BMW `impressed’ by alternative bid

The battle for the future of Rover intensified on Tuesday as details emerged of the Project Phoenix bid, led by former Rover chief executive John Towers.

BMW was said to be `impressed’ by the plan last Friday, according to sources close to the German car manufacturer.

The details overshadowed the announcement on Monday by Alchemy Partners, which is in advanced negotiations with BMW, of its plans for a new MG sports car, to be developed with Lotus. Alchemy’s plans are expected to lead to substantially more redundancies at Rover’s Longbridge plant than the rival bid.

Nick Stephenson, the former Rover design director who is working with the Towers consortium, said a formal response from BMW was expected this week. `We are well aware that Alchemy has a considerable head of steam and we don’t want to unjustifiably raise expectations,’ he said. `But we’re confident we have something very different.’

Richard Burden MP, whose constituency includes Longbridge, said: `The vibes coming from BMW are not dismissing it by any means. There are ways of putting out the message that it’s a non-starter, but the indications are that they are treating the Phoenix bid seriously.’

The Towers plan was endorsed last week by trade and industry secretary Stephen Byers on the grounds that it would retain more jobs. Backers are understood to include automotive component maker Mayflower.

It would appear to offer better prospects not just for Longbridge workers but also for engineers at Rover’s Gaydon development centre, who do not figure in Alchemy’s plans. Some Gaydon staff are expected to go with Land Rover to Ford. Of the rest, Stephenson said: `We’re seeking to be a sustainable car business, so you could conclude that we’ll need some engineers.’

Alchemy has exclusive rights to negotiate with BMW until the end of the month and managing partner Jon Moulton this week said he hoped a deal would be finalised by then.

Phoenix from the flames – the proposal

* Rover would continue to produce 250,000 cars annually, including the Rover 25, 45 and MGF.

* Rover 75 production would be switched from Cowley in Oxford to Longbridge and the estate version, shelved by BMW, would be revived. At present BMW plans to keep the Oxford plant to produce the new Mini, which it will retain.

* New models carrying the MG, Triumph and Healey badges would be launched, with development costs shared with another car maker.

* The plan would avoid the legal problems which have been building up around the Rover dealer network, many of whom have accused BMW of breach of trust.

* Between 1,000 and 2,000 job losses are estimated at Longbridge. Alchemy Partners’ plan is expected to produce a much higher level of redundancies, although it has not given a figure for this.