Britain’s independent car maker MG Rover is in talks to sell a key stake in the business to an outside investor as part of a deal to bolster car production at its Longbridge factory, The Times newspaper claimed on Monday.
Go deeper with GlobalData
The paper said it believed the company, which was bought from BMW by a consortium of businessmen three years ago, is looking at an alliance that could lead to a significant increase in production and the creation of up to 1,000 jobs but understood that the talks may not involve another carmaker but could instead centre on a large business with an interest in the car industry, such as a leasing company. Discussions have involved a number of senior MG Rover officials, including chairman John Towers.
The paper said the deal could help to stem a substantial fall in sales across Europe, particularly if the carmaker can exploit regions in which it is currently weak, while the increase in production would involve existing Rover and MG models, as well as the carmaker’s new mid-sized car, due to be launched next year.
The Times said it thought that the company is particularly keen to expand in Eastern Europe and the US. The paper noted that the group has been attempting to take over a former Daewoo plant in Poland to manufacture Rover 45s using equipment made redundant at the main Longbridge plant when the new medium-sized replacement production. MG Rover believes the Eastern European market is not as sensitive to ageing models as the Western European and US markets but negotiations have so far not been successful.
An escalation in production at Longbridge would also include the larger 75 model, The Times added, which could suggest that some cars may be destined for the American market, where fuel costs are lower and large cars are popular.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataHowever, just-auto.com has been told previously, by MG Rover sources, that the 75 would require substantial re-engineering for the US as it was never designed with the US market in mind.
The Times said MG Rover has previously ruled out selling a stake in the business, which is partly owned by its employees, but it is thought that the new talks hinge on the partner taking a strategic stake in the group. However, the carmaker would be under pressure not to allow its directors to benefit from the deal after recent controversy over rises in executive pay, the paper added.
The paper said an alliance is crucial to the business’s long-term survival because a small independent company cannot afford the large development costs of new models. Its new medium-sized car is based on the platform of the 75, but such an engineering adaptation is not possible for a new small car to replace the Rover 25, The Times added.
