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Friday, 28 April, 2000, 14:06 GMT 15:06 UK
BMW's image damaged
BMW car
BMW's shiny image has suffered a few scratches
The Rover fiasco and the chaos surrounding the sale of the firm has seriously damaged BMW's image, explains BBC business correspondent Greg Wood.

On the Frankfurt stock market this morning the verdict on BMW's failure to sell Rover cars to Alchemy was swift and harsh.

BMW's share price fell by nearly 10%. This is a company with an image problem and a big question mark over its independent future.

BMW headquarter
At BMW headquarters, managers are desperate to have Rover taken off their hands
In retrospect BMW made its biggest mistake five weeks ago, announcing that Rover would be sold to the venture capital group Alchemy before all the financial details of the deal had been agreed.

To have to call off the deal at the eleventh hour makes BMW's management appear at best naive and at worst unprofessional.

On Thursday BMW dismissed a rival bid for Rover from the Phoenix consortium, saying there was no basis for negotiation.

But now the Phoenix bid is the only one on the table.

Thus BMW now says it would negotiate with Phoenix, provided there were financial guarantees to back an offer for Rover. Another embarrassing about turn for BMW.

Professor Joachim Milberg, BMW chief executive
BMW boss Joachim Milberg is likely to face tough questions from shareholders
Since the Alchemy deal was announced, BMW has seen its reputation in the UK, one of its most important export markets, attacked by government ministers and trades unions.

Calls for a boycott of BMW cars have gone largely unheeded.

But if BMW eventually has to take the step of closing down the Longbridge plant in Birmingham, with the loss of 9,000 jobs, the rhetoric will become much more hostile.

As one leading German commentator remarked: "BMW is a disaster. This is not the way that top German companies should do business."

Former BMW chief executive Bernd Pischetsrieder
Bernd Pischetsrieder was sacked as BMW boss after Rover's losses escalated
BMW's management give the impression that they are not in control of events.

The Quandt family, which still holds the biggest single shareholding in BMW, has moved to get rid of senior managers at BMW before. It may now feel that more changes are needed.

But the greatest threat is to BMW's independence. Rover has cost the German carmaker billions and it's still losing money at the rate of 2.5m a day.

Financially weakened, poorly managed and with its reputation tarnished, BMW presents a tempting target. Ford has already agreed to buy Land Rover from BMW. Now it may fancy swallowing BMW too.

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See also:

28 Apr 00 | Business
BMW threat to close Rover Cars
16 Mar 00 | Business
Pulling the strings at BMW
28 Apr 00 | Business
Alchemy shies away from Rover risk
28 Apr 00 | Business
Byers urged to act over Rover
28 Apr 00 | Business
BMW, Alchemy: Full statements
28 Apr 00 | Business
Workers cheer Alchemy move
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