Rover back on track after sale

Rover Cars, the loss-making carmaker, has sharply reduced its negative net cash flow following its disposal by BMW of Germany last month.

The company, acquired by the Phoenix Consortium of west Midlands businessmen, is projecting a negative cash flow of L2m for the 12-week period between completion of the deal to the end of July. BMW, by comparison, claimed Rover was losing L2m a day before it pulled out.

According to officials involved in the Phoenix group, Rover’s underlying financial health has improved in the absence of heavy depreciation charges and interest costs incurred by BMW. “With increased sales in the UK since May and a commitment to cut costs, we could get a positive cashflow next year,” said a spokesman.

The financial projection was discussed at the first meeting of Rover’s new management team last Tuesday, chaired by John Towers, former Rover chief executive and head of the consortium.

Managers attending the meeting were told that a long-term business plan would be finalised in the next three to five weeks, including new model programmes and marketing strategies.

The business plan will be used to support a multi-million pound debt auction, due to be completed by the end of the summer to raise additional finance for the carmaker. It is understood that officials at BMW’s financial services arm has expressed interest in taking part in the refinancing, even though the German group invested and lost an estimated E4bn in Rover during its six-year ownership.

Under the business plan, Rover is reassessing production schedules and overseas marketing as well as drawing up new models. As previously reported, those plans include an estate version of Rover’s flagship 75 model and a future coupe model.

The new management team, led by Kevin Howe, the former managing director of Rover’s Longbridge plant, has revised existing production schedules to switch more than 1,000 cars a week from left-hand drive output to right-hand drive to meet rising British demand. It has also decided to scale back Rover’s presence in some overseas markets – including MG and Mini. Reuters