Rover's recovery

Rover's 9 per cent increase in sales last year was a sterling performance in the face of a European car market accelerating hard in reverse. Indeed, the percentage rise looks even healthier when the Concertos it is still building and selling to Honda are stripped out.

But no one should race for their cheque books in anticipation of an impending sale by British Aerospace. The dog of a company that BAe picked up from the Government in 1988 may have taken some impressive strides but it is still some way off pedigree status.

Rover probably made somewhere in the region of pounds 40m last year. But it will not be worth anything remotely resembling its pounds 1.3bn book value until profits are running at four to five times that level.

BAe would, undoubtedly, like to cash in. The company is not part of BAe's core business and the money raised from a sale would offset the write-offs in its turboprop division.

But who would buy it? Given Rover's uneven track record, a flotation cannot be on the cards for 18 months and there are not many cash-rich trade predators. That leaves the Japanese car maker Honda - the most obvious choice since it has collaborated with Rover since 1979 and already owns a 20 per cent stake.

Talks are clearly taking place about Honda increasing its shareholding, but the Japanese do not envisage paying much for the privilege. They may need Rover, and like Land-Rover. But do they really want the brownfield sites at Longbridge and Cowley?

With Honda's help, Rover has come a remarkable distance in a short time, renewing its entire range with winning models in under eight years. Likewise its model development, at least to the end of this decade, rests on collaboration with the Japanese. BAe can sit tight a while. The last thing it wants to do is sell Rover short.