MG Rover - The Future
We all know that the history of the company has been a long and traumatic one. In fact, it has been one of almost uninterrupted retreat and rationalisation since 1968. Is it possible that John Towers' team can begin to turn things round?
BMW cast a long shadow over Rover - the jury is still out as to whether they will emerge from it or not... (image supplied by Achim Kupper).
s we have seen, the road to the new millennium has been a long and rocky one for MG Rover and their antecedents. From the creation of a giant in 1952, the company has been consolidated on a rolling basis, almost uninterrupted. Sad as it is to report, the only period of growth enjoyed by the company was in the immediate aftermath of the Austin and Morris merger. It could be argued that this was simply a function of the pent up demand for cars during the post-war boom years, and BMC were there to satiate that demand.
A rocky road it may have been, but the survival of the company has been a remarkable testament to the determination of those countless individuals, whose only goal was to see the good times return. The task that faces MG Rover in those first few years of the twenty-first century, is to finally make good the ambitions of those nameless employees, managers and designers who wanted success.
Unlike in 1968, when Donald Stokes soon realised that Leyland had created a monster, John Towers and the Phoenix consortium know exactly what lies ahead for them: a great deal of hard work. The task ahead is not an easy one, but the management team encamped at Longbridge are a very realistic and pragmatic bunch, and if anyone can pull it off, they can.
Considering the success of the XPower SV, it would be easy to conclude that the future of MG Rover lies with the production of such cars - the desire from within, seems to be to remain in "volume" production... posterity will decide if this was the correct direction to take.
There were major problems to overcome, however:
Firstly, the continuation of the Rover name, alone, was always going to be a risky strategy, given the irreparable damage inflicted during the BMW sale debacle. Secondly, only the Rover 75 was the only young car in the range – and following the abandonment of the Rover 55 programme, there was little chance of getting a new model to replace the 25/45 up and running before 2004 at the earliest.
As has been documented elsewhere, the saloon ranges were given a fillip by the introduction of MG versions of each model – risky, given the fact that Rover had shied from badge engineering their saloons during the 1990s for fear of damaging the MGF. The company had also been acutely aware that in the minds of the motoring press (if not the buying public) was this image of the 1980s MG “M” cars, which they liked to speak of in negative terms. They knew that simple badge engineering would be seen through, by the increasingly well-educated buyers, and so, ensured that these new MG saloons were the recipients of some intelligent chassis engineering and focused marketing. The result was a shift in the brand: MG saloons soon became popular – and certainly enjoyed a higher profile than their Rover counterparts.
Although this engineering and marketing programme soon bore fruit, there was no way that anyone within the MG Rover hierarchy were kidding themselves that this was nothing more than a holding operation. The replacement of the 25 and 45 was to be treated with the utmost urgency.
Of course, the company could develop a new model using the parts they already had – they had done it before with remarkable success, but the problem was that the 45 and to a lesser extent, the 25 both relied on Honda componentry and because of this, MG Rover continued to pay a hefty royalty payment to the Japanese company. Broadly speaking, it made little economic sense to base any new car on the 25 or 45, but beyond that, the standards of the class had moved on in giant strides since the appearance of both cars back in 1995.
What was needed was a new platform – and MG Rover did not have the financial muscle to undertake such a huge undertaking. As I write this, these events are future events and the search for a collaborative partner is an ongoing one: MG Rover have stated that they can produce a “go it alone” car to replace the 25/45 and certainly a hacked Rover 75 (known internally as the RD60 and X60) has been spotted on several occasions undergoing trials. This plan certainly continues Rover’s tradition of being able to produce interesting and capable cars on a shoestring, and it must represent an interesting challenge to the production engineers – to package a medium car around the skeleton of an executive car. There are parallels in MG Rover history, although I am sure the current management would not appreciate my mentioning it: the development of the Maxi from the BMC 1800 – and again, the new car is planned to sit on an almost identical wheelbase to that of the larger car it was to be based upon, although I cannot imagine for a minute that any new car from the new regime would not forgo styling in the way that the Maxi did.
Geneva 2002 and the Rover TCV concept made a very successful debut: not only was it a genuine surprise, but it also signalled that MG Rover was not about to drop the “Rover” part of the company in favour of MG. Peter Stevens designed this interesting car – and unlike many Rover designs that came before, this one owed little to the past heritage of the company.
So, certainly, there is a will within the company to formulate the plan to replace the 25/45, and at the 2002 Geneva Motor show, MG Rover alluded to the fact that the replacement vehicle would be a progressively styled vehicle, by unleashing the TCV concept car. One thing that the TCV (for Tourer Concept Vehicle) demonstrated was that the new regime would not allow the Rover name to wither on the vine, to be passed over in favour of the more youthful MG marque name. Already, it was becoming clear that ideas were being bounced, floated around Longbridge and one cannot help but think that the plan of a sporting MG saloon would be countered by a more progressive Rover design. Would there be different MG and Rover versions of the same car – in the same way as there are the ZR and ZS versions of the 25 and 45? Speculation in the motoring press is that the differences between the two might be more far ranging than that – past form would indicate that it is a good bet to make, but is it the right thing to do given the limited production volumes available to MG Rover?
If the replacement for the Rover 45 looks anything like the Rover TCV (and according to Peter Stevens, it will), then the future looks very interesting for MG Rover. Amusingly, Rover chose to show off the fact that the TCV could carry a washing machine upright in its boot – what were they trying to say about their clientele?
Either way, the good news is that despite the fact that many observers had written off the company following their abandonment by BMW, there would be a next generation of medium cars to replace the rapidly ageing mid-range models.
The story in the UK, therefore, was one of the possibilities of the company undergoing a re-birth at the hands of the Peter Stevens designed RD/X60. Rover may have been kicked to death by the media in the UK, and buyers may have melted away, but I suspect that if Rover produces a strong and saleable product, it could still find itself on many UK buyers’ shopping lists.
Whether there would be a general acceptance of MG Rover in Europe, the company’s largest export zone, is another matter. Certainly sales of MG Rover’s predecessor’s cars have been declining since the formation of BLMC in 1968 – there were a couple of instances where this downward trend was arrested briefly (the Metro in 1980, the Rover 200/400 in 1990, becoming part of BMW in 1994), but the cold hard truth of the matter was that Rover’s image was badly compromised by the BMW sale of the company in 2000. Up to that point, Europeans had begun to regain their faith in the company, thanks to the association with BMW, but when BMW had left the party, Rover were once again out in the cold. Certainly in Germany, the sales of Rover’s cars had collapsed to well below pre-1994 levels.
All that really mattered was getting the cars onto the market on-time. World events have certainly not helped MG Rover; the general downturn in sales has hurt the company. There were other issues as well - just as with the development of the MG ZT V8 and XPower SV, the company turned to an outside contractor to assist in much of the technical development of the RD/X60. In this case, however, the company chosen was TWR (Tom Walkinshaw Racing), which proved to be a bad-luck decision on the part of MG Rover. Following the failure in Formula One with their Arrows team, TWR became bankrupt during February 2003 - which has had serious repercussions on the RD/X60 programme. The official line is that the development will continue in-house, but it cannot be overstated just how much this has hurt the RD/X60 programme.
2002 brought the announcement that MG Rover and China Brilliance Industrial Holdings had formed an alliance that would allow both companies to produce the other’s products. Co-development of future engines and a joint venture small car were also promised. Would this mark the return to the glory days of Honda and Rover, perhaps? Kevin Howe (MG Rover chief executive, pictured right) certainly hoped so, but in the end, the deal floundered.
MG Rover now considers itself to be a medium sized company, and in truth, that is a very accurate description to make. The company certainly has none of the inertia that compromised its predecessors chances in the market place – BLMC used to be a lumbering giant of a company; now MG Rover appears quite lean and fit. This positive attribute has encouraged some quite imaginative thinking, and the commencement of (the ultimately fruitless) collaborative talks with China Brilliance Industrial Holdings (CBIH), as well as the TATA Group in India would suggest that the current management are quite comfortable looking beyond the normal industry boundaries.
By January 2003, it was clear that MG Rover had entered into serious discussions with TATA and the resultant press release that the company would market a Europeanised version of their Indica small car was proof enough that MG Rover were serious about re-entering the market they vacated when the Rover 100 went out of production. One thing was clear though - if the CityRover would generate showroom traffic at MG Rover dealers, it wasn't going to increase production at Longbridge, as it was to be built in India and imported back to the UK. The other question that remains to be answered is whether a re-branded version of TATA’s Indica supermini is what MG Rover actually need in order to rebuild its reputation…
MG Rover has also expressed an interest in purchasing the ex-Daewoo factory in Poland, with a view to expanding its own production possibilities. Certainly, the idea of improving the company’s production flexibility made for interesting possibilities, but the deal was still far from being agreed at the time of writing, so little can be said about it, apart from the fact that taking ownership of the factory would open up the possibility of upping production significantly without burdening Longbridge significantly. However, as 2003 draws on, it would appear that MG Rover's plans are, in fact, to sell-off the 25 and 45 designs to the Polish, in order to fund the continuing development of the RD/X60 - the appearance of RD/X60 styling models on a Polish website (and their subsequent leak to Autocar magazine) certainly indicated that the company had been showing them to the Polish government in order to demonstrate future plans.
What direction should the company go, faced with an uncertain future?
There are perhaps two scenarios – one built around sports cars, and one not:
One thing that MG Rover (and, of course, its antecedents) excels at is sports cars and sporting saloons. The surprise announcement shortly after MG Rover’s formation of their purchase of the Qvale sports car company in Italy did point to the determination to re-establish the MG brand as a force to be reckoned with. What did Qvale have that MG Rover wanted? The Mangusta sports car! Basically, a re-bodied version of this two seat, V8 powered, composite bodied convertible would make the ideal basis for a new and upmarket MG sports car. A restyled version, penned by Peter Stevens, appeared in double quick time, coupled with the announcement from MG Rover that a productionised version of this car, codenamed the MG X80, would be following soon after. MG Rover judged that the MG marque had the strength of following to allow them to move into competition with luminaries such as Lotus, Porsche and Mercedes-Benz.
The process of re-building MG had been made a lot easier than it may have been in years gone by, thanks to the appearance of the MGF back in 1995… MG had never gone away in the minds and hearts of die-hard sports car enthusiasts, and its value as a brand had been very strong up to that point. The appearance of the MGF was proof of the publics’ love for the marque – and this characterful sporting car had done much to further strengthen MG.
So MG’s future could be a bright one: the MG saloons have demonstrated strength in depth within MG Rover at sorting out a car’s chassis, but more importantly than that, the new MG TF has proven exceptionally able compared with bigger budget rivals. The continuing development of the X80 (into the delicious XPOWER SV model) would also underline the fact that MG Rover could quite easily, and probably will, make a success of MG. That being the case, could MG Rover, therefore, become the company that Jon Moulton envisaged when he tabled the Alchemy bid to BMW: a specialist producer of sports cars that produced, approximately 50,000 units per year. Certainly this scenario would make a very solid business case for itself (solid enough for a venture capital company to risk giving it a go), but it is somewhat at variance with what John Towers planned for the company back in 2000. MG Rover could easily survive and prosper on the back of something resembling Alchemy’s plan – certainly long enough to become appealing for a competitor to snap the company up.
The other scenario, and frankly the more risky of the two, is for MG Rover to continue in the “volume” sector as the strategy has been since the company’s creation in 2000. Certainly, the plan was holding steady for MG Rover: production may have dropped slightly to 170,200 in 2001, and the company continued to make a small loss (£187million in 2001, falling to £90 million in 2002) following this plan, but it did indicate that the “volume” plan had legs, and it had much more success than most analysts predicted in 2000. Looking at the earnestness that MG Rover appears to have with regards to the RD/X60 concept’s fruition into production, it would appear that this continues to be where the company’s serious ambitions lie. Certainly, the fate of the West Midlands company appear to depend on the success of the RD/X60 alongside the continued success of the Rover 75.
Scooped by Autocar magazine in March 2003, the X60 derivative of the new car appears to remain pretty faithful to the TCV prototype, revealed at the Geneva motor show, the previous year.
The big question is whether MG Rover can deliver the RD/X60 onto the marketplace in time - the launch date was set for 2004, but this appears to have slipped back to spring 2005. Certainly the demise of TWR has had a serious effect on the car's development, and the fact the buzz at the 2003 Geneva motor show was that the RD/X60 was well behind schedule and overweight pointed to a less than favourable situation at MG Rover.
The Rover saloon version of the RD60, again scooped by Autocar magazine showed a delierately more conservative approach to styling... However, following the collapse of TWR and the set-backs suffered by the RD/X60 programme, this model was shelved.
Getting the RD/X60 into production will only be the first hurdle to get over: beyond that, the car will have to be very good to be considered on the A-list of medium sized cars. This market is the hardest fought, and when one considers that it cost Ford and Volkswagen billions to get their Focus and Golf models onto the market, MG Rover’s task is thrown into further relief. However, MG Rover in their previous incarnations have demonstrated time and time again, that they can deliver a good car on a tight budget – one only has to look at the Rover 25, MG TF, and before that, the Austin Metro to see that.
So, assuming that the RD/X60 hits the market in 2005, and it is class competitive (at the very least), then it should sell reasonably well in the UK. But the new Rover must to offer something extra, in order to do just that – they will shy away from going down the “premium” route, so the car will need to be more clever and more stylish and certainly just as reliable as its rivals in order to achieve that. But home sales would not be enough to finance further new cars, and in order to sell well in Europe, it would need to be a truly exceptional car, especially considering the reservations that continental buyers have for Rover, given the company’s chequered past. Perhaps, it is here that the embryonic deals with TATA and an as-yet unnamed Chinese company (that stepped into the breach following the failure of MGR/CBIH) will make their presence felt – and that Rover will find profit in producing their cars for emerging markets.
Even there, risks can be found, given the fact that Ford, Fiat and the Japanese already have a noticeable presence on the Indian sub-continent, and that in China, all the serious players are chasing sales. Be that as it may, perhaps it is most fitting to describe the RD/X60 as MG Rover’s “Last Chance Saloon”, although these negative connotations applied to such a term does not sit well with what appears to be a very interesting new car.
So given a following wind, MG Rover could make it as a small volume player, and would more likely make it as a sports car manufacturer. But either way, ultimately, the long-term aim for the company must be to find safety under the wing of a bigger player. MG Rover has much to offer a bigger company: an efficient factory, engineering excellence, and the tried and tested ability to produce competitive cars on a shoestring. Back in 2000, when John Towers so memorably produced a rescue plan for the company demonstrating that there was life after BMW, he described himself as Rover’s “custodian”; this in itself would demonstrate that Towers was thinking along those very lines - to keep MGR afloat until a saviour emerged...
The whole of the UK should keep its collective fingers that he is successful in achieving those aims.
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