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BMW Chairman Prof Joachim Milberg
"We have decided to sell Landrover to concentrate on our own off-road vehicle"
 real 28k

Richard Bilton reports for BBC News
"Most workers weren't impressed"
 real 56k

The BBC's Greg Wood reports
"Job losses at the plant will be on a large scale"
 real 56k

Friday, 17 March, 2000, 22:51 GMT
BMW blames sterling and sales
BMW chief executive Joachim Milberg
BMW boss Joachim Milberg blames the strong pound for much of Rover's troubles
BMW's chief executive has blamed the strength of sterling against the euro and a continuing fall in sales for its decision to sell most of Rover.
Rover sell-off
BMW keeps Cowley plant, builds new Mini
Alchemy buys Longbridge, will build "MG sports saloons", Rover 25, 45, 75, old Mini
Rover rebranded as MG
Land Rover sold to Ford
Professor Joachim Milberg said the policy of the British Government was also a "significant factor", with the continuing uncertainty about whether the UK would join the euro.

He said it would have been "very positive indeed for the development of Rover if the UK had been in Euroland."

'Breathing space'

Large parts of Rover are now due to be sold to venture capital firm Alchemy Partners. However, the UK government says that this is not a done deal yet.

I am really worried about the levels of redundancies we might now see.

Stephen Byers
Prime Minister Tony Blair reacted with anger to being kept in the dark by BMW on their plans for Rover.

But the German firm's spokesman Axel Obermuller told BBC Radio 4's The World Tonight on Friday that the firm had sent "very clear signals" to the UK government about its difficulties.

He said the continuing delays in getting the 150m government grant approved by the European Commission had led to uncertainty which put off potential Rover customers.

Those comments brought an angry response from former government minister and ex-Jaguar chief Geoffrey Robinson.

He said BMW had been incompetent in its running of Rover, contrasting it with the success of its operations in Germany. He added that it had broken undertakings given at the time of its take over of Rover.

Earlier Trade and Industry Secretary Stephen Byers told Birmingham's Evening Mail newspaper that the government was holding "hectic" talks with international car firms over alternative link-ups.

He said the Alchemy deal had given Longbridge "some breathing space", but was worried at the potential scale of job losses at the plant. Mr Byers had met Alchemy's top executive on Thursday night.

The government now plans to offer the West Midland's an aid package worth 129m to regenerate the local economy and help it cope with cutbacks at Rovers.

New MG in 18 months

Rover's new owners, meanwhile, have said that they hope to roll out the first of a range of MG sports saloons within 18 months.
Jon Moulton, Managing Partner at Alchemy Partners
Jon Moulton: "We won't compete in the mass market."
Jon Moulton of Alchemy Partners said his firm would make sure to shift the current stocks of the Rover 25, 45 and 75, but expected the Rover brand to "decline".

The new firm will be called MG Cars, trying to connect to the brand's tradition of UK-built sports cars. Mr Moulton said the company would not compete in the mass-market but try to become a mid-volume producer in the niche-market of sport saloons.

MG aims to produce less than 100,000 cars a year.

Job cuts

The 8,500 workers at Rover's Longbridge plant, meanwhile, are kept waiting to hear their fate. Mr Moulton confirmed that there would be "substantive" job cuts, but refused to give any numbers.

The employees who stay on would be given share options and be part of an "exciting" and "growing" business.

Earlier, Mr Moulton had indicated that the workforce at Longbridge could be halved.

Currency troubles

BMW boss Joachim Milberg said the pound had risen from 2.53 Deutschmarks to 3.18 since BMW had bought Rover, appreciating by 12% in the past year alone.

This had given competitors an advantage as they could offer price cuts in the UK which BMW had to follow, lowering prices per car by 1,000.

Professor Milberg also blamed the weakness of the Rover brand. Sales had halved in the four years to 1999 and had fallen 25% worldwide last year.

Rover has made losses of almost 745m during 1999 - down 26% on 1998.

Land Rover change of heart

The other big surprise news on Thursday was BMW's decision to sell the "jewel in the Rover crown", Land Rover, to Ford.

Mr Milberg explained the decision with BMW's development of its own off-road vehicle, the X5.

He said it was not an easy decision, but the company had decided to stick to its own brand which had been well received.

Professor Milberg pledged that a new Rolls-Royce plant would be built in Britain at a location to be decided by the end of this year.

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See also:

17 Mar 00 | Business
Ford pays 1.8bn for Land Rover
17 Mar 00 | Business Basics
What do venture capitalists do?
17 Mar 00 | Business
Blair fury over BMW
16 Mar 00 | Business
BMW's 'English Patient'
16 Mar 00 | Business
Pulling the strings at BMW
16 Mar 00 | Business
Anger at BMW decision
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