Rover bosses 'squandered £1bn'

13 April 2012

THE Phoenix consortium who ran Rover after its sale from MG Rover 'squandered' well in excess of £1bn, according to Britain's top automotive analyst Garel Rhys today.

Rhys, a professor at Cardiff Business School and director of its Centre for Automotive Industry Research, said the co-called Phoenix Four consortium of businessmen led by John Towers, who bought MG Rover in 2000, received huge indirect financial support from former owner BMW.

On top of a £427m no-interest loan, BMW handed over £300m of existing stock and wrote off debts. In addition, Phoenix raised a further £200m by a sale and leaseback of Longbridge and the disposal of its spare parts business.

'That was the amount of money that the Phoenix Four received and the company still did not succeed,' Rhys said. 'The amount of money that would be needed to put this enterprise back on to a firm footing, given that it is losing about £20m a month according to the administrators, really is beyond any possibility.'

SPECIAL REPORT: Read our full round-up of the collapse of MG Rover

The apparent end of the road for the company heightened calls for a full Department of Trade and Industry investigation into its accounts ? audited by the top City accountancy firm Deloitte. Nick Matthews of Warwick University's manufacturing research unit said analysis of the accounts had failed to identify the whereabouts of £400m previously accounted for. 'It suggests to me the need for an urgent and thorough DTI investigation,' he said.

Rhys said the company was irretrievably hobbled by its failure to replace its Rover 45 model ? which he argues was too old in 2000 ? and compete in the light-medium market against the likes of the VW Golf, Ford Focus and Audi A3.

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