MG Rover on road to recovery

By TOM MCGHIE
Updated:

 

A RESURGENT MG Rover, Britain's biggest independent car maker, is on course to confound the sceptics and climb out of the red this year. The slimmed-down company should break even this year and show a profit in 2003, chief executive Kevin Howe told Financial Mail.

Two years ago, when it was sold to a consortium by BMW for just £10, MG Rover was losing £2 million a day.

Howe said: 'I have delivered what I promised. Every year we have cut our losses by £200 million and by the end of 2002 the business will be breaking even.'

Last July, the company announced losses of £254 million for the eight months to December 2000. Over a full year, losses were estimated at £400 million.

But when MG Rover unveils results for 2001 next month, losses are expected to be down to about £170 million - a better improvement than expected by industry observers.

In sharp contrast, Ford last week announced a £560 million first-quarter loss for 2002, highlighting the problems of making money in a fiercely competitive market.

MG Rover should receive a further boost next year when it will begin to see the benefits of a partnership, agreed last month, with Shanghai-based car maker China Brilliance.

Investment by both companies, expected to total more than £600 million, will see the development of a medium-sized car to replace the ageing Rover 45. A new small car a couple of years later is scheduled to replace the company's best-selling Rover 25.

MG Rover is also considering making an MPV with the Chinese, who have already developed an Italian-designed model.

Fears that Brilliance would prefer a deal with BMW were dismissed by Howe. 'We have signed a deal with the Chinese and BMW has not,' he said. 'More important, the Chinese have just transferred a substantial sum of money to us. We are working well together.'

It is understood that Chinese Brilliance has already put up more than £150 million as its part of the deal, which is seen as key to MG Rover's long-term survival by giving it a share in the fast-growing car markets of China and South-East Asia.

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