MG Rover Group

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MG Rover was the last independent mass-production producer of the British motor industry. The company was formed by the de-merger of MG and Rover from BMW in 2000, with Government support being given to the Phoenix Venture Holdings bid over an Apax Partners bid, due to proposed job losses by Apax. The company went into administration in April, 2005, with Phoenix handing over responsibility to PricewaterhouseCoopers (the administrator). After much speculation about possible buyers (with around 100 proposed bidders) a list of three bidders was produced in July, 2005. Shanghai Automotive Industry Corporation (SAIC), Project Kimber (a British group led by David James), and Nanjing Automobile Group. The Nanjing bid was accepted on 22 July 2005. The future of the Longbridge plant in Birmingham, which has been in operation since the Austin company was founded in 1905, remains unclear, though Nanjing has proposed using it as an engineering site and possibly for the production of MG-brand sportscars and saloon cars, produced both in-house and from parts kits imported from China. Namjing is also attempting to acquire the rights to the Rover brand. Currently, MG Rover Group Ltd. still exists as a non-trading subsidiary of Phoenix Venture Holdings, administered by PriceWaterhouseCoopers. The assets of MG Rover are now owned by Nanjing Automobile Corporation (UK) Ltd. Nanjing Automobile is working with a British consortium - the GB Sports Car Company Ltd. - to reopen Longbridge and revive the MG, and possibly Rover brands. GB Sports Car will eventually recieve a significant stake in the reformed British operation, and is rumored to be bidding for MG Sport and Racing Ltd. (still trading under administration).

Contents

History


The rise and fall of British Leyland (edit)
1900s 1910s 1920s 1930s 1940s 1950s 1960s 1970s 1980s 1990s 2000s
Jaguar BMH British Leyland Jaguar Ford
Daimler BSA BSA Jaguar
Lanchester
Riley & from 1950s Mini name Nuffield
Organisation
BMC Austin Rover Group BMW
Morris/Morris Garages (MG) Morris BMW Rover
Wolseley
Vanden Plas Austin MGR/Ford
Austin MG Rover
Rover Rover Rover BMW/MGR
Land Rover Ford
Alvis GKN/BAe
Standard Standard Triumph Leyland BMW MGR
Dawson Triumph BMW
                                                                                                                                                                    

British Leyland

MG Rover are the heirs of the British Leyland Motor Corporation, which was formed in 1968 as the result of mergers between many British car firms. In 1975 British Leyland was effectively nationalized due to financial difficulties.

BL's new chairman Sir Michael Edwardes saw that the only way to make the company competitive again was to collaborate with the Japanese. In 1979, he began negotiations with Honda to co-develop new models and to share manufacturing facilities. The first product of this relationship was the Triumph Acclaim, and led to a long succession of Honda-influenced Rover badged models. Edwardes also implemented a ruthless programme of cutbacks and factory closures which saw the death of many of famous British marques. To reflect the resulting two-brand strategy, BL was renamed as the Austin Rover Group in 1982, and this was shortened in 1986 to simply the Rover Group.

1986–2005 timeline

  • 1986 Leyland Trucks subdivision sold to DAF; Split into two with the Van side became independent LDV in 1993, and the Truck side sold to Paccar of the USA.
  • 1986 Leyland Bus floated off; bought by Volvo in 1988
  • 1987 Unipart spare parts division sold off via management buyout
  • 1988 Rover Group privatised; sold to British Aerospace
  • 1994 Rover Group sold to BMW; 17-year collaboration with Honda ends
  • 2000 Land Rover sold to Ford
  • 2000 Mini retained by BMW, maintaining car production at the Cowley assembly plant.
  • 2000 Remainder of company now independent as the MG Rover Group
  • 2001 MG Rover bought Qvale of Italy
  • 2002 MG Rover agrees to collaborate with Tata of India
  • 2005 Collaborative deal with Shanghai Automotive Industry Corporation (SAIC) collapses, forcing the company into administration and insolvency.
  • 2005 Nanjing Automobile Group acquires the entire assets of MG Rover.

Brands

Many car brands that were formerly the property of British Leyland have passed on to MG Rover. The brands of Alvis and Jaguar (including Daimler and Lanchester, as well as the American rights to Vanden Plas) were sold off by British Leyland before it became Rover Group, and Land Rover was sold to Ford in the BMW days.

These brands are owned by MG Rover:


These brands are owned by BMW:

These brands are owned by Ford:

These brands are owned by BAE Systems:

Sale from BMW to Phoenix Consortium

When BMW sold off its interests, MG Rover was bought for a nominal £10 by a specially-assembled group of businessmen known as the Phoenix Consortium. The consortium was headed by ex-Rover Chief Executive John Towers.

Potential deal with SAIC of China and its collapse

In June, 2004, it was learned that Shanghai Automotive Industry Corporation had signed a Joint Venture partnership to develop new models and technologies with MG Rover. This led to much speculation among the British media suggesting the Chinese company were poised to launch a takeover. Later that year, in November, news broke of an agreement between the two companies to create a joint venture company to produce up to a million cars a year, with the production shared between MG Rover's Longbridge site and locations in China. SAIC were to have a 70% stake in this company in return for a £1 billion investment, with MG Rover owning the remaining 30%. However, this agreement had to be ratified by the Chinese government, specifically its National Development and Reform Commission (NDRC).

The Commission was of the mind that if BMW could not make a success of Rover, then it would be hard for SAIC to do so.

On December 8, 2004, Tata of India, which had cooperated over the export of the Tata Indica as the CityRover, threatened ceasing its agreement with MG Rover if the SAIC tie-up went ahead, according to the Indian press. Tata claimed the report was inaccurate two days later.

SAIC did purchase the technical rights to manufacture Rover's 25 and 75 models, and for the Powertrain business, for £67 million last year. It did not acquire the Rover name, which is still owned by BMW.

In January 2005, it was revealed that British Prime Minister Tony Blair had intervened to support the alliance between MG Rover and SAIC. MG Rover could not give a date on which the agreement would be finalized.

Figures released by the company showed that the sale of Rover-branded cars fell in 2004 compared to 2003.

In April 2005 it was reported that the partnership deal with SAIC was in trouble because both SAIC and the British Government had discovered that MG Rover's finances were in a far more parlous condition than had previously been thought. On 7 April 2005 the company announced that it was suspending production because of parts' shortages. Later in the day, it was was announced by Patricia Hewitt, the Secretary of State for Trade and Industry, that the company was being placed in receivership. Her statement was based on a conversation with MG Rover chairman, John Towers. It was later denied by MG Rover Group, although the company admitted that it had engaged PriceWaterhouseCoopers, the accountancy firm, to advise on its current financial situation. In the event, MG Rover placed itself in administration on 8 April 2005, a different status to receivership under British law.

On 8 April 2005, British Prime Minister Tony Blair and Gordon Brown, the Chancellor of the Exchequer, visited Longbridge and stated that there may be some hope for the future of the company, although not the original deal agreed with SAIC.

On 10 April 2005, MG Rover announced that they had received a 6.5 Million Pounds loan from the British Government 1. This would cover worker wages for one week while buy-out proposals are made to SAIC. The same week, SAIC denied it had ever made an offer to buy MG Rover and threatened to sue anyone who attempted to make the 25 and 75 models.

Acquisition by Nanjing Automobile Group

On 15 April 2005, it was announced that SAIC had once again rejected pleas to buy out the company. With no other rescue deal in the pipeline, PWC declared the company to be insolvent and announced that redundancy notices to Longbridge staff would be issued.

By the end of April 2005, Sir Richard Branson had reportedly expressed an interest in buying the remaining assets of the company for the purpose of reviving the marque in order to enter the hybrid automobile market, and several other parties were also rumoured as wishing to buy the remnants, including two Russian businessmen (one of whom denied the reports) as well as the Iranian state-owned car manufacturer, Saipa.

SAIC had claimed that it had already acquired Intellectual Property Rights in some Rover product for £67 million in the autumn of 2004, including the Rover 25, the Rover 75 and the Rover Powertrain K-series engine, but the Administrators advised that there was still interest in saving some other parts of the company, including MG, and Friday, May 13, 2005 was set as the deadline for bids from potential investors.

On Friday, May 20, the Administrators announced that, after considering numerous proposals, they had entered talks with two unnamed "overseas companies" with a view to restarting one or more of the Longbridge production lines. Nevertheless, just the following week they informed creditors that they by then expected the company to proceed instead to a creditors' voluntary liquidation, setting the date for a preliminary Creditors' Meeting to be held in Birmingham on Friday, June 10, 2005. At that meeting, creditors learned that so little of value was left in the company that there would probably be negligible or even no repayment of its outstanding debt and that, although three bidders were then still negotiating to acquire the company intact as a going concern, the Administrators had instructed their agents to prepare for the piecemeal sale of the very few remaining assets in the event that satisfactory negotiations for the sale of the entire business were not concluded.

On Thursday, July 14, it was reported that Magma Holdings, a financial group including former Ford Motor Company and General Motors executives, working in conjunction with SAIC, would be making an offer for both MG Rover and engine maker Rover Powertrain which, if successful, would see at least some production being restarted at Longbridge, and that talks with the other two interested parties – China's Nanjing Automobile Group and Project Kimber (a consortium of Birmingham businessmen led by David James) – were still in progress.

On Monday, July 18, Magma Holdings and SAIC formalized their bid with an offer of £60 million. However, that offer was not well-received and on Friday, July 22, the Administrators announced that the entire group had been sold to the Nanjing Automobile Group for around £53 million, with a deposit of around $5 million, indicating that their preliminary plans involved relocating the Powertrain engine plant to China and splitting car production into Rover lines in China and MG lines in the West Midlands (though not necessarily at Longbridge), where a UK R&D and technical facility would also be developed. But on Saturday, August 27, The Daily Telegraph reported that the balance of around £47 million, due on August 22 had not been paid. Citing confidentiality, the Adminstrators declined to comment.

Nanjing Automobile started shipping equipment from Longbridge to China on Thursday, September 15 and, according to a report in The Times on Saturday, September 17, were close to a deal with SAIC under which they would manufacture the Rover 25 and Powertrain engines while SAIC would produce a stretched Rover 75. Nanjing Automobile was reported to be also still in negotiations to restart some production in Britain.

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