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MG Rover and China Brilliance Industrial Holdings have announced a long-term strategic alliance and co-operation agreement to finance, develop, manufacture and market world-class automobiles for the mutual benefit of both partners.
The alliance provides the potential for MG Rover derived cars to be manufactured in China, including those that will be jointly developed. This will include a new medium-sized car. Plans have also been put into place for the joint development of a new small car and consideration will be given to the development of additional new models. Equally the opportunity also exists for MG Rover to manufacture and market China Brilliance derived vehicles.
The companies will also co-operate on the supply and manufacture of engines including the development of a new range of engines.
MG Rover will provide considerable technical support and assistance in order to establish the necessary manufacturing processes and systems in China. This will extend to the establishment of a joint Research and Development Centre in China.
The alliance will seek significant cost benefits from larger manufacturing volumes, as well as the joint sourcing of components.
The alliance will enable both partners to grow more quickly than would otherwise be possible because they will benefit from each others strengths. It has been structured in a way that MG Rover and China Brilliance both benefit financially from combined alliance sales.
Kevin Howe, MG Rover Chief Executive said: "This is a wide-ranging global alliance that spans the full breadth of both companys activities and presents many opportunities. I am delighted that we have so much in common. Brilliance has achieved quite outstanding results in a very short space of time and demonstrates world-class standards in everything it does. It is clearly the leading automotive manufacturer in the worlds fastest growing car market.
"China will be one of the most important markets for the alliance, where it can move quickly into a position where it can fully exploit this markets potential."
Dr Brian X. Sun, Chief Executive China Brilliance Industrial Holdings, said: "From the beginning it was very clear Brilliance and MG Rover have a similar philosophy and operating style. We are both ambitious, clear in our vision and quick with decision-making.
"Equally important is the fact that MG Rover and China Brilliance do not have products that compete directly, which means we can take the full benefit from our alliance without our plans conflicting in any way.
"Benefit will be derived from large economies of scale, which will spread development costs for new products over bigger volumes, and increase purchasing power for components which will in turn make our products more competitive. Together we will be a force to be respected in the automotive industry."
The alliance creates the potential for much greater global reach and scale. Market territories have been assigned to each partner. Vehicles can be manufactured and sold exclusively by China Brilliance in China and the majority of Asia and Africa. MG Rover will have exclusivity in all other markets; however consideration will be given to combining efforts in the USA.
A new joint venture company will be created. Ownership of the company will be shared 50/50 between MG Rover and China Brilliance. Three directors each from MG Rover and China Brilliance will form the board. They will oversee the collaboration and manage alliance objectives. There will be no exchange of equity between MG Rover and China Brilliance, however both parties will invest substantial resources into ensuring the success of the alliance.
About China Brilliance Industrial Holdings
The Chairman of China Brilliance Industrial Holdings, Dr Yang Rong, heads a group that comprises eight companies, with listings in New York, Hong Kong and Shanghai.
The principal business of the group is vehicle, engine and component manufacturing and sales. It has an annual turnover in the region of US$2.8 billion and significant global reach within the automotive industry, co-operating with many of the worlds most significant players including Toyota, GM, BMW, Mitsubishi, Renault and London Taxi International.
The group employs 40,000 people in China in seven vehicle manufacturing facilities, three engine plants and various component manufacturing, and includes more than 3000 engineers.
Annual production for 2002 will approach 150,000 units. Products include minibuses, sedans, SUVs and pick-ups, light trucks and the legendary London black cab.
The group has some notable firsts. China Brilliance was the first Chinese company to be listed in an overseas stock exchange. It will launch its Zhonghua sedan in the second half of 2002 - the first vehicle to be designed and developed entirely by a Chinese automotive company.
The group is developing its own MPV and is also working on a family of advanced engines with FEV in Germany. They will be manufactured in China in new state of the art facilities, in volumes approaching 500,000 units for the groups own vehicles and for sale to other manufacturers.
The groups total investment to date, in vehicle and engine design and manufacturing exceeds US$2 billion.
And MG Rover...
MG Rover Holdings is an independent, medium-sized British company, with a focus on the development of a fully integrated automotive business. Its aim is to create great cars, from great brands.
The company was formed following the purchase of the Rover Group from BMW in May 2000. The total group has an annual turnover in the region of £2 billion and has a workforce of 6,500.
MG Rover Group designs, develops and manufactures cars at its Longbridge, Birmingham site in the UK. Its products are sold worldwide in 70 markets, with approximately 50 per cent of sales to export territories.
Local distribution is by MG Rover Australia, formed in late 2000. The award-winning Rover 75 went on sale in March last year, joining the MGF sports car. A range of new MG sporting sedan and wagons will be launched in May this year, taking the total 2002 sales target close to 1500 vehicles.
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