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Rover's retail pain.

Rover dealers are to press ahead with a compensation claim against BMW following their first meeting with the company since the announcement of the probable sale to Alchemy.

John Mantle, Rover dealer franchise board chairman, has written to BMW saying dealers believe they have a good case for compensation, and asking for an early response. No figure has yet been put on the claim but dealers are taking legal advice.

The claim is based on assurances given consistently up to and at a dealer conference on February 24 that no discussions on the sale of Rover were taking place. “The reaction will depend on BMW's response,” said one dealer close to the discussions.

“At the conference, we asked whether Rover was up for sale and were told it was not,” said Mr Mantle. “That was a categorical lie. It is clear they were talking to buyers even before the launch of Rover 45 in January.”

Gabriele Falco, BMW regional director who delivered the message at the Rover dealer conference in Birmingham, was present last week when the dealer board met Rover senior management including John Parkinson, UK managing director.

Roger Knight, Marshall Group chief executive and Rover franchise board member, said: “Mr Falco was left under no illusion as to the strength of feeling in the network. In my view there is no question some or all of the dealers are entitled to compensation.”

Lawyers will be looking closely at the exact wording of franchise contracts which refer only to supply of Rover products. Only 180 of the 294 dealerships in the Rover network has an MG franchise. Alan Pulham, NFDA director, said: “If BMW disposes of the company as a going concern, the contracts are valid. If Alchemy claimed a 'significant reorganisation of the network' - and they would have a stronger claim than some I have seen - that would put the whole network on one year's notice.”

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