Inside the New Chinese-Owned MG Motor Co.

 May 11, 2012 at 12:38 pm by Justin Berkowitz

In the town of Longbridge, just outside of Birmingham in the U.K., British workers assemble an all-new MG model from kits imported from China. We went up to the once-sprawling industrial site to check out the operation, where China’s SAIC employs 300 engineers, runs a design studio, and screws together mostly finished cars. Welcome to the future.

Quick History

MG Rover, the last British-owned mainstream automaker, and the last vestige of British Leyland, went bust in 2005. The pieces were sold off to two Chinese companies, including the MG brand name, the factories in Longbridge, and the designs for MG Rover cars and engines. Ironically, just as MG Rover and its predecessor British Leyland were created from government orders, the two Chinese companies were forced to merge by Chinese authorities, and now just operate as SAIC Motor. SAIC no longer officially stands for Shanghai Automotive Industry Corporation, which is part of the company’s aim to be more globally acceptable. In 2007, the Chinese flipped on a few lights at the Longbridge factory and had workers assemble made-in-China kits for the old MG TF roadsters. Few people bought them. But last year, SAIC established a much larger operation at Longbridge.

MG’s Setup in Longbridge

Standing in front of one of the derelict-looking factory buildings that SAIC is now using, you’ve got a clear view into a valley with some of the 150 acres that once belonged to MG Rover. Construction equipment moves dirt around, as a new technical college, housing, and stores are under construction. SAIC has in a sense retreated to the top of this valley, where two dozen buildings still stand. Some renovations to older buildings have prepared the site for MG’s staff.

A 25-foot banner on the side of one of the office buildings says “Designed, engineered, and built in the U.K.” At this point, you might well ask, “Wait, isn’t this a Chinese company?” Yes, it is. There are 300 British engineers on site, who work with a team of 2000 more in Shanghai. SAIC effectively gets a 16-hour workday from its engineering staff, as one continent’s team hands off its progress to the other at the end of the day. Next door, designers work in a studio with computers and clay models—we are not allowed in—which probably accounts in part for MG’s sedan, the MG6, looking more like a Mazda than a Dongfeng. Engineers we speak with us tell how they’ve optimized the MG6 and future models for European driving tastes. The suspension, for example, is said to be stiffer in the U.K. than it would be in China, where drivers prefer cushiness to sportiness.

Inside the Car Assembly Building

Staff at MG call the factory the “Car Assembly Building,” or CAB, and they’re right to do so. The enormous building, where the BMW-era Rover 75 was once built, is almost empty. And it’s cold. Because only about 40 people work inside, and in a small space, the building’s heat isn’t turned on. Assemblers wear winter jackets, and if they get cold, some individual heat blower units are turned on. Some of them worked for the old MG Rover company back in the day.

It’s a sad scene, if we’re honest. The MG6 sedans are imported from China fully painted and mostly complete. In the CAB, workers need only install the front end of the cars: the engine and transmission, the front fascia. When you hear about “complete knockdown kits” as a method for automakers to assemble cars around the world, this is essentially what they’re talking about.

A Quick Spin in the MG6

We took a short ride in the MG6. For the time being, the only engine offered is a 1.8-liter turbocharged four, which is rated at 158 hp and 159 lb-ft of torque. The engine is a derivative of Rover’s troubled K-series engine, although the engine has been redesigned substantially and the K’s issues with exploding head gaskets have been sorted out. On one hand, if you’ve never driven a “Chinese” car, it’s pretty impressive. Shutlines are decent, and the interior is of mostly acceptable quality. The suspension is, in fact, pleasantly stiff. On the other hand, it’s a thoroughly uncompetitive car. The steering is completely numb, and the five-speed manual gearbox—a dual-clutch ‘box comes next year—is notchy and vague. To be fair, we’d need to spend more time in the MG6 to give a more thorough evaluation.

So you’d expect the MG6 to be positioned as a good value to British shoppers, and in a sense that’s true. The cars are well equipped, and both a four-door sedan and five-door fastback are offered. The MG6 is big for its class, ostensibly competing against C-segment models like the Ford Focus and VW Golf, but sized about a half a class above. Unfortunately, the MG6 just isn’t cheap enough. Starting at about £16,000 (roughly $20,400 at today’s exchange rates, and without Britain’s 20-percent value-added tax), it faces competition from not just Ford and VW, but value-priced brands such as Hyundai, Kia, and VW’s Škoda division. Most of these vehicles blow the MG6 out of the water in terms of driving fun, refinement, interior quality, and fuel economy. Cars from the latter three brands even deliver as much equipment and power as the MG6 at the same price.

Chinese and British flags appear (in equal numbers) throughout the assembly area.

Plans for World Domination?

In spite of the banner, much of the design, engineering, and construction for the MG6—and for upcoming models—was done in China. A staff this small can’t execute an entire product line on its own. But the impression that MG is British isn’t just helpful for sales in the U.K., where only a few hundred MG6s will be sold this year. Chinese shoppers mostly prefer western car brands to domestic ones. The ability to say not just that MG is a British badge, but also that the engineers and designers work in the U.K., and that you can see these very cars on British roads, may help persuade customers that they’re getting a piece of Europe, not of Shanghai. It’s not to say that SAIC isn’t taking the British market seriously, and the MG6 probably will be offered in continental Europe, too. But we suspect that even if MG never made a profit in Europe, it would still be a worthwhile investment as a way of legitimizing the brand in China and other developing countries.

Whether MG is in the right position to become a major player doesn’t really matter, though. This is the first inroad from a Chinese company selling vehicles that were at least partially designed, engineered, and manufactured in China in the western world. (We’ll exclude a handful of sales of a Chinese pickup truck in western Australia, because Perth doesn’t count as the western world.) In the next 25 years, we can expect to see a lot more Chinese companies selling their cars in Europe and the U.S. Apple has figured out how to sell California-designed, Chinese-manufactured products in the U.S., and with enormous profit margins. It won’t be long before Chinese car companies crack that code, too.