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Last Updated: Wednesday, 6 April, 2005, 13:52 GMT 14:52 UK
UK's Blair vows to support Rover
Rover 45
Rover's sales were weak in March
UK Prime Minister Tony Blair says his government will do "whatever we can" to save struggling UK car maker MG Rover.

The firm's 6,000 workers are waiting for news from vital talks in China aimed at securing the firm's future and their jobs with Chinese investment.

MG Rover, which has a plant in Longbridge in the West Midlands, and the UK government are locked in talks with Shanghai Automotive Industry Corp.

Industry data showed total MG Rover sales fell 17% in March on a year-ago.

Commitments

Mr Blair made his pledge in parliament, which is wrapping up its business at the start of the general election campaign.

They have not invested anything like the money which is needed in new products
Professor Peter Cook, Nottingham Business School

Meanwhile, workers are still waiting to learn whether the government will make a 100m bridging loan to Rover, a possibility that emerged at the weekend.

Rover's directors gave "extensive personal commitments" on Tuesday to keep the SAIC deal on track.

They are thought to have agreed to put up several million pounds of their own money to guarantee interest payments on the government's loan.

But according to the BBC's Rupert Wingfield-Hayes in China, Rover chairman John Towers has said he is not keen to discuss the situation "until the clouds have lifted".

If SAIC walks away from a deal, there is a high risk that MG Rover could be forced into administration.

Sales slide

News of the drop in sales added to the car-maker's woes, with MG Rover's market share falling to 2.9% in March from 3.2% at the same point last year.

According to the UK's Society for Motor Manufacturers and Traders (SMMT) 6,608 Rover cars were registered in March, down from the 9,247 sold in the same month of 2004 - a drop of 28.5%.

ROVER TIMELINE
May 2000: BMW sells Rover to Phoenix Venture Holdings for a symbolic 10, saving thousands of jobs
November 2001: Rover says it will spend 300m on building a new medium-sized car
November 2003: Rover stops production for three days to clear a backlog of stock
October 2004: Rover reports a 77m loss for 2003, down from a 95m loss in 2002
November 2004: Rover says it is in talks with China's Shanghai Automotive Industry Corporation about a 1bn joint venture
February 2005: Gordon Brown discusses Rover with Chinese leaders as concerns grow the deal may be at risk
April 2005: The government is reported to have offered a 100m bridging loan to Rover amid fears that the Chinese deal may collapse

However, sales of MG branded cars rose to 5,937 last month from 5,810 in March 2004.

Despite the fall, Rover said it had not fared too badly as UK car sales industry-wide were down 5.1%.

'Wasteland'

In addition to Rover's Longbridge employees, dozens of West Midlands engineering firms also depend, at least partly, on supplying the firm, which is Britain's last surviving mass car maker.

Tony Parr, managing director of engineering firm AP Smith which produces engine parts for Rover, told BBC Radio 4's Today programme that his company would probably have to cut some jobs if the deal failed.

Mr Parr's firm relies on Rover for 15-20% of its business, and he believes that the Longbridge area could become a "wasteland" if the deal falls through.

SAIC is thought to be keen on a deal with Rover. However, talks ran into difficulties on Monday over fears about Rover's finances, which are reported to have deteriorated in recent months.

Mark O'Neill, Shanghai business correspondent for the South China Morning Post, said that SAIC was eager to snap up passenger car brands.

"[SAIC] is in the embarrassing position of being China's biggest car producer, but it has no passenger car brands of its own so they're very keen to acquire brands and buying brands is quicker than developing your own," he told the Today programme.

"The problem is whether MG Rover is the right [firm] to buy and how serious its financial situation is."




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