Blog: It’ll all come out in the wash

Carole Nash Classic Insurance Specialists

AM I the only person out there who is really concerned about what is going to happen once the government commissioned auditor’s report on MG Rover’s finances is published for the world to see?

I don’t know anything more about MG Rover’s financial situation than any other observer, so can’t really state categorically any real facts about the monetary dealings of Phoenix Venture Holdings. However, I do get to hear the odd snippet now and then, and whenever I do, I really do worry about the contents of each little nugget.

For one, it emerged a month or so ago that Phoenix’s premature announcement that MG Rover and SAIC had climbed into bed together to form their ill-starred joint venture was not a clever piece of PR, but an emergency measure to stave off increasingly worried creditors, who feared for the future solvency of the company. It is believed that such was MG Rover’s plight, that as early as last November, it was getting close to trading without funds to meet obligations, and that the only way to get round this (in the short term) is to increase confidence in the company by making it look as if financial salvation was around the corner in the shape of a company-saving deal with the Chinese.

And if that was the case, it was a desperate gamble on the part of Phoenix’s management – and probably a way of keeping the company’s auditors in check, and stopping any recommendation that the company should go into administration, when there was the very real hope a deal could be struck with the Chinese.

In fact, the spectre of the up-coming Chinese deal meant that sensible business decisions (such as closing down loss-making elements of the company) were simply not taken. It is my belief, that John Towers really did believe the company had a future in the ‘volume’ sector – an opinion that is partially backed up by the news that as early as last year, MGR had been making descreet enquiries about selling off the MG TF operation, wholescale…

It emerged a month or so ago that
Phoenix’s premature announcement
that MG Rover and SAIC had climbed
into bed together to form their
ill-starred joint venture was not
a clever piece of PR, but an
emergency measure to stave off
increasingly worried creditors,
who feared for the future
solvency of the company

Surely an illogical decision as it was one of MGR’s few remaining profitable ventures – Britiain’s best-selling roadster for goodness sake!

The only conclusion from that little episode, is that Phoenix was not an asset-stripping operation. It was more in a holding pattern – believing that if it could cling on to the operation, a saviour would ride in on a white horse and rescue MGR from oblivion. And in the face of collapsing sales and dwindling public goodwill, the only way to maintain a holding pattern was to bail out any profit making part of the business.

So, the parts business went, then the building itself… then, it would have been the TF next.

And if anyone has any doubts that public goodwill had been dwindling, cast your mind back to the national outcry against BMW when it became public that it was in the process of ejecting The Rover Group. During the formation of Phoenix back in 2000, an 80,000-strong demonstration in Birmingham convinced the government that the public still cared. This time round, there were no major demonstrations… and the government knew Phoenix had created a climate favourable for the public to accept the company’s closure without too much damage being done. Let’s call it the perfect soft landing.

If Phoenix is allowed to have an enduring legacy not overshadowed by allegations of financial wrong-doings, it is that the MG marque is strong and deserves to live. The TF is an enduring success, and the ZR has proved a success with the young. It is because of the re-invigoration of the MG marque that there are companies out there willing to risk a great deal by trying to buy the TF production facility from PwC.

However, Phoenix Venture Holdings will not be remembered for MG’s renaissance.

Whatever emerges from the auditor’s reports, the ‘Phoenix Four’ will be remembered for being inept managers… at best.

And that will be of no comfort at all for all those unemployed ex-MG Rover workers.

Keith Adams

Keith Adams

Editor and creator AROnline at AROnline
Created www.austin-rover.co.uk in 2001 and built it up to become the world's foremost reference source for all things BMC, Leyland and Rover Group, before renaming it AROnline in 2007.

Is the Editor of the Parkers website and price guide, formerly editor of Classic Car Weekly, and launch editor/creator of Modern Classics magazine. Has contributed to various motoring titles including Octane, Practical Classics, Evo, Honest John, CAR magazine, Autocar, Pistonheads, Diesel Car, Practical Performance Car, Performance French Car, Car Mechanics, Jaguar World Monthly, MG Enthusiast, Modern MINI, Practical Classics, Fifth Gear Website, Radio 4, and the the Motoring Independent...

Likes 'conditionally challenged' motors and taking them on unfeasible adventures all across Europe.
Keith Adams

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