HONDA yesterday cast fresh doubt on the future of Rover, warning that it may scrap the licensing agreements and components deals that underpin the bulk of Rover's existing car production in the wake of its pounds 800m sale to BMW of Germany.
The Japanese company has already unravelled its equity links with Rover in protest at the sale by British Aerospace to a German competitor. It is now considering whether to maintain the agreements that will enable Rover to launch a replacement for the 200/400 series scheduled to appear at the end of this year.
Honda is also examining whether to build its own pressings plant at its Swindon car factory in order to end its reliance on Rover for body panels.
Speaking on the opening day of the Geneva Motor Show, Shojiro Miyake, president of Honda Europe, said: "The 15 years of collaboration between us have been very important for Rover and we would like to know how much BMW now needs Honda's support. In the long term it is hard to find any benefit to Honda of collaborating with BMW. We will discuss the future of Rover with BMW, but we can't base our European strategy on BMW."
The Rover link is worth an estimated pounds 400m a year to Honda in licensing royalties and component sales. Honda supplies 70,000 engines a year to the British car maker while the Rover 200, 400 and 600 series all depend on Honda designs and manufacturing technology.
Mr Miyake said these licences would not be transferred to BMW automatically as they were conditional on Rover remaining an independent British-owned company.
Talks are expected to begin around Easter to renegotiate the licences, with Honda certain to demand a significant increase in fees and component prices in return for agreeing to continue the collaboration.
A licence agreement allowing Rover to build the 200/400 replacement, codenamed the Theta by Rover and the HH by Honda, has not yet been signed.
Should Honda withdraw, it would have a devastating impact on Rover's Longbridge and Cowley car …