Why is MG Rover loss making?
The car industry is highly competitive. MG Rover is up against global car manufacturers such as Ford that use econo-mies of scale to keep development and production costs down. Figures from the Society of Motor Manufacturers and Traders show that last year MG Rover sold just under 96,000 cars in the UK, compared with 379,000 by Ford. But losses are being stemmed. In 2000, the same year Mr Towers took over, PVH lost £378m. In 2002, losses fell to £95m. MG Rover says results for 2003 will be a further improvement, but concedes it is still some way off breaking even. Professor Garel Rhys, Cardiff Business School’s motoring expert, forecasts losses of £80m for 2003. At the time Mr Towers bought MG Rover, it was expected to break even by 2002. One of the reasons it has not done so is the collapse of the joint venture with the Chinese conglomerate China Brilliance in 2002. Had it come off, the deal would have given MG Rover access to overseas markets and helped in launching new cars. In 2002
