THE two halves of MG Rover, the British carmaker that collapsed in 2005, are expected to be reunited on Boxing Day with the merger of the two Chinese groups that own them.

The deal is likely to lead to a wider range of models carrying the revived MG brand, a number of which will be sold in the UK.

At present, Shanghai Automotive Industry Corporation (SAIC) and Nanjing Automobile Corporation (NAC) both produce versions of the old Rover 75 and MG ZT sports car.

SAIC owns the intellectual property for the models following a deal done before MG Rover collapsed.

NAC bought the tooling and equipment to make the cars – as well as the rights to the MG name – from MG Rover’s administrator for £53m.

As both are state-owned companies, this fierce competition and duplication of effort always looked wasteful, but it has taken until now for the Chinese government’s Assets Supervision and Administration Commission to engineer a merger between SAIC and NAC.

In reality, it is a takeover of NAC by the Shanghai group, China’s biggest car company, which also makes vehicles in joint ventures with General Motors and Volkswagen. It is believed SAIC will contribute 10%-15% of its shares to acquire the whole of NAC.

The combined company will have a production capacity of 1.6m cars a year. It has not yet been named, though the motor industry has already dubbed it “Chinese Leyland”.

According to local sources, not much will change on the ground. In China, this kind of consolidation does not involve physical amalgamation, closing factories or making workers redundant; the provincial governments of Shanghai and Jiangsu that control the companies will ensure they maintain their employment levels and tax revenues.

There will be savings in engine production and the development of new products.

SAIC has an engineering centre at Leamington Spa and intends to have 30 of its own-brand models by 2012. Its model development plan is being assisted by Ricardo, the quoted UK motor-engineering group.

The company also inherited the planned successor to the mid-sized Rover 45, but was thwarted in attempts to use the famous brand by Ford’s acquisition of the Rover name.

The Rover brand is now believed to be part of the Land Rover and Jaguar sale agreement. Ford is selling the two British companies as a single unit, with Tata of India tipped to win the auction.

At a late stage before the launch last year, SAIC was forced to rename its version of the 75 the Roewe 750. Some 15,000 Roewe 750s have been sold in China this year.

The number of the NAC equivalent, the MG 7, is much smaller, and it has struggled to restart production of the MG TF sports car in Nanjing and in part of the former MG Rover factory at Longbridge, Birmingham.

UK sales of the revived TF were supposed to begin last summer; NAC’s latest estimate is April/May next year.

The new MG will start with 50 MG dealers in the UK but will build up to 100 and plans expansion across Europe. This dealer network could also help SAIC to sell future models made in China – and since Roewe is not regarded as a suitable name for export, there is every chance that those cars will be badged MG.

Times Recommends

• Minister in talks with Saudis to protect creditors
• Premier Inn hits back in £29-a-room row
• Bankers hit back at 'populist' bonus supertax