RE: MG Rover runs out of warranty cash
Thursday 14th April 2005
Dealers to get no warranty moneyRover has run out of money to pay dealers for warranty claims, and dealers are being urged to make alternative arrangements.
MG Rover runs out of warranty cash
Dealers urged to seek alternatives
Dealers to get no warranty money
Though hardly unexpected in the circumstances, a spokesman for company administrator PricewaterhouseCoopers said yesterday, “We acknowledge the difficulties and uncertainty dealers now face due to the administration. We wrote to all dealers yesterday morning (12 April) to explain the impact of the administration on the dealer network.
“A review of the company’s warranty arrangements has been undertaken and has concluded that warranties continue in the first instance to be a matter between individual dealers and their customers.
“We’re aware that historically MG Rover has reimbursed repairers and authorised dealers the cost of valid warranty claims. However, following our appointment as joint administrators on 8 April 2005 the company no longer has sufficient funds to reimburse warranties.
“Should customers wish to purchase warranty cover in the marketplace a number of alternative providers are available. Most dealers will be able to advise customers on how they could obtain this cover.”
Discussion
OK So we have a Company Rover 75 Saloon bought 18 months ago from Dixon Franchise financed thru Black Horse Ltd. Cylinder head went 3 weeks ago and two replacements have also gone in the meantime - apparently a crack in engine block now. So it sits at Dixons and they can't or won't do anything more - no engines available. We are renting for now and have asked to trade in for a ifferent make within the Dixons Group - so they have offered £6k trade in.
It cost £19k a year and a half ago. Black Horse have invited me to write to their Quality Control Department but do not "wish to get involved" - who is responsible then for an undriveable car Rover / Dixons / Black Horse
It cost £19k a year and a half ago. Black Horse have invited me to write to their Quality Control Department but do not "wish to get involved" - who is responsible then for an undriveable car Rover / Dixons / Black Horse
My father bought a new 45 direct from the factory (MG Rover Direct) 6 months ago.
Given that it should have been clear to the directors, at that point in time, that the end was nigh, surely they entered into a contract with my father ( a contract which included a 3 year guarantee promise) under false pretences. You could even say 'fraudulently' as they must have known that the survival of the company for a further 3 years was unlikely. The merger which they 'hoped' would get them out of the mire wasn't signed and was no reason to continue trading and offering promises / guarantees like nothing was wrong.
Given it's history, the DTI should have been monitoring the companies health and prevented them from duping 150,000 clients into buying a motor car, in good faith, with a 3 year guarantee where there was clearly every chance that this couldn't be honoured. And they should have forced MRG to underwrite the warranties on every new car.
It's a disgrace.
I assume that anyone with a warranty claim situation will be classed as a yet another creditor of MGR ?
Given that it should have been clear to the directors, at that point in time, that the end was nigh, surely they entered into a contract with my father ( a contract which included a 3 year guarantee promise) under false pretences. You could even say 'fraudulently' as they must have known that the survival of the company for a further 3 years was unlikely. The merger which they 'hoped' would get them out of the mire wasn't signed and was no reason to continue trading and offering promises / guarantees like nothing was wrong.
Given it's history, the DTI should have been monitoring the companies health and prevented them from duping 150,000 clients into buying a motor car, in good faith, with a 3 year guarantee where there was clearly every chance that this couldn't be honoured. And they should have forced MRG to underwrite the warranties on every new car.
It's a disgrace.
I assume that anyone with a warranty claim situation will be classed as a yet another creditor of MGR ?
I thought most warranties were bought at time of sale to a buyer by the dealer (a bit like insurance), in case of things going wrong.
Thats the way Peugeot do it anyway.
I think that too many people are blaming so many other areas for Rovers problems. Down to money grabbing management imho. Don't blame them really, but they did leave a lot of loose ends, which is very unfair for dealers and loyal customers
Dave
Thats the way Peugeot do it anyway.
I think that too many people are blaming so many other areas for Rovers problems. Down to money grabbing management imho. Don't blame them really, but they did leave a lot of loose ends, which is very unfair for dealers and loyal customers
Dave
I think that the directors took about £40m out of the company in total. MGRs debts make that figure look like lose change.
The fgures reported by the Times last week totalled to over £1.5bn. The £6.5m that the government has given them this week is only paying a week's wage bill. The workers who are being paid that wage still have no job to do as the plant has shutdown.
I think MGRs problem was a simple one. The cars were all old (apart from the 75) and there were no replacements in the pipeline. The mass public are never going to want to buy a Rover that's essentially unchanged from the car that launched 10 years ago (probably even longer for the 45/400/civic).
With no new models in the pipeline, a new prroduct line up would be at least 3-5 years away and go approx £500m per model to design and develop (figures I've learned from my own experience an automotive engineer over the last 3 years).
The director will be made scapegoats but there's more to it that the £40m bonuses they've given themselves.
DC
The fgures reported by the Times last week totalled to over £1.5bn. The £6.5m that the government has given them this week is only paying a week's wage bill. The workers who are being paid that wage still have no job to do as the plant has shutdown.
I think MGRs problem was a simple one. The cars were all old (apart from the 75) and there were no replacements in the pipeline. The mass public are never going to want to buy a Rover that's essentially unchanged from the car that launched 10 years ago (probably even longer for the 45/400/civic).
With no new models in the pipeline, a new prroduct line up would be at least 3-5 years away and go approx £500m per model to design and develop (figures I've learned from my own experience an automotive engineer over the last 3 years).
The director will be made scapegoats but there's more to it that the £40m bonuses they've given themselves.
DC
Just reading this after speaking to an independent dealer this morning who was saying exactly the same thing. He sold a Rover a few months back still under manufacturer warranty and it's now broken. He's trying he best to get something sorted for the owner but it's a massive problem for all.
If they have no cash for warranty claims then they would have had cash flow forecast problems from a long time back. If they knew this (they would have) surely there may be some serious negligence on the management front.
If they have no cash for warranty claims then they would have had cash flow forecast problems from a long time back. If they knew this (they would have) surely there may be some serious negligence on the management front.
Hayes said:
If there's a bancrupcy, the cuartors should first clear the cash for warranties etc. instead of other companies Rover owes money.
Don't be silly...us mere mortals come last under law.
The order is this:-
- Creditors which can prove they have retained title over their stocks at MGR;
- Secured creditors with guarantees over specific assets;
- Secured creditors with general (non-specific) guarantees;
- Unsecured creditors (all suppliers, dealers owed money, customers who feel they have a claim);
- Shareholders.
Typically, if a company is in that dire straits it has to go into Administration, there will be little left for the unsecured creditors, if any, unless a buyer can be found. Even then, don't hold your breath.
As for fraudulent trading - I have to disagree - the company had a deal in final negotiations with the Chinese, which would have safeguarded the company for years. They were trading under the reasonable assumption that it would go ahead.
As to substantiating these claims - I used to work in Insolvency, or Corporate Recovery as it is euphemistically known.
I feel sorry for the Rover dealer I pass each morning on the way to work, to be honest. Who's going to buy a new Rover from them now, given that there's no factory to back it up?
Dealers up and down the country must have hundreds of thousands of pounds tied up in stock that's now virtually un-saleable (certainly hard to sell at a profit!).
Dan
Dealers up and down the country must have hundreds of thousands of pounds tied up in stock that's now virtually un-saleable (certainly hard to sell at a profit!).
Dan
beaublack said:
OK So we have a Company Rover 75 Saloon bought 18 months ago from Dixon Franchise financed thru Black Horse Ltd. Cylinder head went 3 weeks ago and two replacements have also gone in the meantime - apparently a crack in engine block now. So it sits at Dixons and they can't or won't do anything more - no engines available. We are renting for now and have asked to trade in for a ifferent make within the Dixons Group - so they have offered £6k trade in.
It cost £19k a year and a half ago. Black Horse have invited me to write to their Quality Control Department but do not "wish to get involved" - who is responsible then for an undriveable car Rover / Dixons / Black Horse
I would review your finance contract, and see if you can return the car early - probably cost a penalty of a grand or so, but it's then not your problem! Shitty solution for them, but the interest you've already paid them will more than cover it I'm sure!
daydreamer said:
Does appear strange that the warranty cover by the factory was little more than a Gentlemans agreement though.
All a bit of a mess really
Aren't they saying that the Dealers are now unsecured creditors for their outstanding warranty claims, and warning that under receivership future claims won't be entertained?
Sorry mess.
Robbo SPS said:
I have had my ZS for 18 months with no problems, but there is always a worry.
I also got a free 3 year service deal, so thats out the window really.
But thats life, so i am just going to get on with it.
You may find the dealer is obliged to honour it. It's likely that your contract was with him, and he was planning to lay the cost off with the manufacturer.
There IS still a chance a buyer will be found.
HOWEVER: Given that PVH don't have the massive reserves that BMW did, the only way to sell it for a fair price is to stiff the creditors...and hope they don't go out of business! Which is something you can legally do with a company in administration which you can't with a going concern.
PVH will have already realised their investment is worth £0, why do you think they took so much out early on!!!
And yes, the whole thing does smell a bit...but it's by no means the worst example of legal-but-dubious trading this company has seen!!!
HOWEVER: Given that PVH don't have the massive reserves that BMW did, the only way to sell it for a fair price is to stiff the creditors...and hope they don't go out of business! Which is something you can legally do with a company in administration which you can't with a going concern.
PVH will have already realised their investment is worth £0, why do you think they took so much out early on!!!
And yes, the whole thing does smell a bit...but it's by no means the worst example of legal-but-dubious trading this company has seen!!!
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