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Rover environmental analysis

            
            
             The day that 12 prominent European groups finally brought their currencies together as one. The debate as to whether to join the Euro for the UK had been fierce. The UK had negotiated an opt out clause in the Maastricht treaty of 1992 and the current Labour Government has always said that it will hold a referendum on the subject when the economic climate is right. So how has this affected MG - Rover over the last decade? In an article in the Guardian Newspaper dated July 12th 2002, Kevin Howe the chief executive of Rover called for the Government to join the Euro, arguing that the weak Euro and the strong pound were seriously hampering MG - Rover's efforts to return to profitability. In addition Mr Howe also suggested that falling sales in Europe were as a result of the Euro making prices uncompetitive. Excluding the UK Rover saw its sales in Western Europe fall from 34318 in the first six months of 2001 to 23428 over the same period in 2002 (a 32% drop).
             On top of this we are seeing a number of larger manufacturers moving their production facilities to the continent for the same reason. Rover was only saved from being moved to Hungary by BMW due to Government intervention (as we shall see) and Rover is still keeping its eye on a disused Polish Daewoo plant.
             Car Recycling.
             The EU has recently demanded that the manufacturer be responsible for the disposal of all cars on the road that it has manufactured. The new rules state that the manufacturer is responsible for all new cars from July 2002 and all old cars from July 2007. Industry sources suggest that this could have a catastrophic effect on struggling manufacturers such as MG-Rover. Early indications suggest that this could cost the ailing company as much as £200 Million per annum, a figure that the company could not sustain. This ruling particularly affects MG Rover due to its declining sales. It has many, many more cars still on the road in comparison to what it now produces.


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