"Alfa Romeo and MG - two sporting marques fighting for their futures"

(Clive Goldthorp in ARonline)

The premise: "MG and Alfa Romeo are both brands with a lot more potential. They could both be discontinued".

http://www.aronline.co.uk/blogs/news/mg-news/news-analysis-alfa-romeo-mg-two-storied-sporting-marques-set-success/

I find that very interesting, especially as Alfa sells 200 a month in Germany and would be the obvious [only] competitor. (Subaru: 600+] The main difference is between an apparently-flailing group with poor world exposure and a (currently very) financially-strong group getting to grips with its own brands.

The FIAT group has long been without any decent SUV and is centred on Italy and southern Europe, those places which have been worst affected by the euro crisis. I think of the Lancia cars of the early 2000s and see the only real competitor in design and aspiration to Rover, and, sadly, also a brand which has effectively ceased to be, joined the choir invisibule and become an ex-brand.

Some of the article almost suggests a hidden agenda by SAIC to close any UK presence.

Moreover, and worryingly, some of the younger followers of the BMC>MG story are now wondering whether SAIC Motor’s strategy for MG is one of preparing to fail – at least, in so far as any long-term design, engineering or manufacturing presence in the UK is concerned.

I mean - srsly - wut?



A business should always have a range of options on hand, generally linked to the amount of free investable cash the business has. If we imagine the year is 2005, what does a "close any UK presence" option look like? The Moulton "Alchemy" approach?

• Allow MGR to go bust, which extinguishes liabilities in employment contracts and MGR pension scheme -
  
• Close the dealer network
  
• Move out of Longbridge for good (St Modwen own the land and the buildings, little to sell)
  
• Close all design and engineering
  
• Attempt to sell kit e.g. to Malaysia
  
• Look to sell in 2-3 years
  

What SAIC did even in setting up Ricardo 2010 was not this strategy. NAC's strategy of retaining Longbridge and looking to build up Nanjing was totally different. The post-2008 actions of the combined group have only thrown money away if closure is the ultimate goal - expansion of the Longbridge design and engineering centres and integration with Shanghai. Look at the annual accounts of SMTC UK - main risk, "not finding enough British designers/ engineers".

So if the new SAIC management plan to close the only way they have of making serious future money (as opposed to taking a turn from Volkswagen and GM) they have either planned poorly or been overtaken by a major unforeseen crisis...

If Chinese sales are weak, they need all the foreign market share they can get. The Chinese public haven't taken MG/Roewe to heart as they had no knowledge of MGR or it's brands before 2005. With Audi/GM/Mercedes/whatever, they had a chance to try the cars, see the quality and buy into the image. MGR products towards the end of their life simply could not compete with other western brands so why would the Chinese get excited by them? The new models launched since have still not matched other brands in terms of look or feel either; they are still recovering from the development hiatus caused when BMW walked off in 2000. They are catching up fast - the MG3 is ahead of the MG6 and the new 4x4 will be a very interesting proposition as it should move the game further forward still. But the Chinese still don't know enough about the brands to care. It's also quite a mixed message - Chinese pride in a Chinese car, yet don't forget Big Ben and 90 years of British history. It's very schizophrenic.

As for the comparison with Alfa - I don't see it. Alfa have a massive dealer network and access to a huge pool of IPR and R&D. If it fails it will be because of a decision by the 'Corporation' to focus on other brands. MG is the only brand SAIC have - what will they do, just give up and carry on making other people's machines? I don't see that they are wedded to Longbridge but I would think a UK base would be on the cards, even if it was only an import/pdi base. MGR sold most of the site anyway so NAC couldn't actually buy their own car factory, just the lease on one. They could go anywhere in the midlands to a far newer site with more flexibility. R&D in China hasn't produced much of note either; they need Western brains if they want to compete with Western brands, and that is what the Chinese market wants.

What SAIC need to do soon is stop faffing in the UK and Europe - it's been 10 years since MGR so it's pretty clear they are here to stay but they need to massively build the dealer network. They also need to spend big on advertising; they want to be treated like one of the big boys so they need to act like them. It will be expensive but they must surely realise that they aren't going to sell by themselves - they need to push. They need to stop compromising; to launch the MG3 with just one engine and one body style (obviously dictated by Chinese tastes and economies of scale) was a compromise. Not a bad one but could try harder.

This article is the same old story which won't go away until SAIC start acting like the company it wants to be seen as. They need to stop relying on on shopping centres and start displaying at motor shows!