Britain's last independent volume car-maker just can't seem to shake off controversy or slumping sales - in March, the start of the 2004 registration, sales slid 14%. The four directors of MG Rover's parent, Phoenix Venture Holdings - John Towers, Peter Beale, Nick Stephenson and John Edwards - bought Rover from BMW for £10 in 2000. The group has since been restructured - more to the benefit of the directors than the company, say critics.
The 'Phoenix Four' have faced questions on PVH's finances, centring on a £13 million payment into a pension fund, the issue of a £10 million loan note, and MG Rover being charged interest on the £427 million originally loaned interest-free to PVH by BMW. Plans to shift some operations to Poland also incurred union wrath. A Trade & Industry Committee summoned Towers and Beale in March, accusing them of financial sleight of hand.
The directors insisted that no assets had been shifted from the car-making division or ringfenced to benefit only them. They rebutted accusations of poor corporate governance, although Towers admitted later that they'd consider appointing non-execs.
Beale told the TIC: 'I'm very, very proud of what we have achieved in this company and the way it has been structured.' Previously, CEO Kevin Howe told reporters: 'MG Rover hasn't been asset-stripped, it is a ridiculous suggestion.' He claimed that far from enriching the Phoenix Four to the detriment of the company, their acquisition of MG Rover had produced huge benefits to the economy.
THE STRAIGHT TALK
Phoenix took a big risk when it bought Rover, which faced closure. Losses are being stemmed, but PVH's prediction that MG Rover would be out of the red by 2002 did not come true. The directors have frittered away the early support of the unions and the community, and the negative publicity could damage the Rover brand irreparably.
Rover's future rests on its ability to strike joint ventures to develop new models to replace its ageing line-up, including the 45 series. A replacement was originally due at the end of 2003, but plans collapsed when a joint venture with China Brilliance fell through. Howe told reporters in February: 'I don't have a plan that suddenly leaps into profit next year. (But) breakeven is not symbolic any more. We have got to stop losing money.' Prof Garel Rhys of Cardiff Business School says 2005 'will tell us whether the company has a long-term future, a medium-term future or no future at all'.