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Rover's rescue was always doomed

Tom McGhie|Dan Atkinson|Mail
13 April 2012

CRUCIAL talks with Shanghai Automotive aimed at saving carmaker MG Rover were doomed from the start, it emerged this weekend.

The talks started six months ago, but repeated requests for financial information from Rover were stonewalled while losses mounted and cars gathered dust in showrooms.

Once SAIC was able to see the company books, just two weeks ago, it became became clear that the Midlands carmaker was terminally ill.

And the Treasury's determination to shield taxpayers from any serious financial commitment to the company meant the Government was never going to offer the sums that the Chinese wanted if they were to keep Rover as a going concern.

A £100m six-month bridging loan was regarded as derisory by the Chinese.

One Westminster source said: 'Trade Secretary Patricia Hewitt was left hanging out to dry because she had no real funds to offer.'

He added: 'I think the Government hoped to keep the visits, talks and meetings going until after the General Election, but events have moved more quickly than they thought.' Chancellor Gordon Brown visited China in February and discussed the Rover deal then.

But a British diplomatic source said: 'The UK was playing poker without money.'

It had always been clear to the latest owners of Rover - the Birmingham businessmen dubbed the Phoenix Four after the name of their takeover vehicle - that the company would survive in a world of global car giants only if it secured a sustainable partnership with another mass car producer.

From May 2000, when the four bought the company for £10 with a £500m soft loan from BMW, they had made enormous efforts to find a partner.

Plans for a tie-up with another Chinese company, Brilliance, foundered after nearly a year of negotiations.

Now hopes of a tie-up with SAIC have also collapsed.

Under the Phoenix Four, Rover did no more than rebadge old models rather than develop new ones. The company, which first made cars in Coventry in 1904 and whose historic brands included Morris, Austin and Wolseley, was never able to change its image as a builder of staid quality cars for the middle classes, despite launching the £70,000 SV-R sports car.

Meanwhile, the carmaker has seen a dramatic sales slump over the past five years with production dropping from 200,000 to just over 100,000 vehicles a year.

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