BMW still not convinced Phoenix has the money

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The Independent Online

The consortium seeking to take over BMW's struggling Rover car business has yet to provide assurances that it can provide sufficient financial backing, BMW said today.

"They haven't yet been able to provide a letter of comfort," BMW spokesman Juerg Dinner said.

Talks between Phoenix, a consortium led by Rover's former chief executive John Towers, and BMW have reached a critical point and are continuing, the spokesman added.

The statement came the same day that new figures suggested there has been a backlash against BMW which has driven sales of the British cars up and their German rivals down.

The new cars sales chart for April gives a welcome boost to the crisis-hit Rover.

The loss-making firm sold 22,665 cars to reach number two on the chart, beaten only by Ford.

At the same time, BMW's market share is believed to have fallen from just over 3 per cent for the first three months of the year, to around 2 per cent last month.

Rover's market share doubled from 6 per cent in the first quarter of the year to more than 13 per cent in April.

A huge campaign advertising discounts of new Rover models may explain some of the upsurge in sales, although company officials hope the increase reflects a wave of loyalty from car buyers in the wake of the threat to close the firm.

Negotiations between BMW and the Phoenix consortium bidding to buy Rover were continuing and likely to go on over the weekend.

BMW said there were "hundreds of bits and pieces" to be discussed between the two sides.

John Towers, the former Rover executive who heads Phoenix, was expected to meet Trade and Industry Secretary Stephen Byers in London today to update the minister on the progress of his negotiations.

BMW has warned it will have no alternative other than to close Rover if a deal cannot be achieved by the end of the month.

Phoenix, which is backed by unions, is attempting to raise finance estimated at £200 million as well as seeking around £500 million from BMW to fund its plans to maintain mass car production at the Longbridge plant in Birmingham.