Sports cars may soon be zipping out of the factory formerly operated by bankrupt British carmaker MG Rover, as parent company Nanjing Automobile Corp (NAC) is reviving car production at the Longbridge, UK plant.

 

The company signed a 33-year lease worth at least US$100 million on Wednesday for the factory site, according to Wang Hongbiao, the company's official in charge of UK operations.

 

NAC is planning to make 500,000 sports cars including 120,000 MG's TF models and 38,000 ZT models in the future and announced the so-called "Rover project" will create less than 10,000 jobs in the UK.

 

NAC will pay US$3.14 million per year to rent out one-quarter of the plant's 100 acres.

 

The site will mainly be used as a sports car assembly and painting workshop, according to the statement.

 

Car production will start at the factory in 2007, said Wang.

 

The Rover project has been approved by the local government, said a statement on its website.

 

However, analysts familiar with the business doubt the company's capabilities to run a company in a foreign country.

 

There is also speculation whether there are benefits in the long run, since local labor and material prices in the UK are much higher than in China.

 

Sun Jian, an analyst from AT Kearney, a global leading consulting company, said Nanjing Automobile's move was a worthy one but consisted of many challenges, such as lack of local market knowledge and the rising logistics costs.

 

But NAC maintains the situation is possible, and feasible.

 

"We will ship auto parts to the UK which are produced in China with a lower cost," said an official from the team working on the Rover project.

 

NAC is also gearing up to produce new MG Rover's models under the MG badge in China, and one-fourth of the Longbridge equipment has already been shipped to Nanjing.

 

The project is strongly approved by the local government, which is aiming for a boom in its Jiangsu Province auto industry.

 

NAC's Wang said the company was building a manufacturing base for MG Rover cars in Pukou, Nanjing and expected to produce the first car in 2007.

 

"While we are resuming the car production in the UK, we are focusing more on China. The whole project is worth US$370 million in China and the total investment is expected to exceed US$12 billion when we build a comprehensive assembly in Nanjing."

 

Nanjing Automobile Corp is owned by Yuejin Motor Group, one of the largest enterprise groups in China, producing light-duty trucks under the brands Yuejin and Iveco and passenger cars Nanya-Fiat.

 

Nanjing Automobile, which trumped a bid by Shanghai Automotive last year for the carmaker, is attempting to gain core engine technology and rights to produce cars under MG's badge.

 

(China Daily February 24, 2006)