PracticeConsultingBusiness – German rules cost Rover #230m

Business - German rules cost Rover #230m

BMW’s harsh accounting policies have cost Rover more than #230m since 1994 and have placed the British car maker’s future in jeopardy, an Accountancy Age analysis has revealed.

Rover Group accounts filed at Companies House using British accounting rules show Rover made a #147m profit between 1994 and 1997, rather than the #363m loss shown in BMW’s consolidated accounts.

But, while the British figures have been kept out of the public eye, the huge German loss figures have been used to batter Rover’s reputation.

The losses also led to the recent BMW boardroom crisis. Experts say BMW’s accounting policies have helped turn once profitable Rover into a ‘lame duck’.

Professor Garel Rhys, Cardiff University car industry specialist, said customers did not want to be associated with Rover’s image as a troubled lossmaker, and that much of the problem boiled down to accountancy practice.

The harsh rules imposed by BMW include the rapid depreciation of assets, which in Rover’s case have led to massive losses. Rhys said: ‘The depreciation rate is important in terms of showing performance in the market. BMW, and indeed most German companies, depreciate at around twice the rate of the UK.’

BMW plans to move to less conservative international accounting standards. But Rhys said a switch would not be enough to turn Rover’s 1998 losses into profits.

Related Articles

5 tips for SMEs to protect cash flow

Accounting Software 5 tips for SMEs to protect cash flow

5m Alia Shoaib, Reporter
Tyrie on Finance Bill 2017: ‘Making Tax Policy Better’

Consulting Tyrie on Finance Bill 2017: ‘Making Tax Policy Better’

11m Stephanie Wix, Writer
Managing partner Q&A - the year ahead: Richard Toone, CVR Global

Accounting Firms Managing partner Q&A - the year ahead: Richard Toone, CVR Global

12m Kevin Reed, Writer
Deloitte 'self-imposes exile' on government contracts to defuse PM row

Accounting Firms Deloitte 'self-imposes exile' on government contracts to defuse PM row

12m Kevin Reed, Writer
Managing partner Q&A - the year ahead: Julie Adams, Menzies

Accounting Firms Managing partner Q&A - the year ahead: Julie Adams, Menzies

12m Kevin Reed, Writer
Friday Afternoon Live: Deloitte's tech thing; PAC wants HMRC 'contingencies'; and Sports Direct

Business Regulation Friday Afternoon Live: Deloitte's tech thing; PAC wants HMRC 'contingencies'; and Sports Direct

1y Kevin Reed, Writer
Friday Afternoon Live: HMRC complaints rise; Deloitte scoops big audits; and corporate reporting woes

Audit Friday Afternoon Live: HMRC complaints rise; Deloitte scoops big audits; and corporate reporting woes

1y Kevin Reed, Writer
New head of equity capital markets for KPMG

Accounting Firms New head of equity capital markets for KPMG

1y Stephanie Wix, Writer