Rover pins hopes on last chance saloon

THE GUARDIAN
Motor industry waits to see if the 75 series will restore the fortunes of German-owned British giant
Nicholas Bannister, Chief Business Correspondent

The new car upon which Rover's future depends went on sale yesterday to the sound of massed car horns. Rover, which has seen its sales slump in recent months, is counting on the Rover 75 to reverse the trend and set it on the path back to profitability.

The four door executive saloon is the first new design from the Rover stable since the British company was taken over by BMW in 1994 for £800m. Manufactured at Rover's Oxford plant, the car made its debut at the Birmingham motor show in November - an event marred when, hours later, BMW's then chief executive, Bernd Pischetsrieder, threatened to close Rover's main Longbridge plant in Birmingham.

His call for a dramatic improvement in productivity at Rover, together with job cuts and the introduction of flexible working patterns sent shivers through the west Midlands motor industry. At a much smoother ceremony yesterday, in a car park on the south bank of the Thames, the Royal Philharmonic Concert Orchestra played a 10 minute work composed by Dave Stewart, formerly with the pop group The Eurythmics, for orchestra and car horns - the latter provided by 75 examples of the new model with specially-tuned horns.

International violinist Vanessa-Mae shared centre stage with the new vehicle. Jim MacDonald, managing director of Rover Cars UK, said that the Rover 75 would be the first of a range of new models which would transform Rover.

However the industry is looking to the 75 to set the pace. Rover has set a production target of 50,000 this year, rising to 100,000 next year. This is well below the Oxford plant's 140,000 vehicle capacity. Production, running at about 1,660 a week, is due to rise to 2,800 a week by the end of the year, increasing jobs at the Oxford plant by 800.

Most of the new employees will come from other Rover plants, especially Longbridge. Rover is offering relocation packages of up to £8,000 to employees who decide to move to Oxford and smaller amounts to those who decide to commute.

About 75,400 of the model have already been made for the British market. About 70% of total output is expected to be exported, particularly to Germany, where the demand has been strong. Mr MacDonald added that 60% of British sales would probably be bought as company cars. BMW and Rover have invested £700m over four years in developing the model and rejigging the Oxford plant.

The German car maker has agreed in principle to spend a further £1.7bn in modernising Longbridge and building new models there, but has yet to finalise the £150m government aid package that it says is a prerequisite. Thousands of motor industry jobs in the west midlands depend upon new investment in Longbridge to make a replacement for the Rover 200 and 400 models.

Sources close to the company said yesterday that the final details of the aid package were nearly complete and an announcement could be made before the end of the month. The company is already committed to spending £400m on the new Mini which will also be made at Longbridge.

The group's product strategy is to revamp the Longbridge-built 200 and 400 models, and then replace them after a few years. An estate version of the Rover 75 is expected to be introduced in about two years' time. The 75 costs between £18,280 and £26,630, and is a mixture of new technology with old-style accessories such as round dashboard dials.

Rover, which lost over £647m last year and is expected to lose even more this year, has seen its sales fall by over 29% to 89,000 during the first five months of this year. Company officials blamed the bulk of the downturn on the phasing out of the 100, 600 and 800 models.

They said that customers were also waiting for the revamped versions of the 200 and 400 models.