First dealerships close after MG Rover collapse

Three of the eleven MG Rover dealerships owned by Phoenix Venture Motors have been closed with immediate effect and Motor Trader has also learned that a small dealer group in the North of England is under threat as a result of the car maker's collapse. The group, which holds MG Rover as its main franchise, is currently in talks with accountants specialising in insolvency in a last ditch bid to save the business. Meanwhile, the manufacturer owned PVM sites in Northampton, Oxford and Muswell Hill, North London will see total redundancies of 86 across the businesses and more are expected to follow. Rob Hunt, joint administrator for PricewaterhouseCoopers, said the closures followed an “urgent review” of PVM and were based on account profitability and sales potential. “We will continue to work with management to establish which of the remaining sites can stay open and continue to trade,” Hunt said. PVM operated from 11 sites in the Midlands, North West and South of England and had 472 employees. In the year ended 31 December 2003 it had turnover of circa £80 million but reported a loss of £2.5 million. The remaining eight sites are now under review. Elsewhere the collapse has hit major dealer groups as its impact rippled through to the stock exchange. Several of the plc dealer groups have said they will take an exceptional charge in earnings because of the carmaker's demise. Caffyns, which operates eight MG Rover sites, said it was owed £54,000 by the carmaker and had stocks of new and used vehicles amounting to approximately £3.6m — 16 per cent of the company's total vehicle stock. Bosses at Reg Vardy have admitted that the company will make an exceptional charge during the year because of the collapse — but said that there would be no impact on trading results. The retailer, which operates three MG Rover dealerships in its 93-strong network, is owed around £600,000 by the carmaker. “Further exceptional provisions may be required in respect of the valuation of new and used vehicles manufactured by MG Rover and warranty obligations which may now not be funded by the manufacturer,” a Reg Vardy statement said. European Motor Holdings has made an allowance of £600,000 in its accounts, which it is owed by MG Rover. Pendragon operates 15 MG Rover sales points but due to the size of the company it is largely unaffected. The Group said it anticipated “only a minor impact” on net assets. Lookers also claimed it would not be hit after it made a “full provision” to exit its four remaining MG Rover dealerships in its 2004 accounts.