Fleet News

BMW's future dependent on making Rover a success

DEBT-ridden Rover will not break even until 2002 - two years later than originally planned - with BMW admitting its own future as an independent car maker rests on the success of its attempts to revitalise the Midlands-based manufacturer. BMW executives have blamed the failure to meet the initial 2000 break-even target on the strength of the Pound and increasing Rover losses.

Joachim Milberg, BMW chairman, says Rover's fortunes must be turned around 'since the future of BMW is at stake'. This confirms statements made in March by leading industry academic Professor Garel Rhys, director of the centre for automotive industry research at Cardiff University Business School, that BMW risked being taken over by either General Motors or Volkswagen if it failed to become a mainstream manufacturer.

Rover sales across Europe are 21.2% down this year, while parent company BMW has seen sales across the continent increase by 15.9%. That pattern, according to an industry report by Salomon Smith Barney, is expected to be repeated for several months yet while stocks and sales of the new 75 build up. Consequently, the report concludes that 'evidence of the worst' has passed at Rover, although in a separate report motor industry analyst John Lawson concluded there was 'no logical way' Rover losses could diminish in 1999 from the 1998 figure of £647 million.

The new Mini will be launched in 2000 with full-year sales starting in 2001, while a new Land Rover Defender is due in 2002 as well as a new Discovery and the new Range Rover due for debut in 2001. A new MGF is due in 2003. 'On the assumption that these new products are in place by 2002, a huge revival of Rover's volume will need to accompany launch to recover invested capital,' said Lawson. 'We suspect the group will face losses until the new Mini is in its first full year, but the scale of losses should begin to abate.'

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