Nanjing Automobile

 Nanjing (nanqi) Automobile

Why do you think NAC bought the Rover Group? Describe their international business model. What factors will be critical to the new group’s global success?

The Nanjing Automobile Group (Yuejin Motor Group Corporation) is China's oldest car maker. It was founded in 1947 and is a state-owned enterprise with 16,000 employees. The group has fixed assets amounting to RMB 12 billion and an annual production capacity of 200,000 vehicles. The group's major products are cars, trucks, and buses. It produced the first light truck in China in 1958. From 1958 to 1979, they grew to a leading position in the light auto trade in China and in 1980 were the first in the country to install diesel engines in light trucks. In 1982, they introduced moulds for the Japanese firm, Isuzu’s, truck cabs which enabled them to become leaders in China in auto model conversion technology. The auto output increased from 250,000 sets to 650,000 units.  The company jointly established Nanjing Viejo Automobile Co. with the Iveco division of Fiat of Italy, and following this a further joint venture with Fiat to manufacture saloon cars at the Nanjing Fiat Company. They also carried out a shareholding reform at Yuejin autos establishing Yuejin Automobile Shareholding Co., Ltd. Following an agreement with the Spanish firm, SEAT, Wuxi Soyat Branch was set up, introducing mature technology and models from Europe. The company has an annual capacity of 200,000 vehicles, with a range of over 400 types of saloon cars, light trucks, heavy trucks, light buses, off-road vehicles, estate cars and special-purpose vehicles as well as various types of chasses.

On July 22nd 2005, the Nanjing Automobile Group purchased the British MG Rover Group for £53 million. In addition to the brands already owned by NAC:  Soyat (a Chinese car brand, with models licensed from SEAT and Isuzu), engines with Powertrain Ltd acquired in the Rover deal, and rights to the brand names Wolseley, Austin, Morris, Vanden Plas (outside the US & Canada), American Austin, Princess and Sterling names) and finally in trucks, the Yuejin brand plus a Joint Ventures between Nanjing and Fiat, Nanjing and Iveco.

Nanjing Automobile Corporation sells a range of light trucks under the Yuejin name. The Yuejin Motor Group has an annual production capacity of 200,000 vehicles of various types including light trucks, light buses, cross country vehicles, minibuses, vans and special-purpose vehicles as well as various types of chassis. They have also been active in exporting vehicles and components with sales to countries including Argentina, South Africa, Sudan, Ivory Coast, Namibia, Djibouti, Tanzania, Cyprus, Togo, Italy and Spain. In addition they have established local SKD/CKD assembly plants for trucks and minibuses in some countries.

A 50-50 joint venture between NAC and Fiat was set up in April 1999. Located in the Jiangning District New Technology Park in Nanjing, Nanjing-Fiat produced and sold 24,000 vehicles in 2002, bringing sales revenues of 2.3 billion yuan (US$280 million). Nanjing-FIAT produces three models developed by Giugiaro, the Fiat Palio, Fiat Palio Weekend and Fiat Siena. Iveco, an affiliate of Fiat, also has a US$300 million joint venture with Yuejin trucks producingIvecocommercialvans.

The purchase in 2005 of the assets of MG Rover and engine maker Powertrain Ltd marked a significant step taken in NAC’s global strategy. NAC has decided to establish production bases for MG in Longbridge, England and Nanjing, China. The production of some components such as engines and transmissions is being transferred to China, where advantage will be taken of lower manufacturing costs. Assembly facilities will be retained in the UK at the original Longbridge site which in 2007 resumed the production of the MG TF sport car and the MG ZT and MG ZT-T). The other cars in the MG range, the MG ZS and MG ZR are produced in China for both the local and export markets. Making full use of the research and development capability and staff in the U.K. as well as in China, Euro IV compatible engines and a new generation of vehicles will be developed and then produced in both China and the UK. The cars will be sold using the sales network in China established by NAC and the global sales network of the former MG Rover Group.