SAIC to put £1bn into Rover

CHINESE carmaker SAIC is set to control a crucial joint venture with MG Rover under terms of a cooperation deal expected to win approval from Beijing early next year, MG Rover says.

The deal calls for injecting around £1 billion (€1.4 billion) into the venture, providing crucial liquidity for the last British-owned volume carmaker and securing 6,100 jobs at the Longbridge-based group.

It also gives ambitious Shanghai Automotive a solid base in Europe as it seeks to broaden its global reach.

MG Rover spokesman Daniel Ward confirmed a report in the Independent newspaper that SAIC will own 70% and MG Rover 30% of the venture, which will develop and produce cars in China and England.

Mr Ward stressed, however, that MG Rover would remain independent.

“It is not a takeover, it’s a partnership,” he said, reiterating MG Rover’s previous denial of reports that SAIC would acquire the group.

Mr Ward said the £1bn figure reflected estimates of what it would cost to develop a new range of models, the first of which would be a replacement for the Rover 45 due in 2006.

A new small car, a large executive model and a new sports car were set to follow.

“The plan would be to build all the core models in both locations,” Mr Ward said, with the partners focusing output on models tailored to meet local demand.

New models would continue to be designed in Longbridge, he said.

Rumours about a tie-up have circulated since June when SAIC and Rover said they had signed a cooperation agreement.

Final details of the accord are still being worked out, but the plan could be submitted to the Chinese government by year’s end and approval was expected by the end of January, Mr Ward said.

SAIC officials were not available for comment.

MG Rover has been struggling to break even after being sold four years ago by Germany’s BMW for just £10.