MG Rover suspends car production

Car maker MG Rover is suspending production for the rest of the week to help clear stocks of unsold cars.

The Midlands manufacturer is to shut down work on three models on Wednesday, Thursday and Friday this week. Those cars affected are the Rover 25, 45 and 75. Last month, the firm said it hoped sales for the year would hold steady at about 148,000.

The Phoenix consortium bought MG Rover from BMW back in 2000, but has been hampered by a lack of investment funds.

'Standard practice'

A spokeswoman for MG Rover said the move at its Longbridge base would "balance dealers' stock levels". She added: "A small halt in production at this time of the year is fairly standard practice in manufacturing, where a number of companies have an elongated Christmas shut-down."

MG Rover has seen sales slump by almost 50% in the past three weeks, not helped by reports of a £70m pensions deficit, and accusations by trade unions that the company's directors are giving themselves excessive pay deals. This is reported to include a £15.1m payout to five directors in 2002.

The Transport and General Workers Union and Amicus have asked the company for more details of the payment details. The unions are now reportedly asking financial experts to examine MG Rover's figures.

Off target

According to industry figures from the Society of Motor Manufacturers and Traders, MG Rover sold 85,567 cars in the year to the end of October. The company also announced a £95m loss in its recently released 2002 accounts. This has hit its ability to invest in new models.

MG Rover's forthcoming new small car, the City Rover, for example, is based on Indian vehicle Tata Indica, and will be made by Tata in the western Indian state of Maharashtra.