MG Rover and Tata Motors are in discussions to boost disappointing sales of the Indian-built, Tata Indica-based CityRover model in the UK, according to newspaper reports.
The Daily Telegraph said John Edwards, one of the four men who bought MG Rover for £10 in 2000, was in India on Monday trying to save the vehicle distribution deal with Tata Motors.
The paper said MG Rover agreed to sell Tata’s Indica as the CityRover this year, but sales have been far below target with only 4,606 sold in the first six months.
The target was originally set at 100,000 over five years.
An MG Rover spokesman told the Daily Telegraph: “Discussions have been on going in India and they are going on today based on the market dynamics in the UK.”
The paper said the talks are thought to centre on whether Tata or MG Rover should shoulder a price cut of up to £1,000 a car to try to stimulate sales.
Separately, a Tata spokesman told the Birmingham Post that claims there could be an “honourable separation” to bring their agreement to an end was “a bit extreme”.
The Rover model is a derivative of the Indica hatchback, a popular small model manufactured by Tata in its modern plant at Pune south of Mumbai.
The paper said meetings were held between MG Rover and Tata executives at the weekend and on Monday about the marketing of the CityRover and other projects which they may develop.
According to the Birmingham Post, the two sides could decide to revise their business plan and put more extras on the CityRover or bring down its price.
The paper said sale of the car in Europe is important for Tata because the agreement with MG Rover to import the Indica badged as the CityRover is part of Tata’s plan to get a foothold in western markets, helped by using MG Rover dealerships.
The car has had some good reviews but it is also regarded as overpriced. Lowering the price may encourage more sales, the Post said.
Partly re-engineered and lightly redesigned to meet western legal requirements, the car had entered a competitive UK small car market with a wide range of choices for a potential buyer, the paper said.
In the red just three years ago, Tata, India’s largest vehicle maker, reports hefty profits and is expanding abroad, counting on exports to offset any domestic downturn, the Birmingham Post said. But, due to poor sales of the CityRover, it has been left with a bigger inventory in India than expected, the Post added, noting that cars built to CityRover specification are “over-styled” for the Indian market.
The Tata spokesman told the Birmingham Post: “The automotive business is dynamic and companies in it must keep up with the times and both parties may need to take certain actions.”