View Full Version : Red Rover not ready to come over

19-11-2006, 05:58 PM

Geoff Dyer, Beijing
November 20, 2006

SHANGHAI Automotive had postponed plans to export Rover-based cars to Europe and the US in order to concentrate on the Chinese market, a senior executive said at the weekend.

Phil Murtaugh, the former head of General Motors in China who now runs Shanghai Auto's international operations, said the company would only begin to export the cars once they had become successful in the local market. His comments are the latest indication that the much-hyped invasion of the US and European car markets by Chinese brands will be much slower than had been expected. Chery and Geely, two other ambitious Chinese car makers, have also recently delayed their planned entry to the US market. Shanghai Auto executives said earlier in the year that they hoped to begin selling the Rover-based cars in Britain and some other European countries from 2007.
"We have to get it right at home before we go outside of China," said Mr Murtaugh in the first interview he has given since moving to Shanghai Auto in September. "I do not know when we will start exporting."
Shanghai Auto bought the rights to the designs of two Rover models shortly before the British car maker collapsed last year. Another Chinese company, Nanjing Auto, later acquired the rights to several MG models. The Rover name is owned by Ford and Shanghai Auto is launching its cars in the Chinese market under the new brand name Roewe, although analysts believe it will try to acquire the rights to the Rover name from Ford when it launches its vehicles overseas.
State-owned Shanghai Auto is considered one of the Chinese companies with the best chances of successfully building its own car brand because of its manufacturing pedigree - its joint ventures with General Motors and Volkswagen are the biggest car makers in the fast-growing Chinese market.
Mr Murtaugh said the company would be able to build quality cars but the biggest challenge it faced was establishing a good customer service system, of which few Chinese companies had any experience.
Although a number of multinational companies are considering exporting cars from their plants in China, Mr Murtaugh said there was little chance that the car-making industry would shift to China, as many other manufacturing sectors have, because wages were rising quickly.
"There are not going to be too many more years when you will see low-cost and China in the same sentence," he said. "It is really expensive to put cars on a boat and ship them around the world. Why do you think the Japanese and Koreans have invested so much in new plants in the US?"
A number of senior industry executives are in Beijing this weekend for the country's annual motor show, a sign of the increasing importance of the Chinese market to the auto sector.
DaimlerChrysler chief executive Dieter Zetsche said the company was still discussing a manufacturing deal with a number of potential partners to make small vehicles for the group. One of the companies involved in the talks is believed to be Chery, the Chinese company.

19-11-2006, 09:31 PM
Some glimmers of hope for the UK manufacturing plants there about rising wages in China and the expense of shipping cars around the world.

19-11-2006, 11:40 PM
It's good to see that they recognise the need to iron out the teething troubles first before launching on the Western market. It could spell disaster if they rushed into exports before ensuring it was right. Mind you Rover and not rushing to the market are not something you would have seen previously!

19-11-2006, 11:41 PM
Chery and Geely have court actions pending over 'copy-cat' cars, don't they? Anyway, it will be interesting to see if Nanjing re-activate Longbridge for Europe/US construction of MG cars, because it makes more sense to build cars with local input than try and shift cars halfway round the world and sell them as 'local' - remember, Leyland built CKD in Zetland, Australia BUT they had very high levels of Aussie-sourced parts to make them more 'local'. Maybe the Chinese have recognised what western accountants haven't - it will be cheaper to build locally than import half-way around the world....

20-11-2006, 12:00 AM
I gather that a lot of work is going on to re-launch the TF with mild face-lift from Longbridge in 2007, probably towards the year end, but that up to 60% will be locally sourced content.

As per your example of Australia, South Africa and other countries also had a high degree of local content, whether it be interior trim materials, tyres, suspension parts or even in the case of Lucas, locally built alternators/starters etc. Of course shipping a CKD kit is easier than a whole car, so logic suggests the ZT may even evetually roll out of Longbridge again.

Of course, building plants in the target market (such as the US) gets around a number of issues, and a market the size of the US is justifiable, as is the European market. But it also means your distribution is better supported, and if design work is also being undertaken, your designers are more attuned to the market tastes.

Also, in the US, the 75 was designed to be compliant for US sale, unlike the F, but was never sold in the US. Add to which that the US only ever saw the KV6 engine in the Freelander, and you have a major logistical issue setting up distribution - hence why MG Rover shied away. But add the fact that Rover was never a success in the US, unlike MG, or even Austin, and you now have a situation where SAIC had hoped to sell the cars as Rover, but then had to adopt Roewe, but either way both brands are relatively obscure in the US.

20-11-2006, 09:58 AM
I cant see Ford/Land Rover letting SAIC use the Rover brand in the US... and I imagine it would be difficult to launch it differently in the UK and US?

Personally, I think SAIC should just accept defeat with regards to using the Rover name as its one think to 'be' a manufacturer with a brand, its another thing to be SAIC with the Roewe brand, but then hire a brand from a competitor to launch their car in another country.

Rally Matt
20-11-2006, 01:38 PM
75/ZT line is fully functional at Longbridge and only requires the right personel and components and it could be literally running in hours rather than days.

NAC will succeed if they are able to reduce overheads by sourcing better quality components for less than MGR was able to do. I feel they will as they will be looking at much larger production runs and will continue the MGR re-think on keeping more operations in house. BMW were in love with out-sourcing which is not a successful "Long term" stratergy.

There is also much more than cost of shipping cars about at stake too. Nissan in Sunderland, Toyota in Derby and Honda in Swindon are all part of the local community and have helped each brand to become more "British" and therefore an acceptable foreign brand to support.

The US is a different set of reasons and much is down to the protectionist laws the US have in place. A manufacturer within the US does not have to comply with many of the regulations overseas manufacturers do.

Like others I would be fairly certain that Ford will not release the Rover name unless it was tied in with the sale of Land Rover, which is unlikely but may happen if Ford's financial position doesn't improve soon!

In that vein, an interesting proposal SAIC could put to Ford maybe, If you let us have Rover we promise not to make 4x4's, we will also buy Jaguar off you and enter into a JV to produce Ford's in China for the local market. That is a kind of offer Ford's bankers would find too hard to resist!

20-11-2006, 02:27 PM
SAIC's current involvement with VW and GM may go against that proposal to work with Ford. But who knows, in 2 to 3 years when SIAC are ready to export, anything could have happened to the Big 3 manufacturers.

20-11-2006, 05:49 PM
A very wise move by SAIC. I am unsure as to whether their Roewe is up to taking on the European car market.

Ford should consider allowing SAIC to use the Rover name in the same way BMW allowed Phoenix to. After all Ford have absolutely no use for it as a single brand.

21-11-2006, 12:41 AM
Ford should consider allowing SAIC to use the Rover name in the same way BMW allowed Phoenix to. After all Ford have absolutely no use for it as a single brand.

As with Riley and Triumph, BMW probably had no plans for the Rover badge long term, and in the unlikely event that the Phoenix 4 succeeded it would have been a small source of income from 2007. Rover was a small hiccup in their history relating to Herr Pichestrader's grand plan to revitalise every English brand they acquired in 1994.

Land Rover do have an issue. They may not want to produce Rover cars, in fact it's probably safe to say that given their financial plight with Jaguar and Land Rover, the last thing they need is another brand tainted with failure! But, the Americans refer to their Land Rovers as Rovers, so the logical explanation is that they are protecting the brand. On a sentimental level, Rover enthusiasts (by that I mean the Pre-Rover group fans of the old barges on which Rover built its reputation in the 40's-70s) see it as a return of the badge to its spiritual home, needless to say I doubt that was Ford's intention.

However, I am surprised that SAIC have not approached BMW regarding the purchase of the Riley or Triumph brand. Afterall, there were discussions about a sporting 75 to be badged as a Riley back in 1999.

21-11-2006, 12:57 PM
Not to mention the possible use of the Rover name to create more sub-brands.

Land-Rover & Range-Rover are two such examples... City-Rover could be another.

By owning the Rover brand outright (but not the Viking Longship, which I believe belongs to NAC anyway?) Ford can increace the range offered by Land-Rover, without a direct connection to the Land-Rover name and therefore without diluting the heritage and off-roadness of the brand.

We could theorize then, however, that should Land Rover want to stretch into the smaller, more economical segment of the car business, but retain those rugged on-roader looks, perhaps with FWD, a new sub-brand could be created to draw on the power of Land-Rover, but without directly affecting its image.

Street-Rover anyone? :D