Only in China: 2 Rovers race to market
Welcome to the Chinese auto industry. The government is still caught between the old planned economy and the new capitalism.
So Shanghai Automotive Industry Corp. and Nanjing Automobile Corp. are both racing to produce a car based on the 75, a model first designed in the mid-1990s when Rover was owned by BMW AG.
"It's a competition now" to see which can make the model a success, says a Western supplier to both companies.
His company has to tool separate lines to produce the same part for the different companies.
"We wish they would cooperate," he sighs. He was granted anonymity to avoid alienating his customers.
SAIC bought the intellectual property rights to the Rover 25 and 75 sedans in 2004, but negotiations to buy financially troubled MG Rover fell through. After MG Rover Group collapsed in July, SAIC thought it would win the bidding war for the company's assets. But Nanjing was the surprise victor.
The supplier, and almost everyone else in the industry, figured the central government would force Nanjing Auto and SAIC to cooperate on Rover production. After all, SAIC owned the intellectual property rights and Nanjing Auto owned the production line tooled to make the cars.
The line was shipped to China in some 400 containers and reassembled in Nanjing, a city several hours' drive east of Shanghai.
But the ways of the Chinese government are difficult to decipher at times, and the influence of local governments is strong.
The Shanghai government, owner of SAIC, has clout in Beijing. Jiang Zemin, China's former president, is also the former mayor of Shanghai.
The Nanjing government, majority owner of Nanjing Auto, is no slacker in the influence department. After its lobbying efforts with the central government failed to produce a cooperation deal with SAIC, Nanjing won permission to produce its own Rover-based car.
The two Rovers won't be identical. Suppliers say each automaker is making changes to the exterior and interior of the original model. Some are betting on Nanjing to have the most success.
Nanjing began making trucks in China in 1958, so its engineers have experience designing entire vehicles. Nanjing Auto also has a joint venture with Fiat making small cars in China. But others say Nanjing Auto management has no solid game plan in place for using the assets it acquired.
SAIC has relied on its joint venture partners, Volkswagen AG and General Motors, for engineering. Now it has its own small engineering institute but no experience designing an entire car. But its management has a detailed business plan for launching an SAIC-badged car.
And the winner is …
Who will win the competition? The jury is still out.
SAIC will have its model on the street first. Its wholly owned supplier, Huizhong Automotive Manufacturing Co., is producing the chassis now and says the launch will be soon, as does SAIC.
Nanjing Auto is aiming for a launch in the second half of 2007, suppliers say. Nanjing Auto plans to produce Rover models for both the domestic market and for export.
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