MG Rover and Iran is an interesting might-have been. After extracting Powertrain from BMW in 2000, MG Rover set about turning the operation into a stand-alone business, supplying K-Series engines and development expertise to motor manufacturers who needed the assistance.
MG Rover’s brief flirtation with the Iranian company, SAIPA, during 2003 to 2005 was a clear indication that its management knew that in order to survive, deals needed to be done in the East.
Words: Keith Adams Pictures: Mandy Metro/Ms A-Series
SAIPA and the K-Series powered Kia Pride
Back in 2002, the world was a very different place. MG Rover was still in business and, although the company was sinking fast, plans were being hatched to collaborate with other OEMs across the globe. Fiat and Matra were both approached with a view to a variety of models being re-badged and marketed as MGs or Rovers.
MG Rover evaluated the Espace and the Matra M72, and also talked to Fiat about producing a Roverised Fiat Stilo – but Longbridge’s bosses passed that one over. European options were running out so MG Rover’s bosses started looking towards the East for some form of salvation.
The failed MG Rover collaborations
The first deal was with Tata to produce the CityRover – initially a re-badging exercise which was set to bloom into something more significant had time been on MG Rover’s side. For an insight into what the Brits and Indians might have achieved with a little effort, one only has to look at the improvements incorporated into the CityRover Mk2 – the result of British Engineers going out to the Tata assembly plant in Pune, India, and suggesting changes in order to improve quality.
With that deal in place, MG Rover’s bosses turned their attention the world’s fastest emerging market, China, to see if there was any chance of brokering a deal with one of its carmakers. MG Rover entered into negotiations with China Brilliance (or Huachen) – that looked like a promising deal until BMW swooped in and signed a JV agreement worth $500m.
The only surviving remnants of MG Rover’s ill-fated collaboration with China Brilliance are a number of Chinese Rover 75s, which were used to show off to potential buyers and dealers in China (and which allegedly brought in £50m to Longbridge for services rendered).
European options exhausted; Asia investigated
MG Rover then opened talks with the Malaysian OEM, Proton, at the end of 2003 – that resulted in a Letter of Intent being signed in February 2004 and a Gen.2 being delivered to Longbridge for the styling department to work on and produce a Roverised version.
Again, that deal fell through. The rest, we know, is history – MG Rover and Shanghai Automotive began talking in 2003, a collaborative deal was prematurely announced by John Towers in November 2004 and, in the run-up to the General Election in April 2005, the Chinese pulled out (despite the direct intervention of the Treasury Department) and MG Rover went into administration days later.
Looking to the Middle East
However, one less well-known potential JV which MG Rover was more than keen to investigate was in the Middle East. In 2004, MG Rover entered negotiations with SAIPA and Dastaan of Iran with the initial intention of shifting its mounting stockpile of unsold cars.
MG Rover’s main objective was the sale of the production hardware for its older models and, ultimately, the construction of an assembly plant in Eastern Iran with a 150,000pa capacity. Dastaan was said to have been planning to locate the Rover plant in Sistan-Baluchistan, a free-trade zone with special tax incentives for foreign firms, and the plant was to have opened in 2006.
The initial export deal was fairly straightforward – a trial shipment of 2000 Rover 45 and 75 models (specced in accordance with the wishes of the Iranians) and said to be worth £20m was due to leave the UK in May 2005, with a further £30m’s worth of cars committed should the cars sell as well as both parties hoped. Sadly, the Joint Venture (production) deal floundered in early 2005 in the light of MG Rover’s high-profile announcement that it was ‘ready to sign’ with the Chinese, but that wasn’t to affect the export of those Iranian-spec 45s and 75s.
Details made public in 2005
Some details of the Iranian deal became public around the time of the MG Rover collapse – especially as there was some fleeting Iranian interest in buying Longbridge’s assets from the Administrators in 2005. However, the Iranians pulled out when they realised that the Chinese had a more fully-stacked hand to play with. MG Rover’s Head of Business Development, Russ Thomas, confirmed at the time that he had been in talks with Dastaan for about 15 months.
‘The plan was to start with units fully-assembled in the UK, then move next year to partial assembly. Eventually, the idea was to reach full assembly of 150,000 cars a year. Had it been successful, it could have been very profitable,’ Thomas said.
The export deal never took place because of MG Rover’s collapse into administration and we’re still to confirm the details of what happened to the £20m from Iran earmarked for those cars.
How the K-Series Kia Pride came about
Another fascinating twist in the Iranian story emerged during the summer of 2005. An unassuming Iranian-registered Saipa Saba was spotted parked near the Kremlin by enthusiasts on the first Pride of Longbridge march.
A quick look underneath the bonnet confirmed that there was a K-Series engine nestling there and paperwork confirmed that the car was – or had been – in the process of being evaluated by engineers at Longbridge.
One engineer confirmed this: ‘The vehicle you have was made up by PTL engineers and demonstrated to the Iranians. Not sure how much thought went into brakes etc., but the performance of the car was significantly improved.’
Making Powertrain stand on its own two feet
The Kia is all that remains of a proposed business venture between Powertrain Limited (as distinct from MG Rover) and SAIPA, which would have ensured the company’s survival post-2005. Our engineer added: ‘Project Dastaan was one of Powertrain Ltd’s attempts to reduce its reliance on MGR for the sale of engines.
‘I guess the guys at the top could see that the tie in with MGR was not the soundest business plan. A team of PTL management went to Iran with a view to selling engines. Ultimately, it could have led to the Iranians taking more engines than MGR and hence make PTL a viable business in its own right.’
And that is why, in the accompanying picture, the K-Series was to wear a Powertrain-branded cover – Powertrain was very much a going concern and the K-Series power units were still eminently saleable to third-party OEMs.
Could K-Series have been sold off successfully?
This branding exercise looked like a logical step – in fact, one unnamed source recently told AROnline that there were discussions ongoing as to whether Powertrain could be floated off and go on to become a financially viable independent company, working in conjunction with technology partners such a Camcom to develop new engines which would be financed by the sales of the current K-Series power units.
Unfortunately, the collapse of both MG Rover and Powertrain in 2005, meant that these ventures never bore fruit and any deal to produce a 21st century Rover-shaped Paykan replacement was scattered in the wind.
AROnline would, as always, really like to hear from anyone who knows more about this Iranian deal.