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EDITIONS
Thursday, 17 August, 2000, 12:45 GMT 13:45 UK
Rover reaffirms viability
Jon Moulton
Jon Moulton believes Rover cannot survive as a mass producer
Rover's new managers have restated confidence in their business strategy following a scathing attack from the man they beat in the race to buy the ailing carmaker.

The car giant confirmed to the BBC that its future was based on "viable production volumes" following claims by Jon Moulton, whose venture capital group narrowly missed sealing the Rover purchase, that the firm would be fighting for survival by March.


Rover are following a business plan that is very challenging... it has very little chance to succeed

Jon Moulton, Alchemy Partners

Mr Moulton, managing partner of Alchemy Partners, on Wednesday questioned efforts by Rover's new board to continue running the company as a mass car producer.

"Rover are following a business plan that is very challenging, and my personal opinion is that it has very little chance to succeed," Mr Moulton said in a speech to the Marketing Society.

Viable production

But Rover, bought from BMW in May by the Phoenix Consortium, on Thursday defended its projections.

"We are basing the business on a viable production volume of 200,000 vehicles per year," a Rover spokeswoman told BBC News Online. "We are currently debt free as a result of the agreement with BMW."

Rover, which has yet to unveil details of its business plan, secured 500m working capital from BMW as part of the purchase agreement.

BMW put Rover up for sale after the Birmingham based carmaker ran up losses of 2.85bn in six years.

Bidding race

Alchemy Partners in March emerged as favourites to buy Rover, planning to turn it into a niche sportscar manufacturer, and threatening at least half the 10,000 jobs at the carmaker's Longbridge site.

John Towers, head of the Phoenix consortium
John Towers: Victor in the Rover bidding race

But Alchemy pulled out of the bidding a month later, following the emergence of Phoenix, headed by former Rover executive John Tower, which said it could maintain high-volume production at Longbridge.

Mr Moulton on Wednesday blamed the collapse of the Alchemy bid on BMW.

After legal inquiries, BMW realised it was not obliged to underwrite Rover's profitability, and so could escape the expense of redundancies Alchemy deemed necessary to safeguard Rover's future, Mr Moulton claimed.

Mr Moulton also criticised the government for its "chaotic" role in backing the Phoenix consortium.

Government aims

But the Department of Trade & Industry on Thursday defended the government's role.

"It has always been the position that the government had wanted any new owner at Longbridge to be viable, to retain the largest number of jobs possible and to keep high volume car production," a DTI spokesman said.

"But ultimately it was a commercial decision for BMW."

Mr Moulton has also distanced himself from some of his comments on Wednesday, saying he "could not possibly know" what Rover's current financial situation was.

The government "got some things wrong but other things they got absolutely right", he added.

See also:

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