Rover goes to China

MG Rover Group and China Brilliance Industrial Holdings have entered into a long-term strategic alliance and co-operation agreement to finance, develop, manufacture and market automobiles.

MG Rover Group and China Brilliance Industrial Holdings (CBIH) have entered into a long-term strategic alliance and co-operation agreement to finance, develop, manufacture and market automobiles.

The alliance provides the potential for MG Rover derived cars to be manufactured in China, including those that will be jointly developed.

This will include the new medium-sized car, for which the styling direction was previewed at the Geneva Motor Show.

Plans have also been put into place for the joint development of a new small car and consideration will be given to the development of additional new models. Equally the opportunity also exists for MG Rover to manufacture and market CBIH derived vehicles.

The companies will co-operate on the supply and manufacture of engines and development of a new range of engines.

MG Rover will provide technical support and assistance in order to establish the necessary manufacturing processes and systems in China. This will extend to the establishment of a joint Research and Development centre in China.

The alliance will seek significant cost benefit from larger manufacturing volumes, going forward. A joint component sourcing strategy committee will be established in order to maximise the economic benefit of the companies’ combined purchasing.

Market territories have been assigned to each partner. Vehicles can be manufactured and sold exclusively by CBIH in China, and the majority of Asia and Africa. MG Rover will have exclusivity in all other markets, however consideration will be given to combining efforts in the USA.

A new joint venture company will be created. Ownership of the company will be shared 50/50 between MG Rover and CBIH. Three directors from MG Rover and CBIH will form the board. They will oversee the collaboration and manage alliance objectives. There will be no exchange of equity between MG Rover and CBIH, however both parties will invest substantial resources into ensuring the success of the alliance.

Discussions between MG Rover and CBIH began in the second half of 2001.