'Huge Rover losses forced sale'

Even Rover's new models failed to sell well

BMW has denied it misled the UK Government on its plans to sell its loss-making subsidiary Rover.

Rover was costing the German car company £1m a day, BMW said.

"We pointed out that due to currency developments alone the BMW group was losing more than £1m with Rover every day, a loss clearly not acceptable and economically viable any more," said BMW chairman Joachim Milberg.

He was announcing the company's full-year figures, which showed a loss of £1.5bn, one of the worst results in the company's history.

Losses at Rover accounted for £736m of that figure. The total provision for restructuring Rover - put at £1.9bn - was the main factor that pushed BMW into the red.

BMW chairman Joachim Milberg: Rover "not economically viable"

Elsewhere within BMW, profits showed a modest increase to £630m.

Professor Milberg added that BMW had "exhausted all the means and resources at our disposal" to hold on to Rover.

Ultimately, he said, it was British customers who, by purchasing Rover cars, could secure jobs in the company.

BMW reported that Rover sales were down by 7% in the first quarter of 2000, while sales of BMWs had risen by 8%.

Shares up, image down

But motor industry analyst Garel Rhys, of Cardiff Business School, maintains that BMW must bear some of the blame for Rover's fate.

He says the company mishandled the brand, overpriced the products and talked down the company.

The decision to sell most of the Rover group sent BMW shares upwards, but has been a big blow to its image.

The Rover sale has aroused strong feelings

The UK Government has accused the company of lying about its plans, and there have been calls for buyers to boycott BMW vehicles.

The Rover plant at Longbridge in the West Midlands and the MG marque are being sold to venture capital firm Alchemy Partners.

Land Rover is being bought by Ford for £1.8bn - although there are rumours that General Motors might launch a rival bid.

And BMW is hanging on to the Cowley plant in Oxford to build the new Mini.

The figures from BMW come as the Commons Trade and Industry Select Committee holds the first of two meetings to investigate the Rover sale.

MPs will be questioning officials from unions, BMW and Alchemy Partners.

They will also be visiting Birmingham on Tuesday to question business leaders about the impact of job losses on the local economy.