MG Rover reportedly is holding talks with its Indian partner Tata Motors about slashing the price of its latest model after sales in the first half of the year were a fraction of targeted levels.

The Daily Telegraph said Rover hoped to sell 20,000 CityRovers a year but managed just 4,600 in the first half of 2004. So the loss-making car manufacturer is expected to lop £1,000 off the on-the-road price tag for its CityRover in an attempt to spark flagging sales though dropping the price could eat into MG Rover’s profit margins on the vehicle, which is made in India.

The newspaper noted that MG Rover agreed to start selling Tata’s Indica cars as CityRovers in the UK to give it a way into the UK’s competitive “super-mini” car market without the expense of developing a new car from scratch.

However, the Daily Telegraph said the car has failed to attract the British public; in the first six months of 2004, just 4,606 were sold though MG Rover had been reported to be looking for sales of at least 20,000 a year.

The paper noted that Kevin Howe, MG Rover’s chief executive, warned at the Birmingham Motor Show in May that the CityRover was struggling. He reportedly said: “Since we launched the car, some new product has come on the market that has raised the bar.” An MG Rover source told the paper that CityRover sales had not improved: “Kevin said sales were slower than they had hoped for and that is still the case.”

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.

Company Profile – free sample

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 GlobalData
Visit our Privacy Policy for more information about our services, how we may use, process and share your personal data, including information of your rights in respect of your personal data and how you can unsubscribe from future marketing communications. Our services are intended for corporate subscribers and you warrant that the email address submitted is your corporate email address.

The company confirmed to the Daily Telegraph at the weekend that price was one factor in a “package of things” being considered to boost sales. A spokesman reportedly said: “It is a competitive market place. MG Rover is always looking at ways to give customers a better deal.”

The paper said the CityRover, available in four versions costing £6,495 to £8,895 on the road, faces stiff competition in the UK from other “super-mini” cars like the Toyota Yaris and the cheaper Fiat Panda.

Professor Garel Rhys, director of automotive research at Cardiff Business School, told the Daily Telegraph: “You don’t see them on the road. It is too expensive – it is more in keeping with the high spec super-mini. That is a lot of money for the vehicle it is. But it is not competitive at that level. That price puts people off when they see what they can get from the Europeans. It is not a Toyota Yaris or Ford Fiesta.”

Prof Rhys reportedly said that the cheapest model would have to come down to £5,500 to compete with other manufacturers. “It should be about £5,500 lowest price. That is the sort of price that can be achieved,” he said.

The Daily Telegraph noted that Rover sales have fallen for the past four months, down 13% in April, 26% in May, 42% in June and 36% in July, compared with the same months in 2003. Industry figures revealed last week that in the first seven months of the year total Rover sales are down 19% to 30,064 cars.