Blogging from the Highlands of Scotland until I return to the Murcia region of Spain in the Autumn for a month or so
'From fanaticism to barbarism is only one step' - Diderot

Thursday, 7 April 2005

Rover on the money-trail ... again

Rover is cash-strapped ... again. Production was today suspended at Longbridge, for lack of components. Who can blame the components manufacturers; they need to pay their bills just like anyone else and given the uncertainty over Rover's future, the components suppliers could easily be left with large invoices unpaid.

BMW off-loaded Rover several years ago at huge cost. Several years before that BAe off-loaded Rover to BMW, ending the manufacturing and technical assistance deal it had with Honda. Before that it was British Leyland, etc. The truth, sad as it is to say it, is that Rover has been a basket-case for a long time. A great deal of public money has been 'invested' in the company (and its predecessors) over several decades, without notable success. Sinking more money into it now, even if EU competition rules permitted, would be economic folly. Even supposing this GBP100m loan could guarantee the tie-up with Shanghai Automotive Industry Corp (SAIC), does anyone seriously believe that this would see Rover finally turn the corner? We have been led to believe for several months, ever since the possible tie-up with SAIC was announced by Rover management with considerable fanfare - a very one-sided fanfare, it should be noted, that this presaged the dawn of much brighter times for the company. The Chinese side always seemed to be much more circumspect in their public comments. In European manufacturing terms, Rover's product offering is decidedly outmoded. Perhaps there is some remaining value in Rover's technical ability for the Chinese, but one imagines that the real vlaue is the brand names Rover and MG.

In any case these should be commercial matters between Phoenix (Rover's parent) and SAIC. If it were not for the potential political fallout for Labour in the run-up to a General Election I am sure that even they would not be contemplating sinking yet another bung of public money down the same hole that so much has gone before. Would the 'loan' ever likely be repaid, with interest (or without it)? Yes, 6,000 job losses is a real tragedy, but Rover is simply no longer a major car manufacturer - it is a minnow, even in UK car production and it has wandered into a product cul-de-sac.

It's time to let it die.

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