BMW sells Longbridge to Phoenix Consortium for £10

Rover's Longbridge car plant has been bought for a nominal £10 by the Phoenix Consortium, a group of businessmen led by former Rover chief executive John Towers, securing the future of car production in Birmingham for now.

The deal sees German car maker BMW sell off the volume car business of the Rover Group, which it has owned since buying it from British Aerospace in 1994. The new company will be known as MG Rover.

Why BMW is selling

BMW is pulling out because of constant losses at Rover and a declining share of the car market. It has already sold the Land Rover business to Ford, and is keeping the new Mini for itself, to be built at Cowley in Oxford.

What Phoenix is taking on is the volume car business that grew out of British Leyland and, before that, the old Austin and Morris companies. It consists solely of the Longbridge plant in Birmingham.

Longbridge's changing role

As part of the changes, all remaining Rover volume production at Cowley, essentially the Rover 75, is moving to Longbridge. MG Rover will also be allowed to carry on building the original Mini at Longbridge until BMW launches its new model.

The Rover 25 and Rover 45 are recently facelifted versions of mid-1990s designs, and production has fallen slightly because of weaker demand, although the Rover 25 was Britain's best-selling car in April.

A plant with a long history

Longbridge has been at the heart of the south Birmingham economy for almost a century. Herbert Austin found the site, a derelict printing works, in November 1905, and bought it and an additional eight acres for £7,500 in January 1906. The first Austin car was completed at the end of March that year.

By the late 1960s, Longbridge employed around 25,000 people, building cars including the original Mini. During the Second World War, the plant produced munitions and tank parts, while the nearby East Works at Cofton Hackett built Stirling bombers and Hurricane fighters.

What happens now

The deal keeps volume car production going at Longbridge, and with it thousands of jobs in the factory and its supply chain.

The new owners now face the challenge of making the business profitable with an ageing model range and a much smaller company than the one BMW bought six years ago. MG Rover becomes the last British-owned mass-production car maker.

Rover's other major plants have gone their separate ways. The Solihull factory went to Ford with Land Rover, while the Cowley and Swindon plants have been kept by BMW to build its new Mini.