LONDON - While BMW and Alchemy Partners decide the future of Rover, MG and the Longbridge factory, dealers around the world are trying to figure out what is happening to the value of their franchises.
Dealers borrowed money and invested millions to upgrade their premises in accordance with BMW's long-term, multi-brand strategy. Chairman Joachim Milberg defiantly reaffirmed that strategy as recently as February 28 in a Geneva auto show speech. Now the dealers complain they have heard little or nothing from the company about what the future holds following the sudden sell-off to a venture capital company. A BMW spokesman said the company was meeting with UK dealers last Friday (March 24) and would meet very soon in Germany.
Even as BMW and Alchemy were discussing the break-up of Rover, dealers in Australia, Japan and the Middle East were launching the Rover 75, the car that was to have led the Rover renaissance.
Brandon Gough, non-executive chairman of MG Car Company, could not say what MG's plans are for Rover's future as a worldwide presence: 'We will look at that in more detail, and see if we can sell them profitably in (global) markets. I'd like to step up the level of profitable sales.'
Rover Cars are sold in about 1,800 dealerships worldwide, and Land Rovers in about 1,700. Many of those dealerships overlap. Counting combined Land Rover/Rover stores and separate outlets of the two, there are about 2,300 Rover Group dealers worldwide. Only Land Rovers are sold in the United States and Canada. The networks are separate in countries such as Australia and South Africa.
Rover dealers have spent A386.5 million upgrading their dealerships in the past three years in the UK alone, preparing their premises for the 75, 45 and 25 models. They were expecting an all-new small car within a couple of years. BMW had spent another A1.6 million on dealer training in the UK.
'Dealers have been extremely loyal to BMW and Rover and have been severely misled by BMW who have really badly mismanaged the Rover situation throughout,' said John Mantle, head of the Rover dealer council in the UK.
Said the owner of one BMW/Rover/Land Rover dealership outside Stuttgart: 'We have even had service cancellations. People said they are putting off getting their cars fixed. No one even wants to take a test drive.'
Under BMW orders, the owner closed his Rover store last year and spent about A500,000 building a new showroom for all the brands. He wants to keep the three brands together even if they are not owned by the same company.
Alchemy Group plans to be a niche manufacturer making sports cars, cabriolets and sports sedans. It has no plans to replace the 25 and 45, which were recently facelifted.
'We would not replace them with anything comparable,' said Gough. 'They are volume cars. We've stated our objective to be a significantly lower volume manufacturer.'
Such a strategy would leave the Rover 75 with no legitimate stablemates.
Suppliers also face an uncertain future. 'There is a limit to how long firms can face the exposure of idle workers at a time when margins are also so slim,' said Neil Marshall, director general of the Confederation of British Metalforming. 'We believe the worst is yet to come.'
About 90 Rover suppliers met on March 22 in West Bromwich, England.
'Our worried members have contacted Rover in the UK but nobody in the purchasing department takes any sensible decisions,' said Marshall. 'It is the same with BMW. We want a clear picture no matter how black it is.'
Nobody has answered questions such as whether Ford will continue to buy the T5 engine when it takes over Land Rover, or if it will use its own engines..
Rover reportedly has a backlog of about 33,000 unsold Rover 75s.
Diana T. Kurylko and Reuters News Service contributed