After nearly two years of nervous anticipation in Birmingham, the old MG Rover plant at Longbridge has at last been reopened by its Chinese owners, Nanjing Automobile Corporation (NAC). Three MG TFs were shown emerging from the renovated production facility and displayed alongside a selection of their historic forebears. However, despite the razzmatazz, there was little in the way of solid news.

The three cars on display were assembled from Chinese components and, according to the BBC, did not even pass through the full production process. The intention is to start production line assembly of MGs from complete knock down (CKD) kits sent over from China later in the year. Manufacturing commitment will then increase with the fabrication of the body panels within the Longbridge site in partnership with Stadco, the British company that was responsible for supplying the panels during the MG Rover era. There have been suggestions that the Rover 75/MG ZT will return to the Longbridge production line in a similar manner, particularly since NAC relaunched the car as the MG7 in March for the local Chinese market.

It would appear that NAC is putting a brave face on a very limited revival of the TF. The latest version is little changed from the version that died with MG Rover and it is likely that only one engine type will be available. Prices have not been published but AutoCognition has analysed data from the used car market to estimate how the relaunched TF will should relate to its nearest rival, the Mazda MX-5. Currently, the advertised price differential between MG TFs and MX-5s on the used market is around £2000 in the MX-5’s favour, and that's at the very closest. Online auction houses, which display the actual selling prices, show an even greater disparity between equivalent models. Although there are indications that NAC is aware of this and plans to enhance perceived TF values with plenty of additional features as standard, nevertheless the company should be aware of the CityRover’s fate. This was a car that was well-known to originate from a plant in India with low labour costs and so consumers expected it to be priced accordingly. The fact that MG Rover attempted to charge a premium for the car was believed to have been the main contributor to its failure. In the TF’s case, its market position is further weakened by the fact that it will not hit the streets until the late summer, the very time that most other sports cars are being prepared for their winter hibernation. It is therefore the opinion of AutoCognition that even a highly specified TF will need to be heavily discounted in comparison to the MX-5 if it is to gain any significant acceptance.

NAC, though, has mentioned production rates reaching 15,000 a year, a figure that has only once been exceeded in the ten year history of the MG TF and its MG F predecessor. At its peak, MG Rover had nearly 300 dealers in the UK alone; NAC claims to have appointed ten dealers so far, hoping for another fifty by the end of the year. More realistically, the first full year of production is intended to bring 3,000 TFs into the world, about a tenth of MX-5 output.  However, a resurgence in the export market is unlikely to bring much support while sterling holds obstinately to its export-unfriendly highs. In no sense is Longbridge due to become a genuine centre of mass production, the workforce being unlikely to rise above 300 workers. In any case, production will be split with world markets supplied from the main Chinese plant at Nanjing while Longbridge is responsible for the UK and Europe. The resuscitation of Longbridge as a production site is therefore riddled with uncertainty and NAC saps what little confidence is left when it states that models will only be produced at the plant if the British public buy them. It almost sounds like NAC is already lining up its excuses in case it all goes wrong.

At best, Longbridge will probably limp along for the next few years producing the TF in low numbers, well below what it achieved in its last full year of production and about half what NAC are touting as achievable. The best hope is that production in China will prove to be too low to warrant two production lines, or else that the Nanjing plant is at full capacity on other models. Then Longbridge might survive as the sole production site for the TF, keeping the plant occupied until it can get to grips with a new model. If all this sounds like Longbridge is doomed to the periphery of the main Chinese operation then it is fortunate that this is only half the story.

Although R&D at Longbridge always had a place in the NAC plan, recently it has taken on a new emphasis. The reason for NAC acquiring the assets of MG Rover in the first place had little to do with the existing model range, they are only being put into production to establish a quick position in the market. The real purpose for NAC was to acquire a long-term capability for manufacturing cars, each generation succeeded by the next. In this way its strategy was very similar to that of the other acquirer of MG Rover assets, Shanghai Automotive (SAIC). NAC had hoped to build on the MG Rover assets by developing its own new range of models in China, with a small R&D department in the UK working on adapting them for the European market. SAIC, however, soon realised that MG Rover’s distinguishing asset was intangible, the capability that resided in the R&D team. SAIC therefore had the core of that team reconstructed by Ricardo in the UK using the same ex-MG Rover engineers, a team that SAIC has now acquired but retained in situ in Leamington Spa. Lately, NAC seems to have come to the same realisation, raising the status of R&D at Longbridge. MG Rover’s director of product development, Rob Oldaker, is thought to have accepted an invitation by NAC to return to duties and Longbridge will become capable of engineering and developing complete new model programmes. There will still be R&D in Nanjing, of course, but instead of handing down the orders it will be learning and working with the Longbridge team.

These structures emerging at both NAC and SAIC are reminiscent of international vertical joint ventures. Partnerships of this kind are rare because they rely on two partners lacking key, but complementary, capabilities which can then dovetail in a joint venture to replicate a complete, viable system. A firm requiring a key capability has a limited lifespan unless it either outsources the skills at prohibitive cost or receives government support. Chinese automotive firms currently lack the ability to develop world class models of their own so the government forces foreign firms into joint ventures with local firms. It was by this mechanism that SAIC was able to raise itself to world class levels of output by hosting assembly for GM and VW, even while lacking models of its own design. NAC was in a similar position through its partnership with Fiat, although at a far lower level of output. Both SAIC and NAC needed to develop their own vehicle designs if they were to achieve independence. An international vertical joint venture would have done this by forming a co-dependent, symbiotic relationship with a partner that specialised in R&D. There were suggestions that SAIC had found such a partner in MG Rover with the British company prepared to run down its production in favour of China whilst increasing its commitment to R&D at Longbridge. This was halted by the financial melt-down at MG Rover.

Yet even with the demise of MG Rover, the commercial logic of an international vertical joint venture has reasserted itself. Although strictly speaking not joint ventures, the utilisation of British R&D capabilities within the Chinese corporate structures confirms the need for NAC and SAIC to maintain the engineering talent that existed at MG Rover. As far as the public are concerned, Longbridge will appear to struggle along as a small scale assembler of ageing sports cars on behalf of a Chinese parent company, yet unseen and unappreciated R&D engineers will play a crucial role in the rise of the Chinese car industry. Thus Longbridge will be strengthened as a production site of engineering expertise, not ageing sports cars.