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Transportation equipment industry

BMW Considers Selling Rover Amidst Mounting Financial Strains

Strategic Insights

— 1 min read

BMW A. G. announced today that its supervisory board will consider selling most of Rover, the struggling British carmaker it acquired six years ago. Despite initial commitments to support Rover, the German carmaker has faced significant losses, with Rover losing 1.9 billion marks (approximately $1 billion) in 1998 and even higher losses expected in 1999. The company's plans to retrofit its main factory in Longbridge, UK, are also facing regulatory hurdles, raising concerns about the future of the 9,000-strong workforce and the tens of thousands of jobs that indirectly rely on the plant.

Key Takeaways:

  • BMW's supervisory board will consider selling most of Rover, a decision that marks a significant reversal of the company's previous commitment to support the British carmaker.
  • Rover has lost 1.9 billion marks (approximately $1 billion) in 1998 and is expected to have even higher losses in 1999.
  • The European Commission has raised objections to the planned subsidies for the retrofitting of Rover's main factory in Longbridge, UK, citing unjustified and illegal government support.
  • BMW has faced significant financial strains due to its acquisition of Rover, including exchange rate fluctuations and lower profits in the mass-market segments.
  • The company's decision to sell Rover marks a significant shift in its strategy, which was initially aimed at expanding its business beyond luxury cars through the ownership of Rover.
  • The sale of Rover is expected to have significant implications for the 9,000-strong workforce and the tens of thousands of jobs that indirectly rely on the plant.

Statistics:

  • Rover lost 1.9 billion marks (approximately $1 billion) in 1998.
  • The company is expected to have even higher losses in 1999.
  • The Longbridge plant in the UK employs 9,000 workers.
  • Tens of thousands of supply industry jobs indirectly rely on the Longbridge plant.
  • BMW's share price rose 0.76 euros to 27.3 euros (approximately $26.20) on the Frankfurt exchange.

Sources:

  • BMW A. G.
  • Suddeutsche newspaper
  • European Commission
  • The New York Times

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