SAIC will hold a majority interest in the joint venture, taking control of MG Rover and use of its brands, while also gaining access to its worldwide dealer network. In return, SAIC will inject the capital needed to develop new models, starting with completion of a replacement for the 45.
Talks have started between the manufacturer and the MG Rover Franchise Board and lawyers are looking at the implications of the deal. Dealers have contracts with MG Rover but these will have to be switched to the joint venture (AM Feb 11).
Kevin Howe, MG Rover chief executive, and Zhao Feng Gao, his counterpart at SAIC, signed a letter sent to the network. Rod Ramsey, MGR sales and marketing managing director, says in a covering note the company wants a smooth and effective transition to the new arrangements “which provide us with tremendous opportunities”.
Howe and Zhao say they want dealers to be aware of the implications and benefits of the collaboration, including “access to other models in due course”. They ask for dealers’ total support.
In private talks during his visit to China last month, Chancellor Gordon Brown is thought to have urged business leaders to push the agreement through as quickly as possible.
Transport workers’ union boss Tony Woodley is also supportive, saying business logic dictated the Chinese would want to retain production of new models at the Birmingham Longbridge plant.
Last week’s media reports claiming that Howe’s letter to dealers outlined plans to cut 35% of Longbridge’s workforce once the deal is signed have been condemned by Richard Cort, chairman of the MG Rover Franchising Board and chairman and managing director of Richard Cort Motor Group in Bury. “It is absolute tosh,” he says. “It is nothing but mischief-making.”