Fleet News

MG Rover builds a new bridge to profit with a raft of new model launches

MG ROVER is aiming to live up to the name of its holding company, Phoenix, as it plans to rise from the ashes of its troubled history in 2001.

Kevin Howe, chief executive of MG Rover, last week set out the company's plans for the future and said more than half of the Rover Group losses in 1999 will not be a factor for MG Rover in 2001.

It expects to gain next year through overhead efficiencies, by having all departments located on one site, not dealing in loss-making sales, taking profits from its developing parts business as well as retail finance agreements.

Howe talked of a 'profit bridge', taking into account the 'one-off' losses of 1999, and the predicted gains for next year, and calculated the company would report a loss of about £100 million. The cost of moving 75 production to Longbridge was carried by BMW and MG Rover is still receiving instalments of a cash injection from BMW, thought to be worth £500 million.

The company is looking at worldwide sales of 200,000 again next year, with a UK target of 100,000. By next summer the company will be producing eight model ranges, including the 75 estate and three MG saloons, along with the existing Rover range and MGF.

MG Rover will introduce a new medium sized car by 2004, as well as a replacement for the 75, but has a choice of working in partnership with another manufacturer, or using a shortened 75 platform.

Rover residual values are also on their way up after crashing while the firm's future was in doubt. Angus Gray, MG Rover UK fleet sales director, says latest figures from the industry's leading used values monitors, CAP Motor Research, Glass's Guide and Emmox, show an upturn in residual values towards levels before the chaos surrounding the sale of the company.

Gray said he would be announcing a number of contracts over the next few weeks, the largest of these will be with a major contract hire company.'

He said dealer used stock levels had come down from 30,000 in January 1999 to 9,200 in January and 4,800 in October and the company has set its most modest fleet aspirations for many years, expecting only 20% of next year's 100,000-unit UK sales target to go to 25-plus fleets, plus about 5,000 units to daily rental firms.

Gray said: 'We are very much interested in fleets, as long as the particular segment we are looking at is profitable. The amount of contract hire business in our plan is miniscule, but we hope to grow that business beyond what we have planned for.'

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