Capital Bank, part of HBOS (Halifax Bank of Scotland), was financing MGR vehicles from the time they left the assembly line until their sale.
The money offered (equivalent to £1,650 on each unsold car) would enable the 258 MGR dealers to discount cars by around 15%, which is seen as essential to keep them competitive. Before its fall, MGR was funding a 20% cut in list price. On Monday, representatives of virtually all MGR dealerships were briefed by Richard Cort, the dealer body chairman, on the deal offered after two meetings last week with Capital Bank.
Although the network didn’t immediately accept the offer, Cort says: “Negotiations are ongoing.” MGR dealers say demand for the cars is strong but they need financial support. Ken Surgenor, Lookers chief executive, says: “MGs and Rovers are making money for us and we would like more of them.”
Some owners of small MGR dealerships are less happy with the offer and have pressed for greater financial help. HBOS wants the cars sold as soon as possible because MGR has become a costly problem.
MGR held 8% of the value of new cars heading directly for dealers or to holding areas, with Capital Bank putting up 92%. If the car was sold within 90 days, the dealer paid no interest. Between 91 and 180 days, Capital Bank received interest “at a competitive rate”.
Capital Bank is understood to have been trying to support dealers by not demanding the full payment on unsold cars at 181 days. It is also offering to spend “millions of pounds in additional support for dealers”, such as issuing registration documents and help with transporting cars.
John Parkinson, executive chairman of MG Rover XPart, addressed the dealer meeting and outlined a plan to maintain a network of special repairers.
“We will have regional meetings with dealers’ servicing and parts managers over the next few weeks,” he says. “Our intention is that there should be a platform to handle requests from owners and to handle any safety issues in the future.”
XPart supplies wholesalers who distribute components to UK dealers and repairers. “The wholesalers take the credit risk,” says Parkinson.
Last Friday marked the official deadline set by PricewaterhouseCoopers, the MG Rover administrator, for bids with details of financial backing to buy parts of the collapsed business. About a dozen serious offers were received and these will be evaluated during the next two months.
PwC is not revealing who is interested, but just before the deadline Chapman Automotive said it was putting together a bid for the MG brand, the TF sportscar and associated manufacturing equipment. Alchemy Partners, which in 2000 wanted to buy and relaunch MG, says it is no longer interested.