Archive : Rover powers from strength to strength

Carole Nash Classic Insurance Specialists

This day in history – from the daily news archives.

Rover 200: a shining star in the 1995 Rover range
Rover 200: a shining star in the 1995 Rover range

THE INDEPENDENT
A year along the road, BMW has radical plans, writes Russell Hotten
Russell Hotten

A year ago this week, politicians were outraged at the withering away of Britain’s industrial base, unions were crying sell-out and the Japanese were muttering darkly of treachery and revenge. Few industrial issues have managed to inflame such passions, but BMW’s £800m takeover of Rover Group from British Aerospace was as controversial as they come.

Yet, as Rover executives sit down to a special lunch today to mark the first anniversary of the takeover, it all looks rather different. Rover continues to go from strength to strength, with Land Rover excelling all expectations. Although the volume car business is still loss-making, the company is arguably Europe’s most efficient car producer. It is hailed by politicians of all sides as an example of successful British industry.

The unions have won a pace-setting pay rise, and a new model development programme will mean Rover has created 3,000 jobs in a little more than two years. Even at Honda, whose 14-year collaboration and influence is behind Rover’s resurgence, pragmatism overcame pique. Although the cross- shareholdings have been unwound, the two companies continue to work very closely.

Mindful of the controversy, BMW has trod warily over the past 12 months, preferring to listen and learn rather than make strategic decisions. But 1995 will be a crucial year for Rover, which is launching new models and must decide on the replacement for old ones. The German company has radical plans to strengthen the Rover brand name and double sales to about a million.

A £1.2bn five-year investment programme, agreed under BAe, will now almost certainly reach about £2bn by the end of the century. Arthur Maher, a former chief economist at Rover and now a manager at DRI Consulting, believes the takeover is working because the UK car company already saw BMW as a role model.

“To a great extent, BMW’s plans are just an extension of what Rover wanted to do itself,” he said. “Under Graham Day, Rover aspired to be a sort of BMW, but it was owned by British Aerospace, which did not really understand the car business. That is why the BMW takeover was greeted so positively by Rover management.”

Bernd Pischetsrieder, BMW’s chairman, says he intends to take Rover up- market, producing more exclusive models and reducing dependency on the domestic market. This is just what Rover executives were talking about in the 1980s, but they did not have the finances and technology that came with the BMW takeover.

John Towers, Rover’s chief executive, will not talk about which products and plans are on the drawing board, other than to say:
“In a world that sells very good ordinary cars we have got to create extraordinary cars.”

Replacements for the 200/400 series will be unveiled this year, and a new small car to replace the Metro is planned. But Rover has still to decide on replacements for the 800 and 600 series, and more niche products, such as the MG sports car, launched at the Geneva motor show last week, are said to be in the pipeline. Land Rover’s sales are achieving record levels and it is close to agreeing production of a smaller Discovery model.

BMW may also get Rover to re-think what to do with the Mini. With Ford and General Motors planning economical city cars, it must be tempting for Rover to remain in this sector of the market. There is even rumour of a return to the important American market, abandoned four years ago after the flop of the Sterling marque.

All this means Rover’s manufacturing facilities will need to become more flexible. The introduction of BMW’s logistics expertise will ensure this, but it will take time to alter the batch-production system introduced by Honda. The long-term strategy is to reduce Rover’s dependency on the UK, where about four out of every five of its cars are sold. That will mean strengthening the company’s position in traditionally weak European markets. Although Land Rover can tap into BMW’s distribution network, Mr Towers said any product and marketing programmes for the car business would be kept clearly separate from BMW. “The identities will be preserved. Blurring the distinctions would be damaging for both marques,” he said.

Mr Towers said Rover’s sales are increasing in BMW strongholds such as Austria, Switzerland and Germany, where Rover sold 13,000 cars last year in a market of 3.5 million. “But there is no distribution link. The sales increase is because the BMW takeover has given us a level of exposure that we would never have got.”

Such concerns about blurring identities could mean a delay for replacement of the Rover 800, as it would probably be based on a BMW 5-series platform. Analysts believe BMW will therefore opt for a new 600 series as its first big strategic decision on Rover’s future. It was said at the time of the takeover that BMW was only really interested in the profitable Land Rover business. But Mr Pischetsrieder’s comments should be enough to refute such suggestions.

If they are not enough, look at the figures. Rover’s output rose 16 per cent last year to 478,000 vehicles, its best performance since 1989. Demand in mainland Europe rose 16 per cent, against only 3 per cent in Britain. There is no question that the future of the group, not just Land Rover, is more secure than for many years.

Increasingly it looks as though the only damage inflicted by the BMW takeover was to BAe’s balance sheet – because Rover was sold too cheap.

Keith Adams

Keith Adams

Editor and creator AROnline at AROnline
Created www.austin-rover.co.uk in 2001 and built it up to become the world's foremost reference source for all things BMC, Leyland and Rover Group, before renaming it AROnline in 2007.

Is the Editor of the Parkers website and price guide, formerly editor of Classic Car Weekly, and launch editor/creator of Modern Classics magazine. Has contributed to various motoring titles including Octane, Practical Classics, Evo, Honest John, CAR magazine, Autocar, Pistonheads, Diesel Car, Practical Performance Car, Performance French Car, Car Mechanics, Jaguar World Monthly, MG Enthusiast, Modern MINI, Practical Classics, Fifth Gear Website, Radio 4, and the the Motoring Independent...

Likes 'conditionally challenged' motors and taking them on unfeasible adventures all across Europe.
Keith Adams

Latest posts by Keith Adams (see all)

25 Comments

  1. Rover sold 13,000 in Germany in 1995. I wonder if that’s record for UK exports of BMC>MG cars. 478,000 sales – nearly five times what it would be 10 years later. Amazing that they should go from a crest of a wave to oblivion in such a short time. The over-priced and underwhelming HH-R came out a few months after thus article; a few years later BMW was describing Rover as the English patient.

  2. “BMW’s £800m takeover of Rover Group from British Aerospace was as controversial as they come.”

    Can’t help thinking that was cheap? Considering at the time it was a profitable business, with good sales. But considering BAe had only paid £150m a few years before, and had raped the company of assets in the mean time by redeveloping redundant factory sites then pocketing the proceeds.

    Also found it amusing that BAe said they didn’t understand the car industry, yet Honda – 10% owner of the Rover group clearly did. It says BMW have logistics expertise, so does that mean Honda didn’t? I would have thought BAe had logistics expertise too, after all if you’re making anything whether it’s aircraft or cars you still need parts delivered to you and you still need to deliver the finished product.
    So they needed help with Logistics, but the former Logistics Division (Unipart) was sold off prior to BAe taking it on, and still operates globally as a logistics provider!?

    Unipart is probably the most successful part of the old BL.

  3. Bae mugged arg,the country and made a right killing,just look what happened with the nimrod fiasco-cost billions,late and charged £200 million to scrap it!

  4. How can a company go from making nearly 500,000 cars a year go downhill so quickly?

    1.Within 6 years of the takeover by BMW they wanted out! Hardly a sign of commitment and contrary to the German philosphy of planning for the long term.

    2.The Germans got Rover when the pound had collapsed against the DMark in 1993, within 5 years the pound had appreciated by around 25% which aggravated the losses and led to the German owners pulling the plug from under the German management’s shoes.

    3.The British Government had been approached in the late 90s by BMW for modest financial assistance towards the modernisation of Longbridge. This help was not forthcoming, thus further annoying the Germans.

    4. BMW kept Mini and revamped it, which is what Rover never had the money to do.
    Ford got Land Rover for a song.
    “Rover” was left battered without much going for it, everything worthwhile stripped off by BAe and BMW, so it was going to be an almost impossible task to expect anyone to turn it around.

    It should have been nationalised and kept going like any sane government anywhere else in the developed world would have done!!!

  5. Yep, BMW really did snatch defeat from the jaws of victory: imagine a company who’s range was MINI, Rover 75, Defender, Dicovery, Range Rover. Every one a winner. No reason to assume the 55 wouldn’t have stepped up to the plate too. The trouble was, BMW didn’t get round to developing and launching new models soon enough, so there was a period in the mid-late 90s when the range was old Mini, Metro, 25 (good but over priced), 45 (poor and overpriced), 600 (good but not marketed – and maybe not very profitable?) and 800 (old). At the same time they were paying for the development of the new models. So for a short-ish period Rover weren’t selling so many, had a lot of old models, and were spending a lot on investment. The Quandt family on the Board took fright and pulled the plug on Rover and sent off the estimable Piechetsrieder, the godfather of all this, with them. And then of course there was the 75 launch…

  6. I think the trouble was they just did the standard “5 year plan” the period commonly used in the business world, however i think some businesses sometimes need a little more time.

    You mention the Quandt Family though. We often hear about how Longbridge buildings should have been saved because of the historic importance of their use during the second world war. That’s a period of history the Quandt family prefer to keep quite about….

  7. @ Dennis:

    I wish you could say more about the Quandt family, who seem to hide behind high walls and net curtains all the time.

    The saving of Longbridge buildings is a very apt comment to make at the moment as there is currently a petition looking to save the former flight shed at Longbridge, which also served in more recent times as where the prototype cars were built.

  8. Well let’s just say BMW’s were the preferred choice of car for the gestapo….

    With many of the Longbridge buildings, while they were interesting to us as Rover group enthusiasts, they had little real historic or architectural interest. Metro-New west works was basically a big metal box, which you see on most industrial estates. Even East works was a basic Shadow factory design, dozens were build to the same design. Bentley Motors use one for their factory at Crewe (It made Merlins). The cab’s are really quite bland functional lumps. on the whole. However ‘the flight shed’ is perhaps one worth saving, even if it’s just for it’s architecture. I would imagine it would make a good Sports centre or something.

  9. So, what would have happened if Rover had joined forces with Honda instead of being bought by BMW?

    * Continuation of separate but complementary brands and ranges on shared platforms and engines?

    * Badge engineering?

    * Could / would it have been successful?

    Alas we’ll never know. Another ‘what if’ to mull over…

  10. If BMW had realised how successful the MINI would be, would they have kept Longbridge instead of Cowley?

    Could they have built the BMW 1 Series at Longbridge, as a replacement for the 25 and 45? Perfect assembly plant for those Hams Hall engines…

  11. Looking at the Longbridge annual production , the plant produced 293,785 cars in 1995 , the year of the article and the last year of mainstream R8 production . In 1996 it was 321,224 and in 1997 it was 343,157 . However in 1998 it slumped to 281,381 . Why did this happen ?
    My own take on this was that , yes , the strength of sterling did make the cars overpriced on the continent , where Rover had actually managed to increase it sales during the early 1990’s recession , something that must have made it an attractive purchase to BMW .
    Another factor was the sales appeal of the R8 in offering 16 valve technology when the opposition was stuck with 8 valves . Unlike the Mini and 1100 , this was a technical advantage that could be quickly remedied by the opposition .
    When the R3 200 and HHR 400 reached the market place this advantage had dissapeared .
    The relationship with Honda had run its course by 1995 . The Rover 600 and HHR had strict limits on the modifications Rover were allowed to make imposed by the Japanese . Honda refused to buy a controlling interest in Rover when offered the chance , the BMW buy out was the only game in town . Honda by now had the Swindon plant and the collaboration with Rover had served its purpose .
    The final factor , and I believe a major one , was the K-series head gasket failure issue .
    The decision to expand the K-series engine to 1.6 and 1.8 litres and dispensing with the previously used Honda units ( which no doubt did not please Honda ) resulted in the now infamous K-series HGF issue with most Rover cars .
    The Longbridge production figures suggest that from 1995 to 1997 consumers rushed to buy new R3’s and HHR’s in the expectancy of another great car . However by 1998 the extent of K-series HGF would have become known in the fleet market business , which would have killed Rover’s sales prospects in that market sector .
    Of course what needs to be asked and has never been satisfactorilly answered is why BMW/Rover did not fix the problem . Did Rover engineers tell BMW that HGF was caused by poor owner maintenance or were they simply in denial ?
    Regrettable as it may seem to the most ardent Rover fans , the HGF issue was a self inflicted wound similar to the Maestro and Montego of a decade before . No other parties were involved .
    In 1998 BMW began to panic rather publicly and the negative publicity had the same effect as two decades earlier and hit sales even further . BMW claimed Longbridge was hopelessly inefficient , but their figures included the ancient Mini and the equally archaic buld method it required which helped drive down the factories productivity numbers .
    So in summary I feel what went wrong at Rover was a combination of 3 factors .
    1. The strength of sterling killed exports .
    2. K-series HGF killed fleet sales.
    3. BMW’s public panic killed UK private sales .

    The first two factors were enough to push Rover into the red and BMW’s panic finished off the job .

  12. On K-Series:

    My take on this is that it actually started to become a MAJOR problem in the MG Rover era – when there’d be no more budget for quiet question-free repairs.

    The trade view was positive towards K-Series until about 2001-2002…

    /K

  13. I think the Freelander did considerable harm to the K-series’ reputation – a totally different class of vehicle and buyer with very different habits and expectations, and initially sullied by needing a structural recall if I remember rightly.

  14. I think many people were under the impression because the Freelander was a Land-Rover, it didn’t need that much servicing and could put up with abuse like a defender or series 3. The K-Series was basically just a car engine, and was never designed with the abuse that it might see in an off roader and Commercial Vehicle.

  15. Ian, I think strong competition had an effect in the late 90s.
    The Golf IV and Astra Mk4(?) both came out in late 97, both being significant steps forward from their predecessors. Then the fatal blow was the Focus in late 98, a car light years ahead of the Escort, which made the 400/45 look old fashioned and expensive.

  16. Sorry, but I think this is rather harsh criticism of the Freelander. As anyone with any ounce of engineering know-how will tell you, you can’t simply shove a standard car engine into an off-road vehicle and expect it to perform to the same demanding standards, without some re-engineering being required.

    This logic was embraced when the K Series was being developed as a 1.8-litre version, in order to perform in more demanding terrains, altitudes, angles and even when going through water. The fact the K Series engine, particularly those of 1.8 litres, had an issue with head gaskets is more down to the design of the engine itself and infrequent DIY checks on coolant levels etc. by the owner, than being attributable to one specific model (e.g. Freelander) or type of vehicle (e.g. SUV).

    Land Rover was far more committed in trying to resolve the design issues relating to the engine and customers’ dissatisfaction than MG Rover Group was. It certainly was in 2002 when question marks over the K Series engine’s reliability became well known about, as the report from BBC Watchdog highlighted that Land Rover had admitted there were issues concerning the engine, while MG Rover Group denied that there was a problem. From that point onwards, it was downhill all the way for the reputation of the once respected K Series engine.

  17. David: From memory, the issue in the Freelander installation was that a minor leak would cause the water level to drop below the level of the temperature sensor, so people could cook their engines without warning?

    And I agree that Land Rover did a lot to try and make the engine work – but once a car gets a bad rep in the minds of the public and trade, it is very, very hard to shake it.

  18. 1995 was they year the rot set in. As noted above the company had done pretty well the previous year, but then it was still making the R8. In 1995 they replaced it with the extortionately priced and dull as ditch water HHR/400 and then later that the almost identically sized 200 – better looking but still grossly over priced. They where doomed!

  19. I read somewhere that Rover Engineers did tell their BMW bosses how to re-engineer the K-series engines and to cure HGF. However the latter refused to take any action. Is that true?

  20. I think the same engineers also Told MGR management and it still wasn’t done. The same engineers told NAC/SAIC and hey presto it’s fixed (in the form of the N-Series)

  21. Hmmm…

    This is typical of the supine, fawning, obsequious press coverage of the BMW takeover of the time, the like of which Peter Mandelson would have been proud to get for New Labour.

    In truth, BMW had just cut off Rover’s pulmonary artery – its connection with Honda. Rover and Honda were a brilliant synergy; one was superb on body and suspension, precisely where the other was wanting; one has brilliant with engines, precisely where the other needed expertise.

    BMW spent several years plundering Rover’s specialist design and engineering know-how, and its brands, whilst leaving precisely nothing in return. Okay, if the 75 hadn’t had BMW input it might not have been quite as well detailed, but you can bet it wouldn’t have been such a stodgy drive in such dull colours.

    It grabbed Land Rover, nabbed Mini and stole into the night, leaving the core that was MG Rover depleted and devoid of future models. Asset-stripped, basically…

    The fashionable view remains that BMW were ‘a great influence’ on Rover, etc. But they were doing very well without BMW beforehand and rather a lot worse afterwards. Contrast that to Ford’s stewardship of Jaguar/Landrover and my point is made.

  22. “To be fair it was Honda themselves who cut it off, they said they didn’t want to work with BMW and promptly sold off their 10% share in the Rover group.

    As i remember Honda objected to the sale from day one, but BAe went ahead anyway.

    While Honda/Rover did make some great collaborations, the HHR Rover 400 was a bit of a failure compared to the rest. Not an inherently bad car, but wrong in various ways.

  23. If anyone’s interested in an opinion from grass roots level:-

    I was employed as a delivery driver (brake pipes & boot bracket manufacturer), just before and during the Honda/Rover association.

    One of may regular runs (from Avonmouth) was to Longbridge in the morning, then down to Honda’s Swindon plant in the afternoon.

    Almost without fail, here’s a generalised description of my day:-

    Arrive Longbridge mid-morning at first delivery lacation, join queue of trucks, edging forward every now & then for ages. Lucky to be unloaded by lunch time, often using their canteen close by for lunch.

    Eventually unloaded & proceed to second delivery point. Repeat performance, but slightly less waiting.

    Proceed to third delivery point. Repeat performance, but slightly less waiting again.

    During the day, I would watch partly completed vehicles being driven by the workforce between buildings in order (I assume) to finish certain processes – some parked outside and protected from the rain with plastic sheeting.

    Head down to Honda’s Swindon plant, deliver to only one location (where all parts coming in were checked).

    During that half-hour (max.), you could watch the car making process, and it appeared that virtually everything was completed on a continually moving rail in the one, much smaller ‘foot print’ unit.

    My thoughts were, “how ANY car manufacturer can compete with a new, purpose built, contained factory (of which there are now many), from the sprawling village that is Longbridge, is beyond me.”

    In my opinion, it needed to be flattened and started afresh, or a plant built elsewhere (negating the need to put people out of work).

    The layout of Longbridge appeared to be far too large and had a Victorian feel, and must have cost a fortune to maintain (so less money for everything else).

    I personally believe the main problem was a lack of investment in the preceding decades, allowing certain asian countries to leap-frog us with purpose-built modern facories that were bound to be more productive.

    After all, when they, themselves, eventually built factories in the UK, the production figures were comparable (if not better) to factories in their respective home lands, if certain newspaper reports are to be believed.

    The working environment should be continually evolving, as the ‘younger’ the factory, the more productive it will be.

    Vehicle technology isn’t the only relevant advancement, but would benefit accordingly.

    Not easy to do in the UK though (Perhaps understandably).

  24. Comment 10 – ” If BMW had realised how successful the MINI would be…”

    If BMW had realised how successful ALL of the proposed range – MINI, 55, 75 – could have been. Just imagine if the 75 had been launched with the confidence & commitment of it’s parent company, BMW. If this had been shortly followed by an equally confident launch of the 55. Is there any reason why, with the support of their owner, 75 & 55 could not have been equally successful as MINI? Was it only BMW’s short sighted crisis of confidence which prevented a successful ROVER GROUP as opposed to a successful MINI?

  25. “how ANY car manufacturer can compete with a new, purpose built, contained factory (of which there are now many), from the sprawling village that is Longbridge, is beyond me.”

    Thing is the actual factory building is only a small part of the equation, the internal layout and equipment is the biggest factor. Most of the time the building is little more than a large covered space. Which Longbridge has various buildings that fit that description, i think it was more the internal layout of equipment that was the problem. Longbridge’s CABs were effectively laid out as a purpose built contained factory in the 1950’s, lack of investment meant it was rarely updated. The last major update was for the launch of the Metro in 1980, where the New West works were built along with a conveyor bridge so completed bodies could be transported under cover rather than loaded onto lorries and driven across the road. Partially completed vehicles were stuck outside covered up when they lacked certain parts to finish them.
    Possibly the parts sitting in your lorry stuck in the queue outside. What they obviously needed was a single goods inwards, according to Austin Memories, it had just that in the 1950’s, they just never updated it or enlarged it.

Leave a Reply

Your email address will not be published.


*