MG Rover racing back to profits

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The Independent Online

MG Rover, the British car manufacturer, looks set to pull off a remarkable turnaround, with a forecast that it will break even this year.

The reversal of fortune comes just two years after the troubled company was acquired from BMW.

In the next few weeks, Rover will announce results for 2001 that are likely to show a loss of £200m, half the £400m loss made the previous year. This year, however, losses are set to be stemmed altogether, before the company breaks into the black next year.

Kevin Howe, MG Rover's chief executive, said: "In the increasingly difficult times we operate in, our focus still remains on our business plan."

In 1999, the last year of BMW's ownership, Rover lost a staggering £800m, as its German masters pursued a doomed volume manufacturing strategy. It is estimated that BMW invested £2bn in Rover, all to no avail.

A British management team took Rover off BMW's hands for a nominal £10 in 2000. They received a £500m interest-free "loan" from the German company, repayable in 2049.

Rebranded as MG Rover, the company has reduced its annual output of cars and brought together all operations at one site, at Cowley.

Last month, it signed an important joint venture agreement with China Brilliance, the Shanghai-based car maker. The move will see a pooling of resources and access to important new markets for MG Rover in Asia. It also gives the British company access to the vehicles already under development at Brilliance, including an MPV, or "people carrier".

The UK car-making industry is forecast to rebound from a seven-year low and grow by 20 per cent over the next four years, led by BMW, Japanese car companies and Ford. Production of 1.49 million cars last year was the lowest since 1994.

In the first two months of this year, UK production rose 19 per cent above the period in 2001, to 302,000 cars, according to the Society of Motor Manufacturers and Traders.