Brit MPs to Sherlock the Failed MG Rover Rescue Mission

January 26, 2006: London - A British parliamentary committee has launched an official inquiry into the government's role in the ultimately unsuccessful battle to save MG Rover, the last British-owned volume carmaker that collapsed last year with the loss of 6,000 jobs. As chronicled here on The Auto Channel throughout 2000 and 2001*, MG Rover was sold by BMW in 2000 for about $15 to a group of businessmen dubbed the Phoenix Four (John Towers and associates). The carmaker then spent the next few years trying to excite the public about new models and sought various international alliances to provide the money to build them.

Efforts to sell the company as a going concern foundered, and the assets eventually went to another Chinese carmaker, Nanjing Automobile. Many of MG Rover's assets have been transferred to China, though the company has said it plans to resume production at Longbridge on a limited scale. When long-running discussions with the Shanghai Automotive Industry Corporation collapsed in April last year - despite offers of a government loan - MG Rover was forced to call it quits.

The committee has ruled out an investigation of MG Rover Group itself and Phoenix Venture Holdings' purchase of it from BMW. Inspectors from the Department of Trade and Industry are already conducting an investigation under the Companies Act and the committee said: "That investigation concerns the actions of private companies, which fall outside the remit of the committee."

The committee said its investigation would "explore whether the government should have done more to save Rover or whether it intervened too much, and whether there are any wider lessons to be drawn on how to help big manufacturing companies which get into difficulties in the future".

Roger Maddison, national officer for the trade union Amicus, also welcomed the inquiry. He said the union was "pretty pleased" with the government's role in efforts to save MG Rover and added: "We are disappointed the committee will not be investigating the role of the Phoenix Four."

*For supplemental historical information see these stories: http://www.theautochannel.com/news/press/date/20000509/press015089.html http://www.theautochannel.com/news/press/date/20000510/press015243.html http://www.theautochannel.com/news/press/date/20000522/press016168.html

Marc J. Rauch – TACH Auto Central