Reports have begun circulating that SAIC plans to buy the privately-owned British carmaker, which has continued to make a loss since its sale by BMW four years ago for £10 to Phoenix Venture Holdings, as part of its ambition to become the world’s sixth largest motor manufacturer by 2010. The move would provide the Chinese with a gateway into the European car market.
However, MG Rover chairman John Towers has refuted claims that a sale is under way. “We have already made it clear that we are in a major collaboration with Shanghai Automotive, but I have to say that within those discussions there has been absolutely no discussion about an equity stake or acquisition of the business,” he says.
Nevertheless, cooperation with SAIC is all the more important for MG Rover now that it admits that negotiations begun earlier this year with Malaysian carmaker Proton on sharing vehicle development costs have ended unsuccessfully.
In June, SAIC and MG Rover signed a strategic partnership aimed at cooperating on the development of new models and facilitating the expansion of MG and Rover brands worldwide.
Provided the partnership is approved by the Chinese government later this year, it is understood that SAIC would build a new mid-size saloon to sell under the MG Rover brands in China, while a hatchback version, replacing the ageing Rover 45, would be built by Rover at Birmingham for the European market.
SAIC, a government-owned company with more than 60,000 employees, last year sold almost 600,000 passenger cars in China. The business has more than 50 plants around Shanghai and is already involved in a joint operation with Volkswagen to produce the Santana, China’s best selling saloon. Last month SAIC bought a 49% stake in Korea’s SsangYong.