BREAKING NEWS - MG Rover reaches end of the road

[Kicking-back]

The administrators have been called into MG Rover after the collapse of talks with a Chinese consortium

[rdjones]

Awful news, we have a family friend who works at Longbridge and he txt my Dad eariler in the week to say that things where looking bad.

[Richy_Rich]

Yup, just about to post this myself. Very sad.

We'll see what happens next, but my thoughts are with the workers and their families tonight.

[Dani Filth]

that also implies no more MG in DTM ??

[ensign14]

The MG PR director has denied that MG Rover has called in the administrators. He is absolutely fizzing because it appears Hewitt has pulled the plug prematurely.

Labour has apparently withdrawn the £100m bridging loan without actually telling MG Rover.

**** you Bliar.

[touringlegend]

Very very sad news indeed for all those workers, not only for MGR but their suppliers around the Longbridge area.


I suppose it would be pretty pointless buying an MG later in the year now, if there's no manufacturers there'll be no back up etc etc.

[Andrew Gunnell]

Very sad news. But it is not over yet! Ok there might be no MG in DTM this year, but other companiese have come out of administration, so why not MG Rover?

[Silk Cut Jaguar]

MG Rover has used a few of their nine lives already. It's a sad day for sure that Britain's last large scale independant auto maker goes to the wall. I wouldn't be surprised if someone from Europe bought up the MG side of things though.

[Woolley]

It's horrible to think it, but this has been a dying company for so long now I feel the end is inevitable. I've started to think tha £100m could produce many more jobs with a long term future than investing it in the plant. It's not as if I believe that Shanghai would hold out much support for Longbridge anyway. Much cheaper to build the cars at home with low wage costs, no environmental issues or much in the way of labour laws.

[Kicking-back]

Can't blame the government, as much as I'd like to.


An inefficient business making a product no-one wants to buy will always go bust.

That's life!

[ensign14]

Originally Posted by Kicking-back

Can't blame the government, as much as I'd like to.

I can...the biggest problem was the pension fund hole, which is entirely down to Gordon Brown...

Plus Labour have effectively pulled the plug by badmouthing them before receivers had been called in. That has destroyed any remaining confidence.

And who was leaking all the accountancy reports that encouraged suppliers to stop supplying and precipitate the crisis?

[Kicking-back]

Surely that would be political suicide?

What would the government gain by destabilising Rover?

[Super Tourer]

The truth is that the car market has moved on hugely in the last 10 years. You can only dres up 10 year old designs as 'new' cars for so long.

Car makers nowadays have a continual rolling program of new models and refresh and facelift those models usually every 18 months.

If you compare the cars coming out of the Far East now with 10 years ago, the numbers of different models they build and sectors they cover - that is one example of how the car market has changed.

Peter Stevens and his design team have done a tremendous job keeping the old 25/45 models as fresh as possible, but car buyers don't agree and sales have plummeted.

A good point was made on one of the new reports that MGR is too big to be small and too small to be big.

The future is tricky as a lot of investment is needed in new models across the range, this takes time - which is something there is little of for MGR.

[rustyfan]

Hm, I wonder how this will affect the teams planning on using MG in the JTCC here in Sweden (support-class to the STCC).

[ensign14]

Originally Posted by Kicking-back

Surely that would be political suicide?

What would the government gain by destabilising Rover?

If the deal fell through a couple of weeks before the election, which is always a possibility in business, it would indeed be electoral suicide as it would dominate the news for weeks.

Instead, what are the major stories in the papers? The Pope's funeral and Charles-Camilla.

Remember this is a "Government" that has a record of "burying bad news"...get it out of the way when no-one is paying attention. Funny how all the stories about the deal stalling emerged after the Pope died. There was no immediate crisis until the accountancy reports were leaked, thus spooking suppliers who called a halt.

Of course, the Government could announce a "rescue package" 2 weeks before the election to look like saviours...

[garcon]

ensign, I agree that the pensions hole is an issue, and that it is one created by Dear Prudence... er, I mean Gordon. It may even have been one of the final nails in the coffin.

But you can't blame the government entirely for MGR's demise. By the way, I think reports of liquidation are premature - yes, it seems the SAIC deal is dead, but I'd wait to see what happens over the next few days.

Although the Phoenix group did a noble thing in taking on an ailing company and trying to make it work, a succession of blunders have, I think, condemned MGR. That isn't to say it wouldn't have happened anyway, but with the benefit of hindsight they might have done things differently.

Announcing the proposed deal with SAIC in a blaze of publicity over a year ago was one of the biggest mistakes. Initial talks had taken place, but at that stage the deal was nowhere near final. To publicise a deal whilst negotiations are still ongoing flies against everything that Chinese business culture dictates, and it only served to upset the SAIC board. I think that may have planted a few seeds of doubt in Shanghai, but they continued with negotiations in good faith - after all, if the numbers worked they had much to gain.

Phoenix felt they had to expand the MGR model line-up, but with very little money available for development they looked for a suitable partner. Nothing wrong in that. The fact they came up with the Tata Indica, the only car on God's earth that's actually worse in every department than the original Metro, truly beggars belief. I've been slated before for saying the CityRover is a truly awful car, but it is. It doesn't fit with MGR's brand image (perceived or otherwise) and just served to confuse punters and embarrass dealers.

Finally, and most recently, the SAIC apparently floundered in the last few days of negotiations between SAIC, MGR and the UK Government. And this only happened when it became apparent that MGR's finances were in a far worse state than either the Government or SAIC had realised. Once again, it seems, Phoenix had been less than fully honest about their position. The Government had offered a bridging loan (which let's face it they'd never see again) to try and make the numbers work, but it was SAIC who eventually pulled out of the deal when they were unable to get the guarantees they needed. To me that shows very good business practice from two of the three parties. The Government would have been lambasted from here to China and back if they'd thrown public money at the deal without getting the full facts about MGR's position, and SAIC tried everything they could to make the deal work but in the end were unable to accept the risk.

At least if the Phoenix does fail to rise once again from the ashes we'll be saved one thing - the truly terrifying prospect of an MG CityRover.

[garcon]

And that's before we start looking at what's actually left and where it all went...

http://news.bbc.co.uk/1/hi/business/4423725.stm

[ensign14]

Yes, there were problems, as indeed there have been at Ford, FIAT, VW and others - it's just that MG Rover did not have the fallback the other guys had, hence CityRover (which I reckon was a panic buy). And the hiving off of profitable parts makes business and tax sense.

But I question the timing of the accountancy leaks (which were not in Rover's or even SAIC's best interests) followed by Hewitt rushing to the Press to announce administration. Far too soon for that sort of thing. Talks had been going on for ages so why did it suddenly become a rush?

[Dog Faced Boy]

Originally Posted by ensign14

Remember this is a "Government" that has a record of "burying bad news"...get it out of the way when no-one is paying attention. Funny how all the stories about the deal stalling emerged after the Pope died. There was no immediate crisis until the accountancy reports were leaked, thus spooking suppliers who called a halt.

Of course, the Government could announce a "rescue package" 2 weeks before the election to look like saviours...

This seems very plausable to me and I support this goverment on the majority of things.

[cybersdorf]

Two words: Honda Concerto. When did that go out of production? At Rover, they're still building it. This is not a political issue, Rover simply has nothing on offer the market wants.

They've found their feet so often in the past 30 years, maybe all hope is not lost yet, certainly for MG.

[touringlegend]

I'm with Ensign14 on this - I can't believe the DTI announced MGR going into admin before they actually had!

I am sure we haven't seen the last of MG Rover yet. It is far too close to a general election for the govt to ignore, as you'll have heard Tony Blair and Gordon Brown are in Birmingham.


I'm sure they can save the company in some shape or form. Trouble is massive investment is needed, the Rover range doesn't appeal, whereas the essentially same MG's have far more appeal.

I have thought this for years, but the future I see for MG is something not far off a TVR style of brand, except larger.

[Dan Friel]

It's extremely sad news and I feel for those workers in Birmingham who have no certainity about jobs or pensions. And also those companies that supply MG Rover.

It would be too easy to say tht this was all so predictable, but I'm not sure whether anyone trusted whether the new directors could save the day (whilst making several million for themselves and expecting the british public to stump up the cash!)..

"MG" future as a name is seriously in doubt.. is there a space in the market? And what type of car woudl it produce?? And is it not the case the "MG" as a name is still owned by BMW, but Rover had a deal to use it??

[garcon]

I believe the Rover name is owned by BMW and 'leased' back to MG Rover, but the MG name is owned by MG Rover. Seems to me it's about all they do own. Except for a castle.

[rdjones]

You are correct there Garcon. The more I have read on this tonight it the whole thing is a sorry sorry mess. I just hope someone can save the company. I have been looking through the mg-xpower and mg-rover forums tonight and there is a lot support for the company on them and they are linking up on Monday and heading to Longbridge on Monday to show there support.

[ensign14]

Originally Posted by Dan Friel

It's extremely sad news and I feel for those workers in Birmingham who have no certainity about jobs or pensions. And also those companies that supply MG Rover.

The majority fo the pensions will be safe, because, despite the yawning gap between pension scheme assets and liabilities, the Government set up the Pensions Protection Fund to guarantee 90% of the pensions to be paid. They gave it an initial budget of £400m. The MG Rover scheme will need...erm...£400m. If it is saved as a going concern that will be a lot lower and given continuing trading may not be needed in the short term.