Troubled carmaker MG Rover has driven into the red again with a £77m loss for 2003, it was announced today.
The Midlands-based company's losses compared with a £95m deficit in 2002. Rover's parent company, Phoenix Venture Holdings, said losses had been reduced for a fourth successive year, but that worldwide vehicle sales had dipped by 2.4% compared with 2002.
And Phoenix warned that lower sales in 2004 together with the need to continue dealer recruitment in Europe would "make it impossible for the group to continue to reduce its losses".
Phoenix chairman John Towers, who was among a group of Midlands businessmen who took over the company from BMW in 2000, has faced criticism over the establishment of a pensions trust fund for directors and senior staff.
Today, Phoenix said the contribution to the trust fund, which was £12.95m in 2002, was £3.58m in 2003. It added that in 2002 the highest-paid director received £3.24m and that in 2003 the top pay was £1.55m. But the salary part of the overall package rose from £288,089 in 2002 to £817,486 in 2003. It was also announced that Phoenix directors' salaries, including benefits, increased by 1.6% to a total of £2.2m in 2003.
Phoenix chief executive Kevin Howe said: "In an increasingly challenging environment for the automotive industry, we have reduced the group's losses for the fourth consecutive year to a level that is now less than 10% of that in 1999, the last full year before we acquired the business from BMW.
"Our focus is now firmly on the future. We continue to invest in the development of the MG and Rover brands and to review our cost base as we work towards the planned collaboration with Shanghai Automotive Industry Corporation announced in June 2004."
Phoenix said it hoped the joint venture agreement could be signed "early in 2005". Its report to shareholders said: "Once the SAIC agreement has been approved we can expect renewed confidence in the future of the Group and the continuation of MG Rover vehicle production both at Longbridge [in Birmingham] and elsewhere in the world."
There have been reports that another Rover collaboration - with Indian car-maker Tata - was under strain. Today Phoenix admitted that the sales of the CityRover, which Tata is making, had "not yet reached planned levels because of a variety of issues including a delayed programme". Phoenix said MG Rover's latest models had been well received, "but this has not translated into stronger sales because of changes taking place in the UK dealer network".
"The group is stepping up its dealer recruitment activities, both in the UK and abroad: in 2004 some 60 new continental dealers have joined MG Rover and the target is for a further 100 plus for 2005.
The running of MG Rover was looked at in an inquiry into the motor industry earlier this year by the House of Commons trade and industry committee. The committee's chairman, Martin O'Neill, accused Mr Towers and Phoenix vice chairman Peter Beale of "financial sleight of hand".
But the committee's report earlier this autumn cleared MG Rover bosses of allegations of financial mismanagement and asset-stripping. It also rejected claims that Phoenix was secretly planning to close the Longbridge factory. But MPs warned that Phoenix had to be more open about its business dealings.
In the report to shareholders today, Mr Towers said: "The committee recognised the challenges we face and found our approach consistent with any other vehicle manufacturer."
