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MG Rover fear over ELV rules

MG Rover may be forced to drop its future development strategy, designed to return the company to profitability within two years, should the UK go ahead with hard-nosed environmental legislation.

The Government last month revealed proposals to bring forward from 2007 to next year the retrospective End of Life Vehicle directive deadline, which requires carmakers to take responsibility for disposing of cars when they reach the end of their life. It demands that 85% of the car must be recyclable by 2006 and 95% by 2015.

Carmakers condemned the planned action, fearing it could jeopardise profits at a time when manufacturing in the UK has fallen into recession.

One senior executive called the move a “political sop” to environmental groups. He was critical of carmakers and the Society of Motor Manufacturers, which he claimed was “behind the ball on the lobbying front”.

“Their failure means the Government will probably have its way on this issue,” he said.

John Sanders, MG Rover group marketing director, said: “This move would not help the industry and it certainly doesn't help MG Rover at a time when we are trying to build up the business.

“We will be forced to fund the cost by raising prices, reducing specification levels or by not pursuing our strategy for turning the business around.”

Mr Sanders believes the retrospective legislation penalises companies like Rover which has been historically successful, becauseit has a larger car parc than newer entrants like the Far East carmakers.

“It will create an uneven playing field if we have to absorb costs from the past,” he said.

“MG Rover is a small independent firm formed after the acquisition from BMW, and with limited links with the past. Yet we will be expected to handle all old Rovers – and that is a massive car parc.”

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