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Friday, 14 January, 2000, 19:24 GMT
BMW denies Rover closure plan

BMW hopes the 75 will revive Rover's fortunes

Car giant BMW is denying reports it is considering closing down Rover, its struggling UK subsidiary.

Top executives of the German parent group had appeared to suggest, for the first time, they may cut their losses over Rover.
The Rover File

According to German newspaper Sueddeutsche Zeitung, BMW's sales chief Henrich Heitmann warned that the company may run out of time to achieve a turnaround.

Mr Heitmann told the newspaper on the sidelines of the Detroit Motor show that he "fears that we won't have the time we need" to re-establish the Rover brand.

He estimated it may take eight to 10 years to do the job.

BMW's Henrich Heitmann says it was a mistake to replace all old Rover models with new ones at the same time

BMW was currently not considering Rover's closure, Mr Heitmann said, but he added: "Nobody can completely rule out this ultimate solution."

But Rover officials in the UK insisted that closing the car company was not a consideration.

Spokesman Axel Overmuller told the BBC the reports published in a German newspaper were incorrect.

But he said the question of job cuts in the workforce would depend on how sales performed.

Profit target may be missed

When Rover's crisis came to a head in spring 1999, BMW's news boss Joachim Milberg repeatedly stated that Rover had to get back into profit by 2002.

BMW group's chief financial officer, Helmut Panke, though, is now dubious whether this will be possible.

He told Sueddeutsche Zeitung that "under current circumstances" Rover will not make the deadline.

During 1998, Rover made losses of about 1.8bn Deutschmarks (570m). Mr Panke said that the 1999 results would show losses that are "rather larger".

Strong pound hurts

Mr Panke blames the strong pound for Rover's troubles.

This has made exports of Rover cars less profitable.

At the same time, Rover's UK suppliers have become less competitive. The firm sources about 90% of car parts in the UK, but they cost 10-15% more than from suppliers on the continent.

Mr Panke said that the situation is getting more difficult "month by month".

He said Rover would have to cut costs even further, by reducing the number of workers once again and force suppliers to lower prices.

During 1999, the company shed 8,000 jobs, 5,000 more than originally planned.

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See also:
29 Oct 99 |  Business
Rover - a car firm's troubles
07 Jan 00 |  Business
Rover sales slide downhill
23 Jun 99 |  The Company File
BMW gambles its future
20 Oct 99 |  The Company File
Rover sales drop 30%
18 Feb 99 |  The Company File
Spring deadline for Rover
01 Apr 99 |  The Company File
Deal saves Rover plant
28 Jul 99 |  The Company File
Rover holds back BMW

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