SAIC plans 3.6b yuan plant for Rover-style cars

Shanghai Auto Industry Corp yesterday announced it would spend 3.68 billion yuan on a new plant to make cars using technology from Rover and Ssangyong. The models will be sold at home and abroad under SAIC's own brand name.

In a notice in the Shanghai Securities News, Shanghai Automotive, SAIC's listed arm, said its board had approved a plan to invest the money in a new company, Shanghai Luwei Auto, with an initial annual manufacturing capacity of 120,000 vehicles and 170,000 engines.

The plan puts SAIC in direct competition with its two joint venture partners, Volkswagen and General Motors.

Last year, their ventures with SAIC produced 617,000 cars, accounting for 73 per cent of SAIC's total output of 848,000 vehicles.

The Shanghai Luwei plant will be in Yizheng, Jiangsu province, at a site owned by SAIC originally intended to produce Santana cars for its joint venture with Volkswagen. But the plan was never implemented.

SAIC will own 40 per cent of the shares of Shanghai Luwei, with the remainder held by the listed company.

Shanghai Luwei will use technology SAIC acquired in two foreign purchases last year - designs from Ssangyong Auto, the fourth-largest carmaker in South Korea, and MG Rover's 25 and 75 series. The Rover designs were bought for #67 million ($908.45 million) before the British firm went bankrupt.