BMW rules out early Rover's return to US

RUSSELL HOTTEN

BMW, the German car maker, has ruled out a relaunch of Rover cars into the lucrative American market until at least the year 2000.

Bernd Pischetsrieder, chairman of BMW - which acquired Rover in the spring of 1994 - said the British manufacturer could not afford another failure in America, and the company would have to develop new products before its return to the world's biggest car market.

But he also said the acquisition of Rover meant BMW would avoid the fate of its German rival Daimler-Benz, which said last week that the strong mark would cause total losses and restructuring costs of up to DM3bn (pounds 1.4bn).

Daimler-Benz said it would consider transferring production out of Germany, boosting purchases abroad and reappraising its portfolio of shareholdings. The company is expected to spend more than DM1bn moving some production abroad.

Mr Pischetsrieder said in an interview that the internationalisation of production and the weakness of sterling had helped to minimise exchange rate risks. A lower sterling meant lower revenues, but it also meant lower production costs at Rover.

Mr Pischetsreider agreed that sterling and dollar weakness made Germany a less attractive manufacturing site, but hinted that America was likely to benefit from any shift in production overseas. BMW imports only a quarter as much from the US as it sells there, and still aims to achieve "balanced trade".

Rover pulled out of the US car market in the 1980s after the failure of its Sterling model, but sales of Land Rover recreational vehicles are growing.

Mr Pischetsreider said: "Rover would not launch cars into the States before the year 2000 because the products and concepts have to be absolutely right and and Rover cannot risk another failure.''

The purchase of Rover had gone smoothly, but he was "not yet sufficiently satisfied". Although BMW and Rover models would never be sold through the same dealerships, the two companies' distributors could work more closely, he said.