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MG Rover takes first step to joint venture

Joint venture talks with another company are at an advanced stage, according to MG Rover chief executive Kevin Howe. The company has signed a confidentiality agreement.

Mr Howe said MG Rover was “utterly self sufficient”, despite continuing industry doubts about its long-term viability. The group was ready to develop new models from its own cash reserves, if necessary.

He dismissed speculation the company would be forced into an engineering collaboration to build replacements for the 25 and 45 from 2004. He denied it was going back to BMW for more cash.

MG Rover had finalised a five-year business plan which was based on it “developing or replacing a whole new product portfolio by 2004, all funded by ourselves”. He repeated claims the company would build and sell 200,000 units worldwide on average for each of the next five years and said the company was “within days” of achieving that figure this year.

By April, all MG Rover operations will be based at Birmingham Longbridge. Rover 75 production has been there since the beginning of October, with production managers claiming quality better than under BMW.

Mr Howe said the company was on course to turn BMW's £800m a year loss into a profit in 2002. MG Rover was no longer having to carry Land Rover losses and would recalculate asset depreciation.

It would avoid vehicle disposal losses by not getting involved in heavy self-registration and not carry one-off costs such as redundancy and millennium IT planning.

Retail sales of Rover are up by 30% this year and the company is mounting a charm offensive in the fleet market to bring business customers back.

Even so, big fleet business remains a low priority for MG Rover – the emphasis will be on the user-chooser market. Mr Howe said he only wanted about 20% of sales to go to fleets of more-than 25 cars.

Average unit sales through Rover dealers have risen this year from 235 to 250 cars. Eight dealerships have left the network, seven new outlets have been appointed.

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