LONDON- Rover Group is drastically cutting the number of passenger-car sales outlets it operates in the UK because of a decline in market share.
But Rover will expand its dealer network in other parts of Europe. Rover is preparing for expected sales of new models over the next two to three years.
Rover's UK market share fell from 12.3 percent in 1995 to 10 percent in 1997.
Currently, Rover has about 400 locations in the UK, down from 650 in 1995. But the company has identified only 310-350 essential sites and it wants to reach that level by the end of the year.
Jim Macdonald, managing director of Rover Cars in the UK, said he did not know how many new sites would be added throughout the rest of Europe. 'But we do want to get our premises ready for the arrival of new product,' he said.
The new vehicles include a replacement for the Rover 600/800 sedan and possibly a new, top-level sedan.
Meanwhile, Rover dealers in the UK who will keep their franchises are spending heavily to improve their stores.
Land Rover dealers are investing about £120 million ($195 million) to enlarge their showrooms and make other renovations as they move toward the Land Rover Centre approach that is spreading from the US market.
About 75 Rover car dealers are spending another £100 million.
'At the end of the day, the customer has to be as satisfied with the dealer as with the product,' Macdonald said.
The money is being spent on renovating and enlarging showrooms and on redesigning Land Rover dealerships.
The new Land Rover premises feature test tracks and family areas.
About 80 of Land Rover's 123 UK dealerships have agreed to make the changes.
Land Rover also wants to add 12 showrooms by the end of the year. Land Rover believes that its UK sales will rise sharply now that the new Freelander sport-utility is on sale.
Macdonald says he wants dealers' average pretax profit margins to range from 3.0 to 3.5 percent, and he wants them to have a 25 percent return on capital. He would not give current numbers.