9BIRMINGHAM, England - BMW AG will pay the cost for moving the Rover 75 production line the 100km from its current base at Cowley, Oxford, to Longbridge, Birmingham, as part of the deal negotiated with the Phoenix consortium.
Consortium member Nick Stephenson, a former Rover product chief, said this was one of the concessions Phoenix squeezed out of BMW, increasingly desperate to rid itself of the ailing British car company.
BMW will also pay the bill for moving the New Mini line in the opposite direction.
Stephenson was reluctant to go into details of the negotiations with BMW as there are still a number of issues to be resolved. These include the possible purchase of powertrain and body stamping businesses from BMW. Phoenix is currently working on an offer for these.
'The cost of moving the 75 line from Cowley to Longbridge is part of the agreement with BMW,' Stephenson said. 'They will pay for it along with the movement of the New Mini line to Cowley.
'My inclination is to make that move sooner rather than later - within the next few months. The move itself is likely to take between four and five months, during which there will be no production. So we are looking to build up stocks as much as we can to see us through this period.'
Revealing the new R75 station wagon for the first time exclusively to Automotive News Europe, Stephenson said this model was now on target for production in 2001. 'The sooner we can move the line to Longbridge, the faster we can get this model into volume production.
'Longbridge's main problem is its appearance. It is an old, rambling site but inside it is a modern and well-run facility. Site capacity could be between 300,000 and 400,000 vehicles a year but our plan is to produce 200,000 vehicles.'
These will comprise the existing Rover models, the 75, 25 and 45, as well as the MGF sports car. The old Mini is now being run out with the last consignment destined for Japan.
'The range we have will see us over the next three or four years - the 75 is an all-new platform and so has an extensive life ahead of it,' said Stephenson. 'The focus will be on the 25 and 45 midsized products and we will be looking at cooperating with other people.'
The 25 hatchback and 45 sedan use Rover platforms, while the 45 hatchback is the subject of a license agreement with Honda. Stephenson has already met with Honda to continue this agreement through 2002, along with similar agreements for transmissions licensed from Honda.
Stephenson added: 'We do see licensing platforms as a way forward. We are realists and know how to develop derivatives quickly. But we are also well aware of the economies of scale that can be achieved through shared platforms. There is a lot of speculation flying around at the moment but we have not talked to anyone about it yet.'
With limited finance in place, Rover clearly has to watch how it spends its money. Can it succeed where BMW, which poured an estimated 3 billion (A5 billion) into Rover, failed?
Stephenson said: 'There are a lot of numbers in play. The figures which BMW spent relate to the whole of Rover group including Land Rover, where there has been massive investment at Solihull. Our responsibility is now solely Rover cars and we believe we have the financing in place to push the business forward.
'We have to look at all the markets in which we sell the cars. Is the strength of the pound an issue? You bet your life it is. We cannot afford to give the cars away and may have to look at withdrawing from some markets.
'I can't say the dealer network will remain untouched. Some have already been making their own arrangements for the future because of all the uncertainty. We now have to remove that uncertainty. Dealers are already getting excited about our plans for the future, particularly extending the availability of the MG brand where we already have specialist dealers. We may need to broaden that particular base.'
Rover will also be reviewing its pricing policy.
'We will not be looking at premium pricing, we will be looking at the right pricing - so there will be some adjustments,' Stephenson said. 'There has been a lot of noise about pricing, particularly in the UK, and we are looking at how we can get a clear and reasonable proposition to offer consumers.'