Key details on the future of Rover car production in the west Midlands are emerging this weekend as administrator PricewaterhouseCoopers considers offers for the collapsed business from three bidders.
With a decision expected early next week, one of the three, corporate rescue specialist David James, has written to PWC asking for it to wait until Wednesday while his request for government backing is considered by Trade and Industry Secretary Alan Johnson this weekend. Two other bidders - Shanghai Automotive Industry Corporation, which has signed a letter of intent with Magma, a company controlled by former Ford Europe boss Martin Leach, and Nanjing Automotive - have already submitted bids. They are all thought to have been pitched at the £40 million to £50m level.
Some observers believe these two could come together, forming one Chinese bid. SAIC and Nanjing were partners in a proposed joint venture with Phoenix Venture Holdings, Rover's former owner, which collapsed, triggering administration, in April. Both deny this.
In the SAIC plan, Magma is bidding for the assets, with the Chinese providing funding as majority shareholder. Their plan is to introduce the first new Rover model in 2007, eventually producing 12 new models and variants with investment of about £500m, and for production to build up to 100,000 cars a year, with many more in China.
Sources close to SAIC said there would initially also be engine manufacturing at Longbridge, attracting 1,300-1,600 jobs and the support of the Transport & General Workers Union, but decisions on long-term production in the UK would have to be reviewed. The plan is for a positive cash flow by 2007, but profitability is unlikely before five years of operation.
Nanjing's proposals envisage five new models over five years. Two of these will be MG sports cars, along with a small, medium and large car to replace the Rover 75. The sports cars, the 75 and its replacement would be made and assembled either at Longbridge or a new UK plant. The small- and medium-size cars would be manufactured in China for that market, while both will be assembled in the UK for European markets. Engines would be produced exclusively in China.
James is also talking to two private asset financing companies. He is offering £40m for the assets being sold by PWC, but needs to borrow a further £50m of working capital. His plan is to build up the MG sports car business to produce four new models in the next five years. Production would start at 15,000 cars a year, with a target of 100,000.
