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Rover dealers hopeful

Rover dealers have welcomed the news of the planned tie-up with Shanghai Automotive Industry Corporation – on which, according to MG Rover boss John Towers, “the future of the company rests”.

Richard Cort, of Richard Cort Motor Group and head of the Rover Dealer Council, says: “The network is very optimistic and is enjoying the anticipation, now that MG Rover seems to be getting its structure in order and is moving forward. There are better times to come for Rover dealers.”

He adds: “Rover has been written of as dead by the media, but now we have a fairly large company looking to make a major investment. Shanghai is committed to becoming one of the world’s top six carmakers, and when companies from the Far East make a commitment, they very often achieve it.”

His optimism has been matched by some analysts. Peter Cooke, KPMG automotive professor at Nottingham Business School, calls it “good news” which could help to bring back sales (year-to-October in the UK down 20% at 68,439 units).

“Over the next six months, if things start to look up, Rover might become a fleet car again. The deal will also make the franchise more attractive to dealers. It seems there are going to be a string of new models now, and Rover desperately needs new product – the sooner the better,” says Cooke.

The deal will also help Rover to sell cars in China. Goldman Sachs’ auto analyst Max Warburton, who has visited the Shanghai operation, says: “They love three-box sedans and chrome in China – the 75 could be big there.” He summarises his understanding of Shanghai’s proposition to Rover as “let us use your 75 platform and help us to develop more cars for China”. First of all SAIC wants to become competitive in China where the growth potential is higher than in Europe.

“They are in no rush to become exporters – that is a longer-term objective,” adds Warburton. The two companies first announced plans to develop a “far-reaching strategic relationship” in June.

However last week, MG Rover officials were publicly reprimanded by SAIC for disclosing that the state-owned company would be investing around £1bn in a new joint venture with the UK manufacturer.

SAIC executives are reported to be embarrassed by the claims and say the deal has not yet been finalised. MGR says the £1bn figure was media speculation.

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