UK vehicle manufacturers are feeling the pinch of strengthening Sterling at home and abroad. Rover chiefs said the strong Pound could hit export sales over the next couple of years, while LDV said the relative weakness of the Deutschemark and Franc was making imports from France and Germany more attractive.

Rover chief executive Walter Hasselkus said current exchange rate levels would present a problem if they were sustained beyond 1998, until when Rover has hedged its currency risk. Hasselkus said if current Sterling levels of DM2.70 prevailed, Rover could reduce its exposure by buying more components abroad, but stressed that England's position as a production centre was not up for discussion.

LDV meanwhile, has launched a major efficiency drive in response to increasing competition at home and abroad. The van specialist has awarded its workforce a two-year pay and conditions package which it says will be wholly funded by cost-cutting measures. Annual production increased by 2,300 units last year and LDV expects to increase it still further this year, but said the UK market was going to be very tough.