Fleet News

Patience plea in MG Rover crisis

FLEETS are being asked to be patient amid frantic efforts to secure the future of crisis-hit MG Rover this week, despite fears over the future of warranties and residual values.

The company went into administration after a possible deal with China’s Shanghai Automotive Industry Corp (SAIC) stalled and nervous suppliers stopped deliveries.

Administrators from PricewaterhouseCoopers took over the running of the company and revealed this week that the Longbridge site was losing up to £25 million a month.

They were hopeful earlier this week that talks with SAIC would reopen but said that any deal would take some time to complete. A spokesman for MG Rover said: ‘We are asking the fleet industry to be patient.

Decisions are not going to be made straight away. The administrators spent the weekend working on the deal to keep workers paid for another week, so information about other aspects may be hard to come by.

‘In terms of warranty, some dealers have been saying they will honour it and others are not so sure.

‘We have yet to receive clear guidance from the administrators, but we are urging caution and patience.’

Residual value experts say it is too early to comment on what effect the situation could have on the used values of MG Rover cars, especially as there is a glimmer of some form of rescue deal.

CAP Monitor managing editor Mark Norman said: ‘RVs have been falling for some time as the product got older. However, even if production ends, there are lots of people in the used car market who are prepared to buy cars that are no longer made, so that has to be taken into account.’

Customers are also watching the situation closely.

Tony Brown, fleet manager at chauffeur company Lewis Day, which recently announced it had taken on 128 Rover 75s, said: ‘It can affect our corporate image. We went for so many of the same car because of the image they represent. We know the engine is covered under BMW warranty, but are waiting to hear of other areas.

‘We are looking to sell them after two years and know it could affect the resale value if the company stops trading.

‘We have no problems with the car itself. It was best for the job and best value at the time and better than other cars available. It was an ideal car and if MG Rover survived, we would still buy more.’

Another order came from German motoring organisation ADAC, which chose 100 MG cars for its driver training centre over vehicles from German manufacturers (Fleet NewsNet, March 31).

Christopher Macgowan, chief executive of the Society for Motor Manufacturers and Traders, said: ‘The entire industry is united in extending thoughts to the many thousands of people employed at the Longbridge car plant, the companies involved in the supply chain and retailers throughout the UK. We hope there will be a future for these two historic brands.

‘However, the car industry has become increasingly global and this shows how difficult it can be for manufacturers to thrive in a competitive market, without the benefits that come from partnerships.’

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