Car giant Austin Rover announced expected half – year losses of £60 million yesterday. The shock news came on the day that the State – owned firm offered its workers pay rises of at least £9 a week over the next two years .
Austin Rover , which made a £600,000 profit in the same period last year , said the rises would keep its employees at the top of the industry’s pay league. This is at a time when it has been struggling to keep its market share above 15 per cent in the face of fierce competition .
Austin Rover’s problems are two fold, writes Motoring Editor David Benson. It is operating in the toughest selling market since the war and its products , with the exception of the new Rover , already have a vintage feel which puts off new car buyers .
The tough sales environment has meant that all manufacturers are offering huge incentives to enable dealers to meet sales targets.
But these incentives cut in to profits.