LONDON - Rover's top 300 suppliers have been asked to slash costs by 20 percent within two years as parent company BMW AG struggles to make its United Kingdom subsidiary profitable.
Following the Feb. 5 departure of the Rover Group's main supporter, ousted BMW Chairman Bernd Pischets-reider, its survival depends on drastic cost cuts, a re-evaluation of future manufacturing plans, balancing sales at home and abroad, and some very creative marketing ideas.
'Our target remains to break even in 2000,' said Tom Purves, Rover sales and marketing director.
The call for drastic cuts in parts costs came from BMW purchasing chief Wilhelm Becker and Jim Robinson, his counterpart at Rover, at a Jan. 29 meeting.
The announcement followed Rover's decision last summer to move more than £1 billion (about $1.6 billion) of its annual $5.7 billion parts buy outside the United Kingdom. Rover also asked suppliers for an 8 percent cut last year, according to sources. Rover will forge ahead with its plan to manufacture the new Mini at its big Longbridge, England, plant.
But final project approval for the 200 and 400 replacements - code-named R30 - has not been given yet. In fact the decision has not been made whether the cars will even be given Rover badges.
Another option would be to build just a single vehicle to replace the 200 and 400, as the new Rover 75 will replace the 600 and 800.
Rover has three manufacturing options for the R30 project: to build at Longbridge, to build a greenfield plant elsewhere in the United Kingdom or to build a plant in a non-European Union country.
At the same supervisory board meeting at which Pischetsreider lost his job, BMW directors did approve the $652 million investment to build the new Mini at Longbridge.
Volume should be about 150,000 a year, said Bernard Carey, Rover corporate affairs director. The Mini is scheduled to go into production in late summer 2000.