Phoenix may dump Saatchi

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The Independent Online

M&C SAATCHI, the advertising agency founded by Lord Saatchi, is in danger of losing the £40m account to advertise Rover as the Phoenix consortium, which bought the ailing car maker for £10 last week, attempts to cut costs.

John Edwards, the Rover car dealer who is part of the Phoenix consortium led by former Rover boss John Towers, is to review the group's marketing strategies in the wake of the purchase from BMW.

His team colleague, former Lola cars boss, Nick Stephenson, said that marketing was a "key element overhead that we want to reduce".

The Phoenix team, which took control of Rover on Monday, has said it needs to cut at least £300m a year from its overheads, but wants to do this without making more than 1,000 of the 8,500 workers at Longbridge redundant.

Mr Stephenson told the Independent on Sunday that the Phoenix consortium is currently reviewing all the business areas within Rover and trying to strengthen the management team so that the car maker can be brought back to profitability.

In the next few days it expects to promote some of the Rover management to senior positions and recruit two other executives from the motor industry to join the team.

Phoenix will also set about trying to find partners to help it with developing new models and finding ways to make the existing range, the Rovers 75, 45, and 25 and the old Mini, more cheaply. Honda has rejected overtures to support Phoenix, but it is believed that other car makers, such as Chrysler and Renault, may be more interested. However, one of the ways that Rover may immediately cut costs is in the marketing budget.

BMW spent a great deal of time and money promoting the Rover brand. One of its largest areas of expenditure is in advertising, where it changed its agency last year from Grey to M&C Saatchi.

The contract with Saatchi is estimated to be worth £40m a year and is one of the most lucrative in the UK advertising sector.

Saatchi recently masterminded a massive advertising campaign for BMW aimed at getting rid of a stockpile of at least 50,000 unsold Rovers.

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