When BMW unveils its annual results in Munich next Tuesday, the balance sheet will look worse than at any time in the past two decades. But the international horde of journalists descending on the Bavarian capital will be less interested in the figures than in determining whether the prestigious car manufacturer still has a future as an independent company.
Last week's sale of Rover Cars to the British venture capital firm Alchemy has left BMW open to accusations of heartlessness and dishonesty in its business dealings - with a British minister denouncing the Germans as "liars". It has also made the Bavarian firm look incompetent, lacking a clear strategy for the future and has fuelled speculation that BMW will soon be taken over by a bigger firm.
The company most analysts believe is best placed to buy BMW is Ford, which last week snapped up Land Rover for its luxury division, which already owns Jaguar, Volvo, Aston Martin and Lincoln. In a bitter irony for the Bavarians, this Ford division is led by Wolfgang Reitzle, a former BMW manager who left the company last year when he was passed over for the top job in favour of Prof Milberg.
Six years ago, Mr Reitzle warned his colleagues that their British adventure would end in tears and predicted that Rover would cost BMW 13 billion deutschmarks (#6.65 billion) by 2000. His prediction, which was dismissed at the time as an absurd prophecy of doom, was inaccurate. Rover has cost BMW an estimated DM16 billion.
Instead of buying Rover, Mr Reitzle wanted to develop a middle of the range BMW 2 series, along the lines of the A Class developed by the Bavarians' long-standing rivals in Daimler-Benz (now DaimlerChrysler). But his fellow managers argued that introducing a more down-market model would damage the BMW brand and that the best way to expand BMW's range would be to acquire other marques.
The Quandt family, who own almost 48 per cent of the shares in BMW, were uneasy about acquiring Rover but they went along with the strategy of Berndt Pitschetsrieder, Prof Milberg's predecessor, for almost six years. It was only when Rover's losses threatened to damage BMW's core business that the family decided that Mr Pitschetsrieder had to go.
Mr Reitzle expected to take over as chairman last year but his appointment was blocked by trade union representatives on BMW's board, who made it clear that they would not co-operate with his plans. Prof Milberg was chosen as a safe pair of hands but at 61, he was widely viewed as a transitional figure who primary task was to make Rover profitable or gracefully get rid of it.
Instead, Prof Milberg has presided over the worst example of mismanagement seen in German business since Edzard Reuter's ill-fated attempt to turn DaimlerBenz into a technology conglomerate. The Rover 75, universally acknowledged as one of the best new cars to be produced in recent years, has turned out to be a commercial flop. The manufacturers blame the strength of the pound against the euro for the Rover 75's failure but the truth is that it has performed badly in Britain as well.
Despite the exchange rate, Rover continued to buy 85 per cent of its components from British suppliers until last year - missing out on an estimated saving of DM2 billion. By the beginning of this year, even Land Rover was losing money and everyone at BMW realised that the condition of the English Patient - as Rover is known in Munich - had become critical.
This did not stop the company from issuing a sharp denial of a report last month that the BMW board were considering selling Rover. At the beginning of this month, BMW executives attending a motor show in Geneva were repeating the same, confident lines about Rover's future. One German magazine was reminded of the uplifting speeches delivered by East Germany's leaders on the 40th anniversary of their state's foundation - a few weeks before the Berlin Wall fell in 1989.
In fact, BMW has been flirting with prospective buyers for Rover at least since last October, when the Quandt family held secret talks with Ford. When it became clear that Ford wanted to buy BMW as well, the Quandts backed off but the lines of communication remained open.
BMW insists that Prof Milberg masterminded the sale of Rover to Alchemy, an obscure company run by eccentric British investor, Jon Moulton. But Mr Moulton appeared to cast doubt on that story this week.
"The idea to buy Rover came in the autumn from Tom Sommerlatte," he said.
Mr Sommerlatte is vice-president of the management consultants Arthur D. Little in Wiesbaden and an Alchemy board member. He is also reported to have close links with the Quandt family.
The Quandts were scrupulously loyal to Prof Milberg this week, praising his leadership and strategic thinking, but few observers expect the BMW chairman to remain in his post for long. Britain's charges of deception against Prof Milberg may be overblown, but he there is little doubt that the Rover debacle has damaged the BMW boss's credibility, even if it has not yet cost him his job.
For his part, Prof Milberg wants to put the past behind him and to look ahead to a dynamic future for BMW as an independent carmaker. He has even come up with an idea to expand BMW's market share by developing a smaller model than the 3 series - "which will be a typical BMW". So now, six years on and DM16 billion lighter BMW is more vulnerable than ever.
