Thursday, April 21, 2005

2005 Shanghai auto show

Shanghai Auto rules out more foreign forays

By Ben Blanchard / Reuters

Copyright © 2004 Reuters Ltd. Click for Restrictions.

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SHANGHAI - Top China car maker Shanghai Auto said on Thursday it was not looking to buy or forge ventures with any other overseas auto makers after the collapse this month of a proposed partnership with Britain's MG Rover.

It said, however, that it would consider buying assets from Rover, which is in administration.

"No opportunities have appeared right now," a Shanghai Auto spokeswoman told reporters on the sidelines of the Shanghai auto show when asked if the firm is targeting other foreign players.

"We've already told the British government we're not interested in a Rover joint venture or in buying their business, but we have not ruled out buying their assets," the spokeswoman later told Reuters.

State-owned Shanghai Automotive Industry Corp. has been at the forefront of a push by Chinese vehicle makers to expand their global reach. Last year, it bought a controlling stake in South Korea's Ssangyong Motor Co. for about $500 million.

It had eyed foreign car makers as a way of speeding the development of its own brand in the absence of full research and development capability, hoping to vault into the ranks of the world's top six auto makers by 2020.

That meant Shanghai Auto, which plans an overseas listing to raise a reported $2 billion but is now a minnow in the global car market, would have to knock an already deeply entrenched global manufacturer off its perch.

Its ambitions hit a snag after it failed to seal an agreement on setting up a joint venture with Rover. The 100-year-old British car maker, which once made the iconic Mini and the Land Rover, collapsed and is now in administration.

European media have reported Shanghai Auto, the main partner of both Volkswagen A.G. and General Motors Corp. in China, was now setting its sights on Italy's Fiat.

"It's just a rumour," the spokeswoman said.

Shanghai Auto already owns intellectual property rights to build some Rover models, including the BMW-developed Rover 75, but cannot market them under the Rover banner.

Rights to the Rover brand are held by BMW A.G., but the German luxury car maker has said it would be open to talks toward granting the use of the brand to rivals.

The spokeswoman said Shanghai Auto had not decided whether to make cars based on Rover models but was exploring its options.

"Now that the joint venture is impossible, we have to see how we can utilise our purchase," the executive said in the first official company comments since the Rover deal fell through.

"We feel a lot of regret that the deal hasn't happened."

MG Rover's desperate struggle to stay afloat has turned into a political embarrassment for Tony Blair. The British prime minister could be faced with unappetising headlines if 6,000 MG Rover workers lose their jobs ahead of a May 5 general election.

Shanghai Auto's senior executives have declined to answer media questions on the Rover debacle.

The spokeswoman added Shanghai Auto was still committed to developing its own brand and becoming an international player.

The company hopes to have a full range of own-brand vehicles on sale by 2007. It now mainly makes cars with its joint venture partners, GM and Volkswagen.

"Looking to our future, we believe that to win in China and to compete on the global market, we have to have our own brand," said the spokeswoman, who declined to be identified.

"But we don't want to start from zero. We have to build on something. Something like Rover will help us."

Additional reporting by David Lin