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SOS: MG Rover

Kick in the teeth: MG and Rover cars, including the recently launched MG ZR160 hot hatch, are expected to slow while the company fights to survive.

Australian distributor still confident the iconic British brand can be saved

MG logo11 Apr 2005

THE Australian distributor of MG Rover remained confident the British car manufacturer could be saved after it collapsed last week following failed joint-venture negotiations with China’s Shanghai Automotive Industry Corporation (SAIC).

Stressing MG Rover had gone into administration rather than receivership, Motor Group Australia national marketing manager, Ross Meyer, insisted it would be "business as usual" for the sales and marketing of MG and Rover cars in Australia as negotiations continued overseas.

"Obviously, this is not helping our cause in the short term but ... our understanding is this is going to be resolved in the next few weeks as opposed to the next few months," he said.

"It is a bit of a kick in the teeth at the moment – it is not going to help our sales, particularly as we’ve just launched the new (MG) ZR and ZS. We have to recognise that there will probably be a little bit of slowdown of demand whilst people want assurances of what’s happening with the company.

"But we’re hoping this is only going to affect us over the next few weeks and that there will be a positive outcome thereafter."Mr Meyer said talks were continuing between representatives from the Blair Labor Government and the SAIC, with a credible outcome now involving the Chinese auto giant taking full control of the 100-year-old British car-maker.

"From our understanding from the UK, negotiations with the SAIC are ongoing, however as the creditors have come in, the negotiations are pretty much directly going on with the Government and the Chinese firm – as opposed to (MG Rover parent) Phoenix Venture Holdings," Mr Meyer said.

"We are under the assumption that the Chinese, obviously being in a commanding negotiating position, will probably take full ownership of parts of the company they wish to retain.

"We would assume that the Chinese would be most interested in the Rover 75 platform as well as the K-series engine plant, which produces every engine from a 1.1 three-cylinder right up to a 2.5 V6 … as well as the 80-90-per-cent-complete mid-size RDX 60, which I imagine would also have enormous market value as well.

"Assuming that everything goes to plan and SAIC do get involved in a majority capacity, that will therefore free up enormous capital for future model growth ... The long-term implications could be actually very, very good for the company," he said.

 center imagePricewaterhouseCoopers was appointed administrator of MG Rover last week after SAIC abandoned its long-running talks when it discovered the full extent of the British manufacturer’s financial liabilities.

This led to the British Government, which faces an election on May 5, providing a £6.5 million ($A16m) rescue loan to prevent immediate redundancies for the 6000-strong workforce at MG Rover’s Longbridge manufacturing plant in central England – and which would enable talks to continue.

Production ground to a halt at Longbridge last week after spooked suppliers stopped delivering parts. The Blair Government has since set out details of a £40 million ($A97m) support package for the estimated 15,000 people employed in the MG Rover supply chain.

Owned by Phoenix – a group of business managers and financial institutions – since BMW abandoned ship almost five years ago, MG Rover Group has been in a series of negotiations in recent times with prospective alliance partners including China Brilliance and Malaysia’s Proton Cars.

Motor Group Australia is an independent distributor responsible for four niche brands – MG, Rover, Noble and Pagani – but considering MG Rover accounts for most of its business, its future is also now in doubt.

"It’s obviously difficult to speculate about this," Mr Meyer said. "We’re still confident it’s going to be a positive outcome and therefore a positive outcome for Motor Group Australia."

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