BUMPY ROAD AHEAD FOR NANJING

27-03-2007

Joy at this morning's confirmation that Nanjing Autombile is planning to resume car production at Longbridge in June should be tempered by a recognition that the Chinese company has long-standing financial troubles which have never been fully resolved.

As we reported yesterday (see the story here) Nanjing are going to make relatively small numbers of the MG TF convertible in Birmingham, and the company will also have a research and development centre here.

That'sgood news - as far as it goes. But can the company really afford its expansion into Britain? Since the early 1990's it has had financial difficulties and according to the China.Com website lost $50 million last year.

The same source has also reported the baffling newsthat Nanjing is planning to open an MG plant in Oklahama, USA in 2008 - a move described as “a big mistake” by one expert, who points out that the brand has only ever been a niche market in the States (click here)

It's certainly hard to see how you can justify three centres of production (China, UK, US) for a sports car.

As if to underline just how stretched the company is, it recently borrowed $35 million from the Export Import Bank of China to fundthe expansion of the MG; and Reuters yesterday reported that it's now looking to outside investors to shore up its bank account - (click here)

The trouble is that it's been looking for a major partnership with and American or European manufacturer for years, with no success.

If the company makes an excellent product then at least it might stand a chance, but The Stirrer's industry sources point out that both its “new” models are effectively old cars with a facelift; and they'll have to be very competitively priced to stand a chance in a tough market place.

What's more, the brand value of a British made motor can only be diluted by the switch of the bulk of production to China; most of these cars will have an MG badge but lack the cachet of a car made here.

In the short term, we should be grateful that at leastlocal engineering skills will be retained and some work created; but it remains to be seen whether this will be a new dawn - or simply a false one.