Outlook: Kill or cure for BMW's English patient

EVERY DOG has its day and Rover's finally arrived yesterday. After huge helpings of brinkmanship and the ritual regional aid dance, the Secretary of State for Trade and Industry, Stephen Byers, has agreed to cough up pounds 150m of taxpayer's money for Longbridge.

The deal still has to be signed off by the BMW board in Munich and although it isn't the full pounds 200m they were asking for, it is as much as they are going to get.

Threatening to take the investment to Hungary (much to the surprise and bemusement of the Hungarian government, incidentally) only provided so much leverage for the Germans. Longbridge's record may be lousy, but the idea, anyway, that Rover's customers would be more inclined to buy a car made in eastern Europe was always a high-risk assumption.

For BMW, the Longbridge option is hardly risk free. Even after the Government cash injection it will still require another pounds 1.5bn from BMW to turn the plant into something resembling a modern car facility. This, remember, on top of the pounds 3bn that the Germans have already funnelled into the "English Patient" since 1994 only to be repaid with mounting losses (pounds 650m last year) and a market share which has dwindled so alarmingly that Rover now resembles a niche player but without any niche models.

But think of all those shiny new paint shops and welding robots that BMW will be buying not to mention the vast sums of German money that will be needed to retool suppliers so that they too can play their part in the Rover revival.

Whether this is a wise use of taxpayer's money is a tough call to make. In the scheme of things pounds 150m is peanuts - we will probably soon have spent that much trying to bomb the Serbs into submission.

It is also important to recognise that state aid can sometimes be the seedcorn that is needed to turn an ailing business around. Ford bought an expensive lemon in Jaguar in 1989 but pounds 100m of taxpayers money is helping turn it back into a world beater with cars that people want to buy being made in Coventry and, soon, Halewood.

But Longbridge is in the toughest sector of the market. The replacement for the Rover 200 and 400 will be up against the likes of the Volkswagen Golf, one of the best sellers of all time, and the Ford Focus, which has the world's most profitable car maker behind it.

We will not have too long to wait for the answer as to whether Rover can live with the best. The success, or failure, of the R75 executive car, due on the forecourts this summer, will tell BMW whether it has backed a loser again.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Claims Administrator

£16000 - £18000 per annum: Recruitment Genius: A position has arisen within th...

Ashdown Group: Development Manager - Rickmansworth - £55k +15% bonus

£50000 - £63000 per annum + excellent benefits : Ashdown Group: IT Manager / D...

Recruitment Genius: Security Officer

£16500 per annum: Recruitment Genius: Applicants must hold a valid SIA Door Su...

Ashdown Group: Business Analyst - City, London

£50000 per annum: Ashdown Group: Business Analyst - Financial Services - The C...

Day In a Page

The saffron censorship that governs India: Why national pride and religious sentiment trump freedom of expression

The saffron censorship that governs India

Zareer Masani reveals why national pride and religious sentiment trump freedom of expression
Prince Charles' 'black spider' letters to be published 'within weeks'

Prince Charles' 'black spider' letters to be published 'within weeks'

Supreme Court rules Dominic Grieve's ministerial veto was invalid
Distressed Zayn Malik fans are cutting themselves - how did fandom get so dark?

How did fandom get so dark?

Grief over Zayn Malik's exit from One Direction seemed amusing until stories of mass 'cutting' emerged. Experts tell Gillian Orr the distress is real, and the girls need support
The galaxy collisions that shed light on unseen parallel Universe

The cosmic collisions that have shed light on unseen parallel Universe

Dark matter study gives scientists insight into mystery of space
The Swedes are adding a gender-neutral pronoun to their dictionary

Swedes introduce gender-neutral pronoun

Why, asks Simon Usborne, must English still struggle awkwardly with the likes of 's/he' and 'they'?
Disney's mega money-making formula: 'Human' remakes of cartoon classics are part of a lucrative, long-term creative plan

Disney's mega money-making formula

'Human' remakes of cartoon classics are part of a lucrative, long-term creative plan
Lobster has gone mainstream with supermarket bargains for £10 or less - but is it any good?

Lobster has gone mainstream

Anthea Gerrie, raised on meaty specimens from the waters around Maine, reveals how to cook up an affordable feast
Easter 2015: 14 best decorations

14 best Easter decorations

Get into the Easter spirit with our pick of accessories, ornaments and tableware
Paul Scholes column: Gareth Bale would be a perfect fit at Manchester United and could turn them into serious title contenders next season

Paul Scholes column

Gareth Bale would be a perfect fit at Manchester United and could turn them into serious title contenders next season
Inside the Kansas greenhouses where Monsanto is 'playing God' with the future of the planet

The future of GM

The greenhouses where Monsanto 'plays God' with the future of the planet
Britain's mild winters could be numbered: why global warming is leaving UK chillier

Britain's mild winters could be numbered

Gulf Stream is slowing down faster than ever, scientists say
Government gives £250,000 to Independent appeal

Government gives £250,000 to Independent appeal

Donation brings total raised by Homeless Veterans campaign to at least £1.25m
Oh dear, the most borrowed book at Bank of England library doesn't inspire confidence

The most borrowed book at Bank of England library? Oh dear

The book's fifth edition is used for Edexcel exams
Cowslips vs honeysuckle: The hunt for the UK’s favourite wildflower

Cowslips vs honeysuckle

It's the hunt for UK’s favourite wildflower
Child abuse scandal: Did a botched blackmail attempt by South African intelligence help Cyril Smith escape justice?

Did a botched blackmail attempt help Cyril Smith escape justice?

A fresh twist reveals the Liberal MP was targeted by the notorious South African intelligence agency Boss