Outlook: BMW/Longbridge

Outlook: BMW/Longbridge

THE FACES may have changed on the BMW board but the dogged determination to spend astronomic amounts of shareholders' money on Rover has not. Out go Herrs Pischetsrieder, Reitzle and Hasselkus. In come the two Professors, Milberg and Samman, with an even more ambitious investment plan to help the English Patient back to recovery.

By the time Bernd Pischetsrieder was shown the door he had burnt his way through pounds 3bn. All he had to show at Rover after five years at the wheel were losses of pounds 600m and a percentage share of the UK market that could be counted on the fingers of one hand.

The new management has not learnt from the fate of its predecessors and the model programme rolled out by Joachim Milberg yesterday is even more ambitious and expensive. Over the next five years, BMW will invest pounds 3.3bn on Rover. Toss in another pounds 600m for the new factory it needs to manufacture Rolls-Royces, and the bill will surpass the GDP of a medium-sized developing economy.

Even pounds 3bn does not go far when a revamp for the Mini costs pounds 700m alone. The Germans have even grander production plans to go with this investment. Professor Samman dreams of Rover making one million cars a year and lifting productivity at an annual rate of 15-20 per cent.

There is only one small caveat and that is known as the customer. It is a long time since Rover was making that volume of cars, let alone selling them. Even the more realistic production forecast of 750,000 cars a year requires some heroic assumptions about how well the new R75 will go down. Even if it beats all expectations, Rover is still hamstrung by a strong pound. BMW is thus left clinging to the receding hope that Britain will enter the euro early or that the great car-buying public will change the habit of a lifetime. Rover has proved time and again to be a triumph of hope over experience. Stephen Byers says the pounds 152m bung BMW is getting from the taxpayer to save Longbridge is all repayable if things go pear- shaped. Should it come to that, repaying the British Government would be the least of Professor Milberg's worries.

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