MG Rover Expects Approval for Shanghai Auto JV by Year-End

PARIS – MG Rover expects to have China’s approval by the end of the year for a relationship with Shanghai Automotive Industry Corp. that would help the Chinese auto maker begin exports and allow the small U.K. auto maker to enter China.

“We get access into the Chinese market, and Shanghai gets away from licensed manufacturing,” says an MG Rover spokesman, who declines to reveal the direction of the potential arrangement with Shanghai Auto.

Although there has been speculation in the European press that Shanghai Auto would purchase MG Rover, the spokesman says recent trends in the auto industry favor alliances or joint ventures.

In its press release in June, MG Rover said the cooperation with Shanghai Auto will fund the development of new model programs and “facilitate the exploitation of the global car market for (both) brands. This will, of course, include the very important Chinese car market.”

What is sure, the spokesman says, is that Shanghai Auto wants to control some automotive technology of its own, so it can export.

Shanghai Auto has several joint ventures with Western auto makers, including Volkswagen AG and General Motors Corp., in which it manufactures and sells cars developed by its partners.

MG Rover and Shanghai Auto also would develop models together. The spokesman says the company expects China’s approval because the government directed MG Rover toward Shanghai Auto after earlier discussions with another Chinese auto maker, China Brilliance Holdings Co. Ltd., failed.

“Kenneth Howe (chief executive of Phoenix Venture Holdings, the MG Rover parent) went to our embassy in China and visited government officials,” the spokesman says. “You have to involve local decision makers. We didn’t do that enough the first time. This time we did it right.”

MG Rover expects its cars will sell well in China, “especially in Shanghai,” he says. “Asian people tend to like Britishness.”