finds it hard to give up on Rover.
Rover’s bankruptcy would not necessarily be bad news for SAIC if it resulted in more favourable prices for the British company’s assets, China Business News and other newspapers noted, according to the Associated Press.
AP said SAIC has major tie-ups with both Volkswagen and General Motors but no brand-names of its own – the deal with Rover was seen as a way for the Shanghai company to acquire technology and other expertise of its own, while gaining a manufacturing base in Europe.
The Associated Press said the Xinhua report cited unnamed analysts in Shanghai as saying that SAIC had learned that MG Rover’s financial situation was worse than it expected and feared it would have to repay a £427 million ($US808 million; €622 million) interest-free loan to MG Rover from former owner BMW if it went ahead with the joint venture.
