MG cars to hit Europe in second half

SHANGHAI, April 1 (Reuters) - Nanjing Automobile Group intends to start exporting its China-made MG cars to Europe in the second half of this year as it revives the iconic British brand, a senior executive said.

The company is setting up sales teams in Europe and British Commonwealth countries, such as Australia, New Zealand and South Africa, where the MG brand is still a household name, said Zhang Xin, general manager of the Nanjing Auto unit making the cars.

Overseas sales may account for half or more of global sales of MG cars in the first few years, he said in a telephone interview late on Saturday from the state-owned company’s headquarters in the eastern city of Nanjing.

Previously, the company had not revealed when it would start exporting MG cars from China, but Zhang said Nanjing Auto was encouraged by the response of foreign dealers and car enthusiasts to its first models.

“Many MG dealers have expressed strong interest after seeing the made-in-China models, as they look the same as the ones at home,” he said.

Nanjing Auto, which took control of assets of collapsed MG Rover in 2005, began rolling MG sports cars and saloons off its Chinese production line last Tuesday -- the first MG cars to be produced in two years.

Production at the former MG Rover plant at Longbridge in central England may restart in April or May, and Nanjing Auto may also make MG cars in a $2 billion project in the U.S. state of Oklahoma, though a final decision has not been made.

Exports of MG components from China began in June 2006 to supply the 4 million MG Rover owners worldwide, and global demand for spare parts could top 30 million pounds ($59 million) over the next five years, Zhang said.

Nanjing Auto, a medium-sized vehicle maker that began life as a military garage in 1947, has said it aims eventually to sell 200,000 MG cars worldwide every year.

It surprised the industry when it outbid China’s biggest car maker, SAIC Motor Corp., to win the MG brand in 2005, paying 53 million pounds ($104 million) for the assets of MG Rover after the British firm collapsed with debts of 1.4 billion pounds.

The acquisition underlined the hunger of Chinese auto makers to produce higher-end models and expand into developed markets.

China became a net automobile exporter for the first time in 2005 and its 2006 exports nearly doubled to 300,000 vehicles. But Chinese companies have so far had little success in making volume sales to major, developed markets.

Nanjing Auto expects China to become its single biggest market for the MG marque. Creating a following for the brand in China is likely to be a challenge, but the company wants to use MG to move into the high end of the country’s rapidly expanding auto market.

Domestic sales may be small at the beginning, but will grow as more Chinese drivers are exposed to the brand, Zhang said.

“We need to work hard to cultivate the market. But I believe that a few years down the road, we will have just as many die-hard MG fans (in China) as elsewhere, if not more.”

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((Reporting by Fang Yan, editing by Andrew Torchia; Reuters Messaging: yan.fang.reuters.com@reuters.net; +86 21 6104 1793)) Keywords: NANJINGAUTO MG/EUROPE