LONDON (CNNfn) - BMW, Germany’s third-biggest carmaker, warned it will have to take a further axe to troubled British subsidiary Rover before the unit can generate a profit, according to a press report Tuesday.|
"The basis for maintaining a manufacturing capability in the U.K. is deteriorating month by month,” BMW chief financial officer Helmut Panke told the Financial Times, cautioning that "more drastic steps” will be required. The newspaper reported that Rover’s workforce has declined by 8,000 over the past year, to 30,000.
Rover lost 640 million pounds ($1.05 billion) in 1998, but company officials refused to say whether the loss for 1999 would be greater still.
BMW denied it was considering selling Rover, which has caused Munich-based BMW a host of problems since it was acquired in 1994.
Rover’s problems have been compounded by the strength of sterling, which has risen sharply against the single European currency, making its cars more expensive to continental European buyers.
BMW’s response to the crisis at Rover is likely to mean more job cuts and a cut in the number of components it buys from U.K.-based suppliers, according to the newspaper.
The European Commission is investigating the proposed 152 million pounds in state aid that Rover is due to receive from the U.K. government under a controversial deal brokered last year.