Reports have shown that there are three types of cars that they will introduce under the new manufacturers ‘Shanghai Automotive’. The first will be the mid-sized family car, then the sports car, and finally a smaller car like the Rover 25, and also a sleek executive model. This is good news as we are promoting the MG-TF, which is a sports car, so in the future when we are promoting the MG-TF, we can be sure that sales will happen, because sports cars will still be made.
As the production of cars is being extended to China, both ‘Shanghai Automotive’ and ‘MG Rover’ have said they are expanding the business and forming a partnership. By expanding the partnership over in another country, more sales and more profits are likely to be made, but not as much in Britain, as less cars will be made here, unlike in China. This Chinese takeover of MG Rover, signals the end of Britain’s once thriving car sector. By doing this the British car market may crumble, as the customers eyes are now looming to foreign companies. MG Rover is said to be Britain’s famous car brand, not because of the ups and downs that the company has always struggled with, but they have been renown for their quality, which is now lacking, as ‘Shanghai Automotive’ may be saving their lives, just like others before. This could be the end of changes and the demanding presence of British car manufactures in the world.
‘Shanghai Automotive’ is preparing to take over MG Rover, meaning they will want to make some serious changes to the business. The implications of the business will depend on what changes are going to occur under the charge of ‘Shanghai Automotive’. These could be job losses, the production line of cars being made over in China rather than in Britain.
There will obviously be changes for the company MG Rover after an injection of nearly £1 billion pounds. The changes perceived by the staff will swing both ways. This is because they will be motivated and glad that they have not lost their jobs, and feel that they want to make an impact and impression to make the business look good under, maybe a new company name. However, the SAIC may honour their jobs at first as they are making only a small number of cars over in Britain, but after a while they may want to move the whole production line back over to the main source in China. This means that the jobs will be lost, like they were in the first place. Due to the fact of further job losses, as the main production may be moved to China, this may affect the reputation of the company if the story is to get out. This will mean that the companies name will be in shame which may put customers off. Another disadvantage of this takeover, is that the main production of cars will be made in China and Chinese language, so the structure and build up of the engines/cars may not be the same, so the workers, will have to learn new structures and maybe languages of the car in able to manufacture it. This will mean a lot of time and cost into the new company on top of the money already invested.
The customer’s perception of the new company may not go down as well as thought. The people in Britain may feel that because the car is not made in Britain, and the name of the car maybe changed, the reputation would be hard to meet, if the quality or brand name is not matched, like MG Rover. Customers may not like the fact that they are paying prices over the limit, for not even a British car, as the main productions of cars will be made in China. So therefore it will actually be a Chinese made car, but with maybe a British brand name.
As the main production line will be made in China, under new Chinese machines and manufacturers, the quality of the car and brand name of the car may not reach the previous standards of the making of MG Rover. This means the investment of the SAIC/ ‘Shanghai Automotive’, would be worthless, as customers will not like the services and car itself, and so there will be no profits or success for the new takeover company.
As the main production line of cars will be moved to China, the exporting of cars to Britain will obviously need to happen, if they want to reach a wide target audience. This means that the exports into the UK and Europe may take some time, but maybe a long time. This will mean customers have to wait longer than they have to because of the time taken for the export. This may put customers off the car and cancel the delivery, because the service or car is poor and will then mean the company will inherit a bad reputation.
At this moment in time, MG Rover is one whole company conjoined by both MG and Rover. As I have said earlier, ‘Shanghai Automotive’ will own around 70% of the business whilst MG Rover 30%. This will mean that the company name maybe changed, and could cause confrontations because MG or Rover may not want to be associated with the other. The company name may change and it will be the end of a British car manufacturer that was once loved, but has struggled since the introduction of larger and recognised foreign models.
We can ask ourselves the question now ‘Will the change be beneficial for the company MG Rover, as well as Shanghai Automotive?’ There are two sides of this argument, yes and no. As Shanghai Automotive are injecting around £1 billion capital into the business, MG Rover have been saved and have a lifeline, as they have got the money to carry on the production car line. Also by making the cars in China, the way they want to, with their large machines, the production cost will be less but still make the same cars. This means that by making the cars but at a faster and cheaper rate, we can still sell the cars at the same price, but we will be making a larger profit on the car models. The disadvantage and downside would be the new image and reputation the company receives the jobs of British workers at state, the fact that capital intensive in the business could be introduced and jobs will be lost. The lack of control/quality of the new vehicle will obviously be compared to the old MG Rover cars, to see if they meet the same or better quality, which could result in the number sales the car manufacturers make. Also the delivery problems again, that if the cars are concentrated and made over in China, the exporting of the cars into the UK and Europe may take a long time, which means that the customer maybe unhappy with the length and poor service they are receiving.
All these points will be considered to whether the change is a good or bad decision to the future of the British car company, MG Rover.
