Meanwhile, the National Audit Office revealed that £250m of public money had already been used to support MG Rover, and that figure was likely to rise to £275m. It also criticized the DTI’s decision to give MG Rover’s administrators a £6.5m loan to prop up the carmaker while the DTI’s own investigation into Rover’s collapse, not due to be published until next year, could top £10m.
Lots of figures, lots of wasted money. It was clear that MG Rover’s future was shaky long before it actually called in the administrators, despite the desperate attempts by directors to persuade the media, dealers – and their own staff – otherwise.
BMW is now looking to sell the Rover brand. Ford has first refusal – a leftover from its purchase of Land Rover – although BMW is also courting the Chinese carmakers Nanjing and Shanghai. Given its own profit problems, Ford won’t want to waste money on a brand that is largely defunct.
Rover is not the only one with big issues. Volkswagen Group’s big two – board member and former chairman Ferdinand Piech and current chairman Bernd Pischetsrieder – have clashed over the latter’s restructuring plans. The main problem is the unions – 10 workers sit on the 20-strong VW board, and they are against the reorganization, likely to cost up to 20,000 jobs. Piech is backing them.
The VW board meets next month to decide whether Pischetsrieder gets a two-year extension to his contract, which ends in 2007. That looks unlikely.
But, he is right to restructure: VW’s recent results (revenue up 7%, pre-tax profits up 58% thanks to cost savings), are masked by the performance of Audi and Seat. VW itself is struggling.
If the board votes not to extend Pischetsrieder’s contract, his successor will still have to carry out major reforms. Without it, VW’s future is bleak.