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Friday, October 15, 1999 Published at 09:37 GMT 10:37 UK

Business: The Company File

Rover 'faces board scrutiny'

BMW has pinned its hopes on the new Rover 75

Car giant BMW is launching an intensive study of the strategy of its loss-making UK subsidiary, Rover, it has been reported.

The board is meeting for a briefing on Rover's recent performance, according to Friday's Financial Times.

[ image: Rover buys most components within the UK]
Rover buys most components within the UK
Sales of the new 75 model, in particular, which is seen as crucial to turning the company round, will be examined, it says.

Members will start scrutinising Rover's structure, sales strategy and product plans, involving quarterly monitoring, according to the report.

But a BMW spokesman said there would be no more studies of Rover's tactics than usual.

Mr Graham Biggs said: "We're in a turn-around situation and there are a huge number of aspects to look at.

"The turn-around process is well under way, things are improving dramatically and we expect to see improvements as time goes on.

[ image: Many workers have taken voluntary redundancy]
Many workers have taken voluntary redundancy
"I'm sure every single time the board meets, they discuss Rover - that's their job."

He confirmed that BMW is considering selling off non-core assets but declined to say which ones were prime targets.

Rover already has a large programme of voluntary redundancy under way in an effort to cut back costs.

Last week BMW signalled further cost savings by insisting Rover's motor parts suppliers give prices in euros. They were also told to cut their prices further.

Giving prices in euros means that if sterling rises in value - as it has done - it will be suppliers, rather than Rover or BMW, who will bear the extra costs.

[ image: BMW fears Rover could be sunk unless it improves]
BMW fears Rover could be sunk unless it improves
Any suppliers which fail to do so would lose their contracts to rivals in the UK or cheaper competitors abroad.

Until now, Rover has bought 85% of its parts from British companies.

The business of supplying Rover with parts supports up to 50,000 UK jobs.

Six months ago, BMW asked many suppliers for savings of up to 10% and said it would step up the search for cheaper parts overseas.

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