MG Rover expects to supply the West Bromwich Building Society with “hundreds” of cars under a new exclusive supply deal.
The scheme, dubbed 'Brum Brum', will see people who borrow more than £90,000 on a West Bromwich mortgage offered the keys to a new £7,995 Rover 25 1.1i 3dr. But they will be tied into a higher interest rate – 5.99% – for five years.
The building society has committed to purchasing an unspecified number of cars from MG Rover to secure as low a price as possible. That is likely to be about £5,600 – a discount of about 30%.
Neither company would reveal full details, although David Johnston, general manager of marketing at the West Bromwich, says: “We have a preferential deal for very good discounts with MG Rover – that's the sole deal for us, there is no turn on the car.
“The campaign will last for several months and we might shape another deal at the end of that.” MG Rover dismisses suggestions that the agreement could affect residual values, currently 35% over three years/30,000 miles, pointing out that the volumes are relatively low. “We also don't expect customers to take a shortcut to a fast buck by selling the car as soon as they get the keys – they are paying for it from their mortgage so it's not an astute thing to do. But that is a possibility and it's entirely up to them,” says a spokesman for the carmaker. “This is simply an opportunity for us to sell some cars – and that's likely to be in the hundreds, not the thousands.”
One industry analyst was sceptical about the deal. “It's better than having them stuck on an airfield somewhere, but then why build them in the first place?” he asked. However, those claims are rejected by MG Rover, which says that all the cars are being built to order. “We do not have loads of these cars in stock waiting to be sold,” says the spokesman.
Once the mortgage is completed, MGR takes control of the customer. It also has the opportunity to upgrade the buyer to a higher model spec, with the customer paying the difference in price.
MGR has embarked on a number of alternative ways to get its models to market. The Streetwise has been offered as a competition prize on a number of TV shows and local radio programmes.
One car was even given away each day of the week by retailers during a recent promotion. “There's no point in us following the same old routes to market – we have had to change the parameters of our operation and be more innovative in our thinking,” says the MGR spokesman.