Rover quells payment fears after purchase order error

Rover calmed fears that it was planning to extend its payment terms to suppliers to 90 days when it admitted this week that it had sent out purchase orders in error quoting BMW terms of business. Rover was sold by BMW this year to a consortium led by former Rover boss John Towers.

As production of the Mini came to an end at Rover’s Longbridge plant on Wednesday after 40 years, and production of the new Rover 75 began, smaller suppliers voiced alarm that the change in payment terms could drive them into bankruptcy.

But MG Rover deputy chairman Nick Stephenson said there were no such plans. ‘We sent out some automated orders and they had switched to some of BMW’s terms in error. One or two suppliers received them and we’ve made clear that it is a mistake.’

Stephenson emphasised that suppliers would play a key role in collaboration to develop new Rover models by supplying, for example, major assemblies such as complete interiors. ‘Large global suppliers, such as Delphi and Visteon have subsets of technology to produce wholesubassemblies of cars. Collaboration could be with organisations like that.’

But MG Rover chief executive Kevin Howe refused to comment on reports that the company was talking to Proton, the Malaysian car maker. He said Rover was planning to make formal approaches to ‘selected partners’ early next year. ‘Meanwhile, someone has approached us and we are talking to them,’ Stephenson added. Howe also categorically denied that there were any plans to discuss a partner taking a financial stake in the company.

Since the Phoenix consortium bought Rover, over £100 million has been invested in Longbridge, moving the Rover 75 production line from Oxford, introducing the 75 estate and developing MG saloon derivatives. Howe promised an eight model line up for Rover within a year. Rover 75 production is targeted to reach 60,000 a year within six months though initial production will focus on the higher specification models to clear a backlog in orders.