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Britain had offered China’s Shanghai Auto a 100 million pound (US$186.5 million) “sweetener” to seal a proposed carmaking venture with MG Rover, London-based newspaper The Times reported Wednesday.
The incentive was offered for the signing of an agreement between Rover and Shanghai Automotive Industry Corp., China’s top carmaker, to ensure a deal did not collapse ahead of a British general election expected to be held in May, the newspaper said.
The British Government was worried that up to 60,000 jobs might be at risk if the agreement collapsed, it said.
Government money would take the form of development aid, The Times said.
Rover said this month that talks on forming a venture with Shanghai Auto were moving forward, but it did not give any timetable.
MG Rover has struggled to make money after Germany’s BMW AG sold it to Phoenix Ventures Holding for just 10 pounds in 2000 after years of losses.
The proposed deal with Shanghai Auto aims to use a cash influx to help rejuvenate Rover’s model range, while giving State-run Shanghai Auto a beachhead in Europe plus access to technology and expertise.
The precise level of ownership of the venture has not emerged. Rover has said Shanghai Auto would have a majority stake.
The venture to develop and make cars in England and China aims to produce 1 million cars a year. The range would include a replacement for the Rover 45 due in 2006 and eventually a new small car, a large executive model and a sports car.
The plan calls for production of all the core models in both locations, MG Rover has said, with the partners focusing output on models tailored to meet local demand.
Shanghai Auto and Rover said last June they had signed a cooperation agreement, but details have been scarce.
Shanghai Auto is the main Chinese partner of both General Motors and Volkswagen. It aims to become one of the world’s top six carmakers by 2010 and wants to list its stock overseas to raise a reported US$2 billion.
(Shenzhen Daily January 27, 2005)
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