AM Online

Chinese commit to Longbridge as deadline to quit passes

Nanjing Automobile Corporation has waived the clause which would have allowed it to break its 33-year lease on part of the Longbridge car plant in the West Midlands.

Under a deal signed in February with the developer St Modwen Properties, Nanjing agreed to lease part of the former MG Rover site. But the agreement included a clause allowing the Chinese carmaker to end the lease within six months.

The escape clause expires today.

Nanjing would have had to give 14 days' notice if it had wanted to exercise it and both companies have confirmed that no such notice has been given.

Nanjing plans to restart limited car production at Longbridge. The collapse of MG Rover saw almost 6,000 workers lose their jobs. Nanjing won the battle with its rival carmaker Shanghai Automotive Industry Corporation to acquire MG Rover's assets after the UK company went into administration last year.

Last month Nanjing said it would be making an initial £10m investment in the MG TF sports car in the first half of next year, with the aim of producing about 15,000 a year. Kits of components will be manufactured at a new production plant in Nanjing and shipped to Longbridge for assembly.

The company is also expected to produce versions of other MG models in China, with sales of the top-of-the-range MG ZT planned to resume in the UK in 2008. Both the TF, ZT and MG ZR will be produced for the Chinese market.

That raises the prospect that Nanjing and Shanghai may be battling for a share of their domestic market, using two of Britain's best known car brands. While Nanjing has the MG name, SAIC is negotiating with BMW to buy the rights to the Rover name.

SAIC already has the intellectual property rights over a number of Rover models and has agreed, in principle, to acquire the Rover name.

The deal could yet be derailed by Ford, which included in its 2000 purchase of Land Rover from BMW a clause in the agreement giving it first refusal on the Rover brand and tough restrictions on the use that any other buyer could make of the Rover name.

The deal precludes a buyer using the Rover brand name on off-road vehicles such as 4x4s - a move designed to prevent any confusion with Land Rover.

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