Blog: Dave LeggettRover

Dave Leggett | 15 September 2004

How can MG Rover carry on? It's a question that's been on a few people's minds for some time and it's one that may be to the fore again after the latest European sales numbers published by ACEA. They're off (YOY) by over 11% in the first seven months of the year at just over 74,000 units - yes 74,000! (To put it in perspective, market leader VW Group did 1.6 million units and even one model range niche maker Mini managed 75,000.)

Not much for a volume maker is it? For all the talk of MGR's 'new business model', there's no dodging industry fundamentals - in mass-market segments you need volume to get unit costs down and be profitable. Look at the competition for the prehistoric 25 and 45 (and the 75 is no spring chicken). It's amazing sales have held up as far as they have. The sooner a partner is sorted out, the better. Maybe it's a question of just hanging on until SAIC (or someone) take over. A company like that would likely be interested in MGR's sales network. Once a deal is concluded, the Phoenix lot can ride off into the sunset, saddlebags bulging with gold coins, saying 'job done'. Just a pity that under such a scenario, Longbridge will likely be greatly slimmed down.

And MGR in negotiations with Tata over poor CityRover sales? That's not surprising. If it was £1,000 cheaper, it would probably sell. But a source told me that while the transfer price from Tata to Rover on the vehicles is low, MGR's mark-up is not - hence the pricing problem. Have the MGR people been greedy? Now that would be unusual wouldn't it? 


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