MUNICH - BMW AG used its annual financial results press conference here to rebuild faith in its reputation as an independent carmaker and restore luster to its core brand.
BMW officials admitted the failure of the Rover Group experiment cost them A4.6 billion including the A1 billion purchase price in 1994.
The messy split-up of Rover leaves BMW with three immediate jobs:
To transfer the huge Rover plant in Longbridge, England, to London venture capital group Alchemy Partners - along with the MG and Rover brand names.
Rover Group Chairman Werner Sämann hopes that job will be done by the end of May.
To complete the sale of the Land Rover unit to Ford Motor Co., which will add Land Rover to its Premier Automotive Group of luxury brands. Due diligence and negotiations are to begin this week.
Among the issues to be dealt with is which of BMW's Land Rover product plans Ford will inherit. The next generation Range Rover, designed primarily in Munich, is due in 2002. Ford officials would like to get the BMW eight- and 12- cylinder engines for the super-luxury sport-utility, which is being moved further upmarket.
To scale back its own business in the UK. BMW will immediately begin transferring the partially constructed Mini assembly line from Longbridge to Oxford. BMW will continue making engines at Birmingham for the Rover 25 and 45 as long as Alchemy wishes to sell those models. It will also make the new Rover 75 at Oxford on contract to Alchemy.
BMW's Hams Hall engine plant is due to open later this year and will make four-cylinder engines for BMW vehicles. BMW says it is still committed to making a new Rolls-Royce in England. BMW takes over the Rolls-Royce marque from Volkswagen on January 1, 2003.
Longer term, BMW must regain the momentum it had before it bought Rover. BMW officials sought to start re-establishing that momentum by announcing they will build a new small car within four years.
BMW hopes the car will start a new segment. It will fall between the VW Golf, Ford Focus and Opel/Vauxhall Astra and the BMW 3 series. It will be a premium model.
The car has no name yet, and BMW executives sought to discourage speculation it would be called the 2 series. That name does not fit into BMW nomenclature, since the three main sedan lines - 3, 5 and 7 series - begin with odd numbers.
Sales of BMW's core 3 series rose 17 percent in 1999 to go above 500,000 worldwide for the first time. But sales of the 5 series were down 8 percent to 203,000 units. The 7 series fell 9 percent to 43,000 units.
Sales at BMW were A34.3 billion, up 6.6 percent over the previous year. BMW would have reported earnings of A663 million, but took a one-time extraordinary charge of A3.1 billion for the disposal of Rover and restructuring of the group.
That meant BMW reported a loss of A2.48 billion, said Helmut Panke, BMW chief financial officer.
BMW officials claimed for the first time that Land Rover had been an unprofitable business recently. But they declined to break out any figures to support the statement. Some Ford officials privately expressed skepticism at this claim.
In fact, Land Rover achieved a new record in 1999 with sales of 178,000 units. The small Freelander model accounted for 68,700 units.
Land Rover was the fastest growing brand in BMW Group last year, with sales up 16 percent.
But the real damage was caused by Rover Cars, including Rover, Mini and MG. Deliveries dropped 25 percent to 251,150 units.
Panke blamed UK customers for not buying enough Rovers.
'The very people who were moaning and groaning (about prospective layoffs at Longbridge) are the same people who weren't buying the Rover 25, 45 and 75,' he said.
BMW management board chairman Joachim Milberg said the losses at Rover had given the company no choice but to make the deal with Alchemy.
Milberg sought to refute accusations BMW had not been honest about its intentions with Rover. 'Some media have accused me of consciously deceiving the public and the work force in the period leading up to this decision,' he said.
'I must say that the accusations have hurt me personally. At all times I answered all questions on the future of Rover to the best of my knowledge, clearly and honestly presenting the status applicable at each point in time.
'However, I now realize that some of my statements might in hindsight have been interpreted differently.'