Autocar Article and thoughts on Profit & Loss

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    Morris Motors

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    Autocar Article and thoughts on Profit & Loss

    Post by Morris Motors on Thu Apr 25, 2013 6:33 am

    Not sure whether to put this here or in the Chinese section, but I've opted for here as its a UK publication - Autocar have been shown around a dealer in China which is selling 35 cars a week - more than MG can manage in the UK in an average month!

    http://www.autocar.co.uk/blogs/motoring/what-have-david-beckham-prince-william-princess-kate-and-kate-moss-got-do-british-car

    Fairly impressive stuff, but it sort of links into something I posted about the MG3 pricing. I was thinking about the any losses made by MG in the UK (assuming that they do make a loss) which, frankly, must be fairly manageable anyway due to their low UK overheads. But any loss they incur here could surely be absorbed by the Chinese marketing budget as it seems to be that the Longbridge connection is what is selling them in China! Operating in the UK must be seen as a no-brainer to SAIC.

    That aspect had always worried me about SAIC after they seemed utterly unconcerned when they lost the MG Rover sell off auction to NAC. Whether their comments at the time about not wanting Longbridge anyway were a bit of bravado or sour grapes or not, I do wonder whether they would have done what NAC did and keep it open building TFs? Anyway, it seems to be working for them now...

    As an aside, it would be interesting to know which company actually owns the freehold on the Longbridge site because, if MG Motor UK Ltd own it, they would probably charge a rent to SMTC UK Ltd for their facility. And SMTC UK Ltd would (presumably) charge their design services to the rest of the group. That would be another way of 'subsidising' the UK manufacturing operation. Just thinking like an accountant for a moment Surprised)
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    Re: Autocar Article and thoughts on Profit & Loss

    Post by patpending on Thu Apr 25, 2013 8:48 am

    Morris Motors wrote:Not sure whether to put this here or in the Chinese section, but I've opted for here as its a UK publication - Autocar have been shown around a dealer in China which is selling 35 cars a week - more than MG can manage in the UK in an average month!

    http://www.autocar.co.uk/blogs/motoring/what-have-david-beckham-prince-william-princess-kate-and-kate-moss-got-do-british-car

    Fairly impressive stuff, but it sort of links into something I posted about the MG3 pricing. I was thinking about the any losses made by MG in the UK (assuming that they do make a loss) which, frankly, must be fairly manageable anyway due to their low UK overheads. But any loss they incur here could surely be absorbed by the Chinese marketing budget as it seems to be that the Longbridge connection is what is selling them in China! Operating in the UK must be seen as a no-brainer to SAIC.

    That aspect had always worried me about SAIC after they seemed utterly unconcerned when they lost the MG Rover sell off auction to NAC. Whether their comments at the time about not wanting Longbridge anyway were a bit of bravado or sour grapes or not, I do wonder whether they would have done what NAC did and keep it open building TFs? Anyway, it seems to be working for them now...

    As an aside, it would be interesting to know which company actually owns the freehold on the Longbridge site because, if MG Motor UK Ltd own it, they would probably charge a rent to SMTC UK Ltd for their facility. And SMTC UK Ltd would (presumably) charge their design services to the rest of the group. That would be another way of 'subsidising' the UK manufacturing operation. Just thinking like an accountant for a moment Surprised)

    MG Motor UK Ltd is an English company within the SAIC group. I think they are still owned by NAC UK. So marketing spend will show up in individual company accounts.

    In 2009 and 2010 MG Motor UK Ltd made some turnover selling parts to the rest of the group.

    But don't forget that the freehold for the whole of the site was flogged to St Modwen by MG Rover and that any bits SAIC use are leased.

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    Re: Autocar Article and thoughts on Profit & Loss

    Post by Morris Motors on Thu Apr 25, 2013 11:28 am

    Not so - MG Rover sold off Longbridge in more than one deal - two or three I think, for different sites (North Works, West works etc.) Anyway, they never sold the HQ site.

    I believe they sold the Flight Shed and other bits of land, but as far as I know, they retained CAB1 and CAB2, the paint shop and the 'Kremlin' complex. I would imagine that, by now, they don't pay rent to anybody. It was the IPR, equipment and this 'rump' of the factory site that NAC bought in 2005 - they took out leases on other parts at the same time (presumably the bits they have since vacated).

    Also I think MG Motor UK Ltd is actually NAC UK, but renamed.
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    Re: Autocar Article and thoughts on Profit & Loss

    Post by Windy on Thu Apr 25, 2013 4:00 pm

    Morris Motors wrote:Also I think MG Motor UK Ltd is actually NAC UK, but renamed.
    That is true, it was NAC UK, now named MG Motor UK, that took out the lease with St Modwen and SMTC will presumably lease office space from MG Motor UK. I thought MGR had by the end sold almost all the land.

    MG Motor UK is owned by NAC, hence Pats comment, so they can buy MG5s from their parent but MG3s and MG6s need to be bought from SAIC Shanghai which is not part of NAC! Although it is all owned by SAIC passenger cars at a layer above.

    NAC is profitable, as is the Shanghai part. Last I heard MG Motor UK was making a small loss although possibly a tax convenient one.

    "Whether their comments at the time about not wanting Longbridge anyway were a bit of bravado or sour grapes or not, I do wonder whether they would have done what NAC did and keep it open building TFs? Anyway, it seems to be working for them now..."

    SAIC have never been very interested in anything but their domestic (China) market and at "the time" would have needed to obtain state permission for every transfer of money in or out of China - taking many months each time; doing anything with Longbridge was almost out of the question for SAIC, NAC have exported for decades having been set up with special import/export privileges from the government so for them buying and running Longbridge was just a matter of finding the money. This was probably the main reason SAIC involved NAC in the original failed joint venture, SAIC where to build new production lines in China while NAC where to purchase and import the Longbridge R45/R25 lines because they could.

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    Re: Autocar Article and thoughts on Profit & Loss

    Post by Morris Motors on Fri Apr 26, 2013 2:00 am

    Ah, very interesting. So NAC still sort of exists in China, and they and SAIC aren't one entity in China?
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    Re: Autocar Article and thoughts on Profit & Loss

    Post by Windy on Fri Apr 26, 2013 4:21 am

    Morris Motors wrote:Ah, very interesting. So NAC still sort of exists in China, and they and SAIC aren't one entity in China?
    NAC fully exists in China as a subsidiary of SAIC. It also exists in the UK, as can be seen if you read the first paragraph of http://mg.co.uk/terms-conditions/

    NAC is essentially the Nanjing operation, I believe including the Nanjing technical centre and I think the Yuejin truck division.

    NAC also does all the import and export operations, including Maxus etc.

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    Re: Autocar Article and thoughts on Profit & Loss

    Post by Morris Motors on Fri Apr 26, 2013 5:42 am

    Ah, its all getting a bit 'Leyland-esque' with all these subsidiaries!

    Totally off topic now, but NAC used MGR presses to make the MG7, whereas SAIC started from scratch to build the 750 - how exact are the panels made by SAIC (boot etc aside)? Will a driver's door from a Roewe be an exact match to an MG7? No particular reason, but I've always been curious.
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    Re: Autocar Article and thoughts on Profit & Loss

    Post by patpending on Fri Apr 26, 2013 5:57 am

    Morris Motors wrote:Not so - MG Rover sold off Longbridge in more than one deal - two or three I think, for different sites (North Works, West works etc.) Anyway, they never sold the HQ site.

    I believe they sold the Flight Shed and other bits of land, but as far as I know, they retained CAB1 and CAB2, the paint shop and the 'Kremlin' complex. I would imagine that, by now, they don't pay rent to anybody. It was the IPR, equipment and this 'rump' of the factory site that NAC bought in 2005 - they took out leases on other parts at the same time (presumably the bits they have since vacated).

    Also I think MG Motor UK Ltd is actually NAC UK, but renamed.
    [The Birmingham car maker MG Rover has sold most of its Longbridge site to a property developer.
    The sale, which was revealed on Tuesday, saw St Modwen Properties pay £42.5m for all but 20 acres of the 248-acre complex.[my highlight]

    The car group plans to rent the land back from St Modwen and reinvest its windfall in the business.

    MG Rover lost £100m in 2002 and this is the third land sale made by the company in under two years.

    http://news.bbc.co.uk/1/hi/england/west_midlands/3373969.stm

    I know when walking around the factory complex in 2010 that they were talking about handing back areas right next to the Kremlin to reduce the rent bill.

    In 2010, MG Motor had no freehold land or buildings - just capitalised "Leasehold Improvement" (note 8 to the accounts).

    (MG Motor does not have publicly to itemise its costs such as lease payments).

    So none of the land belongs to MG Motor. (Don't know what happened to the 20 acres - into administration and bought by St Modwen?)
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    Re: Autocar Article and thoughts on Profit & Loss

    Post by Windy on Fri Apr 26, 2013 9:21 am

    Morris Motors wrote:Ah, its all getting a bit 'Leyland-esque' with all these subsidiaries!

    Totally off topic now, but NAC used MGR presses to make the MG7, whereas SAIC started from scratch to build the 750 - how exact are the panels made by SAIC (boot etc aside)? Will a driver's door from a Roewe be an exact match to an MG7? No particular reason, but I've always been curious.
    NAC remained separate mainly because a large amount of it was owned by Nanjing government while SAIC was owned by Shanghai government, Nanjing didn't want NAC paying its taxes to Shanghai and so as part of the cooperation agreement between NAC and SAIC, NAC had to remain a separate company for tax purposes.

    I'm not convinced that the MG7 did use Longbridge presses. They already had presses in Nanjing and I think they produced new dies. I think anything too large or heavy to fit in a standard shipping container remained in Longbridge, as did anything that would have taken too long to shift as they had a tight deadline to get everything moved before they had to start paying 17.5% tax on everything exported!

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    Re: Autocar Article and thoughts on Profit & Loss

    Post by Morris Motors on Fri Apr 26, 2013 1:44 pm

    I think one of the last pieces to be handed back were units along Lickey Way, plus the buildings at the top of the site next to the entrance off Lickey Way where deliveries came in (or still come in - the access road is still there).

    As for the 20 acres, I'm sure I recall at the time it was the HQ area. The site today is currently about 40acres so if that figure of 20 is correct then there must be leased property.

    As for the 2010 accounts listing no freehold property, could it be that SMTC UK own the property? That 20 acres must have gone somewhere.

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    Re: Autocar Article and thoughts on Profit & Loss

    Post by Morris Motors on Fri Apr 26, 2013 1:46 pm

    Thanks for the info on the 7 & 750 - very interesting.
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    Re: Autocar Article and thoughts on Profit & Loss

    Post by patpending on Sun Apr 28, 2013 1:29 pm

    Morris Motors wrote:I think one of the last pieces to be handed back were units along Lickey Way, plus the buildings at the top of the site next to the entrance off Lickey Way where deliveries came in (or still come in - the access road is still there).

    As for the 20 acres, I'm sure I recall at the time it was the HQ area. The site today is currently about 40acres so if that figure of 20 is correct then there must be leased property.

    As for the 2010 accounts listing no freehold property, could it be that SMTC UK own the property? That 20 acres must have gone somewhere.

    I know MG Motor were thinking of keeping an option on leasing/retaining the lease to the access road to Longbridge N Gate so that stuff could reach the NW corner of the factory.

    If MG Rover still owned those 20 acres on insolvency, they would have gone into the pot. Then they would have had to be bought out. Did SAIC have the right to buy overseas property in 2005? It seems the land for Ricardo 2010 (forerunner of SMTC) was leased from Ricardo in Leamington... presumably NAC didn't buy the land if it is now not in MG Motor...
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    Re: Autocar Article and thoughts on Profit & Loss

    Post by Windy on Mon Apr 29, 2013 2:42 am

    patpending wrote:
    If MG Rover still owned those 20 acres on insolvency, they would have gone into the pot. Then they would have had to be bought out. Did SAIC have the right to buy overseas property in 2005? It seems the land for Ricardo 2010 (forerunner of SMTC) was leased from Ricardo in Leamington... presumably NAC didn't buy the land if it is now not in MG Motor...
    It would have made sense for St Modwen to buy any remaining land from the administrators, they were selling off the assets so there was no reason to sell the land to the same person who bought the rest. Also, at the time NAC bought MG, they hadn't decided to keep Longbridge, they signed the lease with St. Modwen a long time later having decided that a Longbridge operation was desirable.

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    Re: Autocar Article and thoughts on Profit & Loss

    Post by Morris Motors on Mon Apr 29, 2013 6:23 am

    Interesting. So it really might have all vanished if NAC had wobbled a bit.
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    Re: Autocar Article and thoughts on Profit & Loss

    Post by Windy on Mon Apr 29, 2013 9:40 am

    Morris Motors wrote:Interesting. So it really might have all vanished if NAC had wobbled a bit.
    They went on a shopping trip for production lines and IP so Longbridge could easily have been lost, but they did look at all the possibilities and at one point they were considering keeping some lines running which I think would have proved impossible. I suspect in the end NAC only kept Longbridge because their leaders loved Shakespeare and Scottish castles, had SAIC bought it then they had no such interests and it would certainly have been lost!
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    Re: Autocar Article and thoughts on Profit & Loss

    Post by patpending on Mon Apr 29, 2013 11:58 am

    I remember discovering how to write Coventry in Chinese - I think that was NAC considering alternatives (think Stadco).

    I also remember discussions held by a Chinese delegation in Graz, Austria (Magna) and Osnabrück, Germany (Karmann) for Euro production. I think that was SAIC. Can't remember if they got to Valmet, Uusikaupunki (=New Town), Finland, but that factory which had previously made Ladas, Calibras, Porsche Boxsters and SAABs is now turning out those Mercedes A-Class cars not made in Hungary or Germany.

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    Re: Autocar Article and thoughts on Profit & Loss

    Post by Morris Motors on Mon Apr 29, 2013 12:57 pm

    Wow! Were you involved with NAC then?

    I can't help thinking they might be better with a greenfield site and develop it as they need, rather than paying rent on empty assembly halls.
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    Re: Autocar Article and thoughts on Profit & Loss

    Post by patpending on Fri May 03, 2013 6:56 am

    Morris Motors wrote:Wow! Were you involved with NAC then?
    Jackonicko saw through me and realised I was secretly Mr Überwang, registering on .org a couple of years before MGR went bust as only someone from China could know these things. (IIRC we were talking about SAIC for Euro production, not NAC). Before this site began, Chinese news was supplied to .org by Windy and PatrickT, I think the Osnabrück story is in here:

    http://forums.mg-rover.org/showthread.php?t=219059&highlight=chinese+news

    I can't help thinking they might be better with a greenfield site and develop it as they need, rather than paying rent on empty assembly halls.
    Depends how long-term you are looking.

    If NAC had just closed the lot down, the continuity that is so important to MG would most definitely have suffered a major blow. If we think the BINI is an evil robot Mini, just imagine an MG assembled in a warehouse in Liverpool! Or not at all! That would definitely have been far worse for MG's image than paying rent .

    If NAC wanted any presence at all at Longbridge, it looks like it involved paying St Modwen...

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    Re: Autocar Article and thoughts on Profit & Loss

    Post by Morris Motors on Fri May 03, 2013 7:21 am

    Well, there is the continuity.. its a pity there aren't any parts of Abingdon suitable!

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