Nanjing Automobile (Group) Corporation Totally Explained

Everything about Nanjing Automobile Group Corporation totally explained

The Nanjing Automobile (Group) Corporation (Chinese: 南京汽车集团有限公司 or 南京汽車集團有限公司) is a state-owned enterprise with history dates back 1947 and one of the oldest Chinese automobile manufacturer. At 2004, the group, with over 14,000 employees and 3,400,000 m² area, has a total assets of RMB 12 billion and an annual production capacity of 200,000 vehicles. The group's major products are cars, trucks, and coaches.

History

The history of the Corporation can date back to 1947. It was first established as a repair service column in the East China Field Army (later became the Third Field Army of the People's Liberation Army) in the province of Shandong. This was the period of civil war between the Kuomintang government (the Nationalist or KMT) and the Communists. In July 1949 it took over an automobile workshop of the KMT government in Nanjing (Capital of Republic of China since 1928) when the Red Army conquered the city.
   In the early fifties, the plant was transferred to China's First Ministry of Industrial Machinery. It successfully produced the first light trucks of China on March 10, 1958, a 2½ tonne based on the GAZ-51(?) from Russia. The Ministry named the truck Guerin autos (跃进牌汽车 - which literally means 'Leap Forward') and approved the establishment of Nanjing Automobile Works.
   From 1958 to 1979, Nanjing moved to a leading position in light auto market in China. In 1980, in order to satisfy the demand of market, it was the first to install a diesel motor in light trucks. In 1982, Nanjing introduced a whole set of moulds of Isuzu cabs for US$750,000, which enabled an update of the truck and leaping to become a leader in China's auto market. The company also introduced modern technology from Iveco and the auto output had a sharp increase from 250,000 units to 650,000 units. In 1996, during the period of the Ninth Five-year Program (1996-2000), the company established Nanjing Viejo Automobile Co. with Iveco Company of Fiat Auto S.p.A. of Italy. It established Nanjing Fiat Company, a join venture of Fiat, initiating the production of saloon cars. At the meantime, it carried out shareholding reform on Yuejin Autos and established Yuejin Automobile Shareholding Co., Ltd.; it introduced the assembly line and technology of Seat's Ibiza (first generation) from Europe and established Wuxi Soyat Branch.
   Currently, the company has reached an annual capacity of 200,000 sets of various autos, including over 400 kinds of saloon cars, light trucks, heavy trucks, light buses, off-road vehicles, estate cars, special vehicles and special-purpose vehicles as well as a wide series and multi-type product mix of various chassis, which has developed into four integrated production bases of Yuejin, Nanjing-Iveco, Nanjing-Fiat and Soyat.
   On July 22, 2005, the Nanjing Automobile Group purchased the remaining assets of British MG Rover Group for £53 million.
   On December 2007, the Nanjing Automobile and SAIC Motor announced a long-expected merger.

Brands

Car brands owned by NAC:

Soyat (Chinese car brand, their models are licensed by SEAT and Isuzu)
MG (Acquired MG Rover Group and Powertrain Ltd assets, including the brands: Wolseley, Austin, Morris, Vanden Plas (outside the US & Canada), American Austin, Princess and Sterling)

Truck brands owned by NAC:

Yuejin NAC Joint Ventures:

Nanjing-Fiat

Nanjing-Iveco

Wuxi Soyat Branch

The Wuxi Soyat Branch(南汽新雅途) of Nanjing Automobile (Group) Corporation is the fourth integrated production base following Yuejin(南汽跃进), Nanjing-Iveco(南京依维柯) and Nanjing-Fiat(南京菲亚特), and the second production base of saloon cars. It locates at Wuxi Huihan Economic Development Zone(无锡惠山经济开发区), just north of the city of Wuxi(无锡)(about 150 km east of Nanjing), in Jiangsu province of eastern China, at the centre of the Hangzhou-Shanghai-Nanjing triangle. The site covers an area of 640 mu(亩), with a floor area of 670,000m². Soyat current model list:

Soyat NJ7150 and Soyat Unique (under SEAT licence)

Soyat-Junda SUV (under Isuzu licence)

Soyat-Junda Pick-up (under Isuzu licence) These models are mainly sold inside mainland China.

Yuejin Motor Group

Nanjing Automobile Corporation sell light-duty trucks under Yuejin brand in China and overseas.
   Yuejin Motor Group possesses an annual production capacity of 200,000 vehicles of various models. The products cover different types of models, including light duty trucks, light duty buses, cross country vehicles, small-sized passenger/cargo transportation vehicles, special-purpose vehicles as well as various types of chassis etc.
   Yuejin Motor Group has been engaged mainly in exploring the overseas markets of automobiles and parts & components thereof. The products have been exported to many countries and regions such as Argentina, Chile, Senegal,South Africa, Sudan, Ivory Coast, Namibia, Djibouti, Tanzania, Cyprus, Togo, Italy and Spain. In addition, it has obtained successful experience in establishing abroad SKD/CKD assembly plants of trucks and minibuses.
   In late 2006, Yuejin's truck making business is merged with Naveo, the commercial van join venture with Iveco. It is reported that trucks will continue to be sold under the Yuejin brand. See details in following section.

Nanjing-Fiat and Nanjing-Iveco joint ventures

The 50-50 joint venture between NAC and Fiat was set up in April 1999]. Located in the Jiangning District New Technology Park of Nanjing, Nanjing-Fiat produced and sold 24,000 vehicles in 2002, bringing a sales revenue of 2.3 billion yuan (US$280 million). Nanjing-FIAT produce four models: Fiat Palio, Fiat Palio Weekend, Fiat Siena, designed by IDeA and Fiat Perla the first model jointly designed by Fiat and Nanjing Fiat Automobile.
Fiat is a latecomer to the China market and showed half-year sales of 16,442 units for the first six months of 2006. The company hoped the Perla, which went on sale in September, 2006 would improve its sales to 40,000 units a year, which would be an improvement of 20 percent. The combined sales of Perla, Siena, Palio and Palio Weekend by Nanjing Fiat in 2006 was over 33,000 vehicles, an improvement of 37% over that of previous year, though represented less than 1% market share. Sergio Marchionne, the chief executive officer of Fiat says the automaker is aiming to raise sales in China to 300,000 cars a year by 2010. Fiat vows to introduce one new model a year in China in the next four years. In the mean time, there were reports that Fiat was dissatisfied with the performance of the join venture, blaming its local partner (Nanjing Auto)'s distraction on Rover/MG project and was actively seeking resolution including possibly to replace its local partner. Iveco, part of the Fiat Group, also has a US$300 million joint venture, Naveo, in co-operation with the Yuejin trucks, producing Iveco commercial vans. Fiat announced in September 2006, Naveo to acquire Nanjing's Yuejin truck making business and plan to produce up to 100,000 vehicles a year. In 2006, Yuejin sold about 43,000 vehicles and Naveo sold over 20,000 vehicles. It plans to expand sales to 90,000 vehicles (Yuejin to increase by 50%, Naveo increases by 20%). It is hoped that Yuejin trucks can be strengthened with technologies from Iveco, and furthermore, supports of Yuejin trucks in overseas markets can be backed by Iveco's international network. Iveco is the world's second biggest bus manufacturer, following only Mercedes-Benz.
In December 2007 Fiat announced that it's going to end its joint venture with Nanjing, the passenger car production will end but co-operation continues still with LCVs.

MG Project by Nanjing Automobile

It is a significant step taken by NAC in its global strategy to acquire the assets of MG Rover and Powertrain Ltd. After its successful acquisition of MG Assets, NAC is now undertaking the overall planning of MG project, of which, some part is already underway for implementation.
   NAC has now decided to establish production bases of MG project at Longbridge, Nanjing, and Ardmore. On one hand, the production of some products with rather high cost if produced in the U.K., such as engine, transmission and medium and low end vehicle products, will be transferred to China, where a mature supply chain with low cost will be set up step by step. On the other hand, with part of production facility retained in the UK, the original Longbridge site will be integrated to resume the production of MG TF sport car and part of the high end products (including the ZT and ZT-T). Meanwhile, by making full use of the prominent R & D capability and personnel in the UK as well as that of China, the Euro IV engines and a new generation of vehicles will be developed and then produced in both China and the UK in the near future. Then, the sales network of China established by NAC and the global sales network of the former MG Rover can be used to meet the demand of various markets in China, Britain, Europe and North America.
   NAC is in the process of making detailed plan for the strategy implementation in the UK and China and has taken steps on some important strategic issues such as Longbridge Site integration and Euro IV engines development.
   In the original plan, the production would have been resumed in the Longbridge in March 2007, when MG TF, MG ZT and MG ZT-T were meant to be relaunched. However, this has been delayed.
   The MG range will expand in late 2008 with the launch of two new model ranges which may also be sold as Austins. These will effectively replace the MG ZR and MG ZS ranges which Nanjing decided against continuing.
   It is a key point in the global strategic plan of NAC to establish a new sales network based on the original one of former MG Rover Group.

MG Production Plan

In 2007, Nanjing Automobile plans to build 13,000 cars based on the Rover 75 / MG ZT lower-premium sedan. It also plans 3,000 MG TF convertible sports cars.
   Nanjing's Rover 75-based cars will be mostly sedans (saloons) that will be called the MG 7. Nanjing will also build some station wagons (estate cars) called the MG 7T. It intends to build the MG 7 in both China and at the former MG Rover factory in Longbridge, England. When Longbridge re-opened in early 2007 producing the MG TF.
   By 2011, Nanjing hopes to assemble 85,000 MG 7s a year and 25,000 MG TFs. Nanjing will source as many parts as possible in China for both models to keep costs down.
   Nanjing is already seeking price quotes from suppliers in China, including many who are already making parts for a version of the Rover 75 that will be assembled by SAIC Motor, a subsidiary of Shanghai Automotive Industry Corporation.
   SAIC sources say the agreement under which SAIC purchased the intellectual property rights of the 75 has loopholes that allow Nanjing to also make the sedan, that means there could be two copies of the Rover 75 on Chinese roads in a few years.
   But industry insiders confirm that Nanjing and SAIC have been asked to work closely together and are in talks to jointly build SAIC Group into the biggest world class automotive group company in China and build Nanjing into a key production base of automotive industry in China.
   Nanjing re-opened the Longbridge plant on 29 May 2007, just over two years after the bankruptcy of MG Rover. Production of the MG TF LE500 is expected to resume soon.

The Fifth Integrated Production Base: MG Plant in China

The MG Factory of Nanjing Automobile Corporation is located in the High-level New Technology Economic Development Zone in Pukou (a new district of Nanjing). The capacity of the future Nanjing-MG Factory will reach 200,000 autos, 250,000 engines and 100,000 gear-boxes. It was originally predicted that the factory, which covers 290,000 m², would have a construction time of seven to nine months, however it was completed in six months and the first cars were produced in March 2007. The initial MG range consisted of just the MG 7, a successor to the MG ZT, and MG TF.
According to the purchase agreement, Nanjing Automobile bought the MG, Austin and other British car brands, production technology and equipment for the MG ZT and MG TF. The tooling for the MG ZS was repossessed by Honda as it was based on an old Honda design, so production of this model was never an option for Nanjing Automobile.
However, Nanjing will produce its own version of the MG ZS (the MG 5), as well as the MG ZR-based MG 3, both of which will go on sale in 2008.

The Future of the Longbridge Plant

The MG Rover plant at Longbridge was for many years one of the most important factories in Europe and was the largest British owned car manufacturing plant until the bankruptcy of the MG Rover Group. After the factory of Abingdon closed in 1980, Longbridge was also from 1982 the home of MG. Longbridge employed 16,000 ten years ago, down to 6,000 when the company collapsed into administration in April 2005.
   The ownership of the site is held by the St Modwen Properties company who acquired 412 acres of the Longbridge site in two deals in 2003 and 2004 for £57.5 million and leased it back to MG Rover Group.
   Shortly after Nanjing Automobile bought the company it revealed plans to employ 1,200 workers and ultimately build 100,000 cars in 2006, but these plans have been revised and it's predicted that approximately 600 jobs are now likely to be created and 15,000 cars will be assembled at the beginning. The Longbridge plant re-opened on 29 May 2007, with just 250 staff initially being employed for assembly of the MG TF sports car. Nanjing says that there's a capacity for up to 1,200 staff to be employed there in the not too distant future. This will be necessary for the assembly of the forthcoming MG 3 and MG 5 ranges. The MG 7 is also due to start production at Longbridge at around the same time.
   A 33 year deal was signed in February 2006 between NAC and St Modwen Properties covering the lease of 105 acres (a quarter of the total area of the Longbridge plant) but including the two main car assembly plants, the paint shop and administrative offices at a rent of around £1.8 million a year.
   An estimated £10 million is needed to reopen the factory..
   The development of Euro IV engines, previously completed by Powertrain, would be carried into production, with much of the final stages now being complete. Bulking up the European end of the operation, a UK Research and Design Centre would be set up in order to develop Euro-specific models. There will also be a research and design centre in China for the development of cars for the Chinese market.
   Nanjing has plans to revive the Austin marque (last used in 1989) for future models that are more downmarket and family orientated.

MG Motors North America: Ardmore Plant

On July 12, 2006 senior officials of Nanjing Automobile Corporation announced the revival of the historic MG brand of vehicles, as well as plans to build a new MG product in Oklahoma, with the formation of MG Motors North America, Inc., in a ceremony in Oklahoma City.
   MG vehicles won't only be built in Nanjing, China, the Longbridge assembly plant near Birmingham, England but also at at a new American assembly plant to be built at the Ardmore Air Park in Ardmore, Oklahoma. Headquarters for MG sales, marketing and distribution (outside of Asia) will be located in Oklahoma City. Research and development will be in Norman at the University of Oklahoma.
   NAC has recruited a seasoned American auto executive, Duke T. Hale, to be the new company’s President and Chief Executive Officer responsible for the revival of MG in the UK and Europe followed by the re-launch of MG in North America.
   According to MG Motors officials, approximately 550 jobs will be created in Oklahoma, including headquarters operations, assembly operations, parts and distribution operations and research and development.
   Construction of the factory started in early 2007, with production set to start towards the end of 2008.
   However, as of the beginning of 2007, there have been reports of quarrelling between the Americans partners and Nanjing Auto over differences of opinion regarding MG's future. Some people speculate that the Americans are impatient with Nanjing, who seem to be more heavily favouring the existing British Longbridge factory and their own Chinese operations over the planning of the US factory. There is also believed to be extensive cultural difference between the Chinese and the Americans that are causing rifts.

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