Fleet News

Rover sell-off brings turmoil to UK fleets

THE UK fleet industry has been grappling with the fallout of BMW's decision to sell Rover and Land Rover.

As recently as 1995, Rover was a key player in the UK fleet market, one of the 'big three' alongside Ford and Vauxhall (Opel), and enjoying a 14.51% market share with 132,388 fleet sales.

By 1999, however, Rover's fleet sales had dwindled to 46,934 units, just 4.63% of the market.

This savage decline stemmed from the car maker's decision to stop supplying high volume, fast-cycle fleet business, such as daily rental companies, and its premium pricing policy.

When Rover developed the 400-series in partnership with Honda, Rover priced the car as a rival to the Peugeot 406 and Ford Mondeo, while Honda priced its Civic as a competitor to the Volkswagen Golf, and fleets never really accepted the 400 as an upper medium sector car.

Similarly, when Rover launched the 200 as an Astra/Golf rival, potential buyers were more inclined to view it as a supermini to rival the Volkswagen Polo or Ford Fiesta.

Rover resolved this problem last year with a major price realignment of the 25 and 45, but the damage had already been done and sales failed to pick up.

Now UK fleets that stayed loyal to Rover are reviewing their contracts and calculating how the sale of Rover to MG Car Company (owned by venture capitalist Alchemy Partners) will affect the residual values of their cars.

CAP Motor Research and Glass's Guide, the UK's two top used car market monitors, insist that Rover residual values should not be affected so long as MG Car Company maintains a strong dealer network. Other experts are not so confident, with one leading consultant immediately reducing his residual value forecasts for Rover cars by 15% at the standard three years/60,000 miles company car threshold. HSBC Vehicle Finance and Interleasing have temporarily stopped buying Rover product, at least until the current review period is over.

BMW is also anxious about a potential consumer backlash at its decision to sell Rover and put thousands of UK jobs at risk, although the manufacturer believes it will now be able 'to focus on what it does best' without the constraints of operating in tandem with Rover in the corporate and retail arena.

  • John Maslen is features editor of Fleet News, the UK's top fleet publication. (April 2000)
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