31 August 2004

Cost-cutting will put MG Rover back into the black by the end of next year, the first time the company will have made a profit for five years. The claim comes in the wake of industry stories that MGR will be sold to potential Chinese partner, SAIC. MGR is looking for at least £100m worth of savings in its £1.7bn annual budget for bought-in parts, services and equipment. ‘I am looking at a huge range of small savings. If we can find £2m here and £3m there, we will make our target,’ said Peter Beale, MG Rover’s vice-chairman.

New non-executive director Nigel Petrie is heading a cost-cutting committee. But one key area – the new car parts budget worth £800m a year – will prove very difficult to make savings. Most of MG Rover’s suppliers want to increase parts prices because they are selling fewer components to MG Rover due to sinking production levels.

‘This area will be difficult,’ admitted Beale. ‘But in a large business like this there are plenty of other areas where we can make savings. We are totally committed to making these savings.’

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