LONDON - While the Phoenix consortium struggles to create a future product strategy for Rover, it also faces the difficult task of resolving an international car distribution puzzle.
Phoenix executives must decide in how many countries they will continue to sell Rover cars. During the past three years, BMW AG gradually combined its distribution network worldwide to achieve cost savings. BMWs, Rovers, Land Rovers, MGs and Minis were sold by BMW national sales companies or importers. Now that BMW is selling Rover to Phoenix, the whole pro-cess will be reversed.
Once the sale of Rover to Phoenix is complete, BMW will no longer be handling the various Rover brands. The process is complicated by the fact BMW decided to sell Rover just as it was in the middle of a global product offensive.
For example, Rover has already decided to halt exports of the Rover 75 to Australia, at least until Phoenix decides what its plan is. The car was introduced this spring at the Sydney motor show and was to start sales in July.
The 75 was originally planned to be sold in 120 countries worldwide - an increase of about 50 over the previous reach of Rover Cars.
With its plan to make about 200,000 cars a year, Phoenix must decide whether it has the financial muscle to sell around the globe, especially without the strength of the most global Rover brand - Land Rover.
The global distribution puzzle is just one of many the Phoenix partners must solve. And dealers in the UK and elsewhere hope Phoenix will come up with some answers -and soon.
UK dealers have seen Rover sales surge on the back of attractive incentives offered by BMW. But those incentives run out at the end of May and dealers want to know what they might be replaced with.
Late last week, Phoenix had not yet named the executives who will have to make these decisions. The consortium is headed by John Towers, former Rover chief executive. Other directors include Nick Stephenson, former Rover director of design and engineering; Terry Whitmore, managing director of UK body panel maker Mayflower; David Bowes, managing director of the sports car company Lola Cars; and John Edwards and Peter Beale, owner and finance director of a Stratford, UK Rover dealership.
They will have ]]810 million credit in repayable credits from BMW to work with, plus funding from an American bank, subject to due diligence. They will need the money to insure a future product strategy.
Phoenix officials have said they are interested in finding another car company to be a partner in developing a successor to the 25 and 45, which were due for replacement in 2002. BMW is keeping the plans for the replacement car, known as R30. Honda and Chrysler have been mentioned as suitable partners.
Chris Rogers, head of public affairs for Honda Motor Europe Ltd., said it had had no discussions with Phoenix.
'We have an open door policy to talk about mutual business benefits with any manufacturer,' he said. 'But we have challenges of our own to solve in Europe and Rover is not part of those challenges.'
Rover 75 production resumed last week in Oxford on five-day shifts, making about 1,000 cars a week, according to Rover spokesman Gordon Poynter. Production will continue through the end of June, when the factory shuts down. At that point, the 75 line will be disassembled and moved up the M40 motorway to Longbridge, where it will be rebuilt.
Phoenix hopes to restart production of the 75 sedan in September. In addition, a Rover 75 station wagon will also go into production at that time.
When BMW's deal with London-based venture capital firm Alchemy Partners fell apart in late April, BMW had to make a few concessions to get rid of the Rover unit that had cost it so many millions since 1994. Giving Phoenix the 75 production line was one of those.
Phoenix also got several brand names Alchemy would not have received: Austin, Austin Healey, Morris and Wolseley.
But BMW would not part with Triumph or Riley, the brand cherished by former BMW Chairman Bernd Pischetsrieder. Phoenix will take over production of the current Mini until production ends. But BMW will retain rights to the new Mini. It will begin producing the new Mini next year and sell it through its own dealer network.
The Rover name itself will be licensed by BMW to Phoenix as long as Phoenix continues to produce the 25, 45 and 75. Should it want to produce Rovers with other names, it will have to reapply to BMW, according to Poynter.
BMW will also hold onto its Longbridge powertrain plant and continue to supply engines to Phoenix. BMW's stamping plant in Swindon will also continue supplying Rover with parts.
Some UK dealers, concerned by uncertainty surrounding the sale of Rover by BMW AG, say they have been approached to take on different franchises or sell their properties to dealer groups representing other franchises.
Rover dealers in the UK are anxiously awaiting an electronic, interactive cable teleconference scheduled this week with Phoenix. They want to know what Phoenix plans for the future of Rover.
'If Phoenix has success, it will be on a smaller scale,' said Alan Pulham, director of the National Franchise Dealers' Association in the UK. 'They (dealers) are all considering what they should do next. It's not an easy decision.'
European Rover dealers are also concerned about Phoenix's plans. But there has been little information so far. Some dealers say they have heard that Phoenix plans to expand the MG brand, not just in terms of product offerings, but by adding dealer outlets.
MG is now sold through about one-third of all UK Rover dealerships.
According to one dealer source, Phoenix may be considering making the MG brand available to all the 300 or so UK Rover dealers. Such a plan would not be met with universal enthusiasm because it could dilute the exclusivity of MG, he said. Some Rover dealers made all their profits off MG the last couple of years.
Alchemy's plan was to rebadge Rover cars as MGs, giving the lineup a sportier image. Phoenix has not said whether it might adopt some of Alchemy's ideas.
The Rover 75 concept car shown at the Geneva auto show this spring featured some MG cues and could provide something for Phoenix to build on.