In the last section we saw that the current customers of NAC MG appear to be very satisfied with their purchases resulting, if you can believe the survey, in an amazing 98% customer satisfaction score, however to claim a real success, they also need to have achieved their aims and before judging if their aims have been achieved we need to take a look at what those aims were. In this section we will take a look at the history leading up to the purchase of MG by NAC and then in the following section we will take a look into why the purchase was made and what those aims where.
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The history of the Nanjing Automobile Corporation can be traced back to March 27th 1947 when a repair shop was set up in Shandong province in northern China to repair some of China’s most common motorised vehicles of the time, the American built Sherman tanks run by the Peoples Liberation Army (PLA) East China Field Army. This would have presented a fair challenge, as it’s unlikely the Americans would have been supplying the PLA with spare parts at the time; the tanks after all were ones that the PLA had captured from their opponents rather than ones they had purchased. Nanjing at the time was held by the opposing forces and was not taken by the PLA until April 23rd 1949 with the PLA repair shop setting up in existing Nanjing workshops on July 13th of the same year.
Vehicle production didn’t begin until 1958, when they put China’s first light truck into production. The truck was known as the Yuejin (Leap Forward) and the Yuejin company has successfully been producing light trucks ever since. In addition to the light trucks they also have bus and special vehicle (road maintenance, military etc) divisions plus a joint venture with IVECO trucks of Italy producing small to medium sized trucks. All of these businesses have run reasonably successfully throughout their history with Yujin being one of Chinas leading Automotive companies up until the expansion of the Chinese car industry.
The one thing missing above is car production, mass production of cars didn’t start in China until the mid 1990’s when the government decided to kick start the industry with some significant investment in a few of the larger automotive companies. Various local governments also invested on a much smaller scale in their local industries. The result is a small number of large, well funded and successful companies such as the Shanghai Automobile Industry Corporation (SAIC) and First Automobile Works (FAW) and a whole load of far smaller and less successful companies including, as far as cars were concerned, Yuejin.
Its name was changed to Yuejin Motor Company in 1995 in order to take part in the automobile revolution. A reorganisation took place in 2000 bringing in extra investment to form Yuejin Automobile Group and the The Nanjing Automobile Corporation (NAC) was formed by Yuejin and a number of local government investment companies in 2003 with Yuejin itself being the controlling shareholder. Following formation of NAC, the Yuejin name was publicly used only as the brand name of NAC’s light truck range.
Before the introduction of MG, NAC’s car production consisted of Nanjing Soyat and Nanjing Fiat. Nanjing Soyat is a small and throughout its life not very successful venture part owned by NAC. It is somewhat surprisingly, still producing and selling small numbers of cars today (beginning of 2008). Nanjing Fiat was a 50-50 joint venture with Fiat cars of Italy which achieved higher production figures than Soyat but has never been profitable and production numbers have failed to increase over the years. After much public argument about its future, by the end of 2007 Fiat had pulled out of the joint venture, selling their 50% stake to NAC for the grand sum of €1 (One euro).
The remaining brand of NAC, MG, was one of the British brands that BMW took possession of when it bought the Austin Rover Group from British Aerospace in 1994. In 1999 it split the group, selling Land Rover to Ford, retaining the Mini and selling the remaining assets to the British Phoenix Venture Holdings (PVH) for the grand sum of £1 (one British pound). Since then both Land Rover and Mini have been very successful while MG-Rover (MGR), set up by PVH consistently made losses, both financially and in market share, finally running out of money and entering bankruptcy, or more accurately administration, in the spring of 2005. The administrators sold the entire assets, including the MG brand, to NAC in the summer of 2005.
One thing common to both the NAC and MGR stories is insufficient investment to produce new car designs competitive with the larger automotive groups while at the same time attempting to compete with those larger groups, a problem which both companies where seeking a solution to almost from the time of their formation. An example of a competitive larger automotive group that also has a production base in Nanjing is Ford-Mazda, many times the size of NAC or MGR. It was this problem which brought NAC and MG together and eventually lead them to join up with SAIC, the details of which we will cover next.
To be continued…
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