BMW defends Rover sell-off

By THIS IS MONEY
Updated: 18:00 EST, 27 March 2000

German car giant BMW today launched a strong defence of its shock decision to sell Rover as it revealed the huge scale of losses left it with 'no choice' but to break up the group.

Losses rose by over £152 million last year to more than £730m - an increase of 26%.

BMW chairman professor Joachim Milberg said the figures highlighted the 'bitter reality' facing the German owners.

He also fiercely denied that he misled the Government over the future of Rover, maintaining that he had given several warnings that the high value of the pound was causing problems.

Prof Milberg made his comments at the BMW headquarters in Munich as MPs from the Commons Trade and Industry Select Committee visited the huge Longbridge plant in Birmingham as part of an inquiry into the likely jobs impact of the Rover sale.

The German car group revealed in its annual figures that it had made accounting provisions for £1.9 billion in costs to cover restructuring at Rover during the year.

The Rover burden offset improved performance at the BMW car and motorcycle business and drove the German group into a net loss of £1.52 billion for 1999.

Sales of Rover cars were down by 7%, and Prof Milberg said British car buyers could help secure jobs which will remain despite the break-up of the group.

He told a press conference there was 'no alternative' to the decision to break up Rover, including the sale of Longbridge to venture capitalists Alchemy Partners.

He admitted that BMW had not been able to penetrate the lower mid-range segment of the car market with Rover.