Major speaks up for Rover over US tax threat

JOHN MAJOR last night urged President Clinton to drop plans for a tenfold tax increase on sales of Range Rovers in the US.

The threatened increase, which would raise the price of the best-selling Range Rover and Land-Rover Discovery by dollars 7,000 (pounds 4,844), would have a disastrous impact, George Simpson, the Rover chairman, warned.

'If Mr Major is unsuccessful we will have a serious problem in the US,' he added.

Rover sold 4,500 Range Rovers in the US last year. The Clinton administration is under pressure to raise the tax on imported four-wheel-drive vehicles from 2.5 to 25 per cent to protect US car companies from foreign competition.

The threatened tax increase is among the trade issues that the Prime Minister was expected to raise with Mr Clinton during talks last night.

Mr Simpson, also deputy chief executive of BAe, meanwhile cast doubt on whether the car group would move into the black this year by achieving its target of breaking even on production of 400,000 vehicles.

He also warned about the faltering European car market, which now accounts for 45 per cent of all Rover sales. Despite the competitive edge Rover has gained through devaluation, it expects little advance in UK car sales and a 10 per cent drop across Europe.

'I am worried like hell about Europe,' said Mr Simpson.