BMW Group has blamed a 25% plunge in its profits on heavy discounts for Rover cars, higher-than-expected Rover redundancy pay-outs and the phasing out of the 600 and 800 ranges. BMW's profits for the first half of the year dropped 26.8% to £127million for the first six months of 1999.

In its interim report, BMW state Rover sales fell by more than 33% during the first six months of the year - compared to a growth in BMW car sales of 13.4%. Another major factor was a higher-than-expected redundancy rate, which saw more than 5,500 Rover employees take redundancy packages, far higher than the 2,500 initially expected to leave.

BMW chairman Joachim Milberg said price cuts on Rover models and the phasing out of the 600 and 800 had further contributed to the decline in profits, but he was optimistic for the future. 'Comprehensive restructuring measures are directed towards securing the profitability of Rover in 2002, even at current prevailing exchange rates for Sterling.