It therefore cannot hope to weather this problem as well as some of its rivals. Some industry insiders are predicting that this could be the final nail in MG Rovers Coffin.
Unionisation.
MG Rover has and always will be heavily associated with Unions and Union Action. During the seventies British Leyland (as the company was then known) was severely damaged by strike action, which led finally to the nationalisation of the company in 1977. Fast Forward to February 2002 and once again the unions are balloting on the threat of industrial action following the rejection of a 2.5% pay increase by the Transport and General Workers Union. On 10th April 2002 he workers voted in favour of a strike, the first at Rover for ten years.
Directors Pay (Fat Cats).
In November 2003 MG Rover sales crashed by 30% year on year as bad publicity brought about by accusations of Fat Cat salaries for company directors were brought to the fore by the Unions. This led directly to the company suspending production on the 16th December 2003 so production and stock levels could balance.
Taxation.
Government taxation of the motor industry is a significant factor within the political arena. The Government derives a huge amount of its revenue from the motor industry in the following forms:.
V.A.T. on new car sales.
Road Tax Duty.
V.A.T. on insurance sold.
Petrol Duty.
V.A.T. on servicing.
Income Tax on wages paid to all in the industry.
Company Car Taxation.
Etc.
A shift in any of these taxation factors could seriously affect a car manufacturer such as MG Rover. V.A.T. increases could make the cars seem significantly more expensive. Rises in petrol duty and Road tax can force people onto public transport, which is very negative for the car industry. Over the last ten years there have been significant changes to many of the taxation policies of this country. The most important of these have been changes to the company car taxation in 2001- now based upon car emissions and the road tax duty in 2002, which is now based upon engine size.
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