For BMW: The Headache Is Gone; Now Comes The Hangover

Jan. 13, 2005
Germany's Bayerische Motoren Werke AG (BMW) may have even bigger problems now that it has sold its money-losing Rover car business in Britain. The successful bid (a symbolic 10 pounds -- US$15.33) by the Phoenix consortium, led by former Rover CEO John ...

Germany's Bayerische Motoren Werke AG (BMW) may have even bigger problems now that it has sold its money-losing Rover car business in Britain. The successful bid (a symbolic 10 pounds -- US$15.33) by the Phoenix consortium, led by former Rover CEO John Towers, staves off closure of the country's largest car factory. But the company is left with a heavy bill of US$4.1 billion in a failed, six-year bid to make Rover profitable. Two top executives of the German luxury auto maker have lost their jobs over the major setback. "Worse is probably to come, and other heads will roll," says John Lawson, an auto industry analyst at Salomon Smith Barney. "The value of BMW stock has tumbled, and the company exposes itself to the risk of becoming a take-over target." Volkswagen has made no secret of its interest in BMW, while Ford has been expanding its top-end range by acquiring Jaguar, Volvo, and Rover's Land Rover and Range Rover business.

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