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MGR mulls over Capital Bank offer

MG Rover has failed to agree whether to accept a rescue package offered by HBOS’s car finance arm, Capital Bank.

More than 400 dealer representatives attended a four-hour meeting at the Heritage Motor Centre in Gaydon yesterday, when the company said it wanted more time to examine the offer further. Under the offer, Capital Bank will allow dealers to cut more than 15% off the cost of 10,000 new and 5000 demonstrator MG and Rover vehicles.

The bank will also foot the bill for millions of pounds-worth of administration costs, such as issuing registration documents, and help with transporting the cars.

Before Rover’s collapse, Capital Bank was technically the owner of the cars once they left firm’s Longbridge factory in the Midlands. The dealers then took over ownership on delivery, paying interest on their value before they were sold.

In the past, dealers were able use a 20% discount paid for by the Longbridge plant. Since the collapse, the dealers have had to try to sell the cars at as high a price as possible.

One dealer said they had £300,000-worth of unsold MGs and Rovers on his forecourt. "This is our livelihoods," he said. "We can move but it is not the way you want to move -we are in the dark.

There are a lot of dealers who are being financially crippled by this deal."

A spokesman for Capital Bank said: "Following constructive dialogue between Capital Bank and the dealers, we are offering a discount off the wholesale prices of cars. "This is a straightforward commercial measure in the interests of both the dealers and Capital Bank. There is a strong demand for Rover cars and our new arrangement is all about ensuring that this demand can be met."

Richard Cort, the chairman of the Rover dealers association described the meeting as “very constructive” but said nothing concrete has been agreed.

“Dealers have put in place a warranty scheme to back future sales,” he added.

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