Rover set to cut prices after sales slump by half

Rover is set to announce a big cut in prices across its range of cars following a slump in sales last month, which was caused by a fall in demand from fleet buyers.

Rover is set to announce a big cut in prices across its range of cars following a slump in sales last month, which was caused by a fall in demand from fleet buyers.

Sales of Rover and MG cars fell by almost half in September to 13,000, leaving it with a market share of just 3.7 per cent - its lowest ever. The fall in sales follows reports that Rover has told its component suppliers that it is extending its payment terms from 60 to 90 days to conserve cash.

A spokesman for the Phoenix consortium, which bought Rover from BMW for £10 earlier this year, blamed the collapse in sales on a number of one-off factors.

These include the switching of production of the Rover 75 model from Oxford to Longbridge; lower fleet sales of the 45 model; and the exceptionally high sales of the Rover 200 and 400 series in September last year as their prices were slashed in order to clear stocks to make way for the new 25 and 45 models.

Rover has not yet followed the lead of Ford and luxury car manufacturers such as Jaguar, BMW and Mercedes by cutting list prices. But a spokesman said: "Watch this space."

John Towers, the former Rover chief executive who led the Phoenix rescue, said initially that production at Longbridge would be about 200,000 cars a year. But output of the Rover 75 is only expected to reach 3,000 in the last three months of the year, compared with 1,000 a week at Cowley, while production of the 25 and 45 is also down sharply compared with output levels under BMW's ownership.

Rover said that car purchases by private motorists had held up well, with sales of the MG double last September's level and Mini sales up three-fold.

Total UK car sales also fell last month, despite the introduction of the new letter identifier and price reductions by a number of manufacturers. Sales of V-registered cars fell by 9 per cent to 353,494. In the first nine months of the year sales were down by 1.2 per cent at just less than 1.8 million cars.

The Society of Motor Manufacturers and Traders (SMMT), which publishes the figures, blamed last month's slowdown on problems some experienced by some manufacturers in transporting vehicles to dealerships, and on uncertainties about price cuts.

The biggest fall in sales came in the fleet sector, which traditionally accounts for 60 per cent of new car registrations. Fleet registrations fell by 14 per cent, while sales to "business" customers were down 21 per cent. An SMMT spokesman suggested that the fall in new car prices and the knock-on effect of this on residual prices of fleet cars might have been a contributory factor.