View from City Road: Jilted bride prepares for future without Rover

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The Independent Online
Tokyo, 21 February: BMW man emerges smiling from Honda building, says talks amicable and discussions on Rover to continue for six months. Honda man emerges fuming and says all links with Rover severed. Translator fired? Not exactly.

A more likely interpretation is that Honda has expressed its anger by terminating the cross-shareholder arrangement, but it recognises precipitate action could hurt it as badly as Rover. So phased divorce proceedings are in train.

It was inconceivable that the Japanese would happily do nothing in the face of their shoddy treatment by Rover's former owners, British Aerospace. But it was equally inconceivable that a company as commercially minded as Honda would forsake the financial gain it reaps from the partnership - currently some pounds 400m a year - by pulling the rug from under Rover.

However, the 20 per cent cross- shareholding the two companies enjoyed until yesterday was undoubtedly the cement that held the partnership together. Without that, it is difficult to envisage a future.

How quickly the relationship will unravel is harder to assess. Despite the bloodcurdling noises from Tokyo yesterday, both Rover and Honda are talking of going ahead with their joint medium- sized saloon, even though the car is not due until next year. Beyond that, they had no plans anyway.

The prospect of Honda withdrawing from Rover in a phased manner to build a more independent operation in Europe dictates an end to technology transfer. Honda will also need its own body panel plant in the UK.

But there is no reason Honda should choke off the supply of engines to Rover if it is profitable business. If anything, it is more likely that BMW will decide it can live without Japanese horsepower.

As for the impact on Japanese investment in Britain, the episode tells us little. Rover's ownership has changed, but the factors that attract the Japanese to the UK - language, culture, low labour costs and golf - remain constant.

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