2003 financial performance: could do better…
28 October 2004
MG Rover reduces losses to £77 million…
(Picture: Virtual Brum)
In a tough market, where rivals are offering fearsomely competitive cars, MG Rover defiantly remains with us. For some time, the pundits have been writing obituaries for the concern, stating that the company will run out of money, and bite the dust, leaving us with nothing but the valuable MG marque name to sell to the highest bidder.
So, some four years after the formation of MG Rover following BMW’s disposal of the Longbridge plant and all its assets, the company has just released its latest set of financial figures. There is no getting away from MGR’s poor performance in the UK’s market place. The company now seems to have settled into a monthly pattern of selling 30 per cent less than last year (itself not a great year), and even the once strong MG seems to be losing ground.
September and YTD sales paint a bleak picture compared with last year
|Single month||Year to date|
The facelifted models do not seem to have given a lift to sales, which has proved a disappointment for the company. Of all the cars the company offers at the moment, only the Rover 75/MG ZT and MG TF have not suffered from catastrophic losses. However, the company has tightened its belt, and a new cost-saving initiative headed up by new non-executive director, Nigel Petrie does seem to be bearing fruit.
The headline figures
|Year to 31 Dec 2003||Year to 31 Dec 2002|
|Loss before goodwill||£77m||£95m|
So although MGR is still losing money and market share, it is still in a reasonable position with the banks, with a cash balance of £213 million.
Some elements of the media seems to be painting something of a doom-and-gloom picture of events at the moment, but it has to be said that the company is in pretty good shape now that it has found a collaborative partner. The Chinese authorities are yet to rubber stamp the MG Rover-SAIC deal, but this has now been described as a “formality”, and once this is underway, the vitally important RD/X60 will be a couple of years away.
Kevin Howe has confirmed that the company plans to build the RD/X60 in China as well as the UK, which should put the minds of many Midlanders at rest, and the mere fact that he is talking in such terms must be viewed as a move in the right direction in terms of PR and how advanced the deal must be.
It is interesting to note that we have heard from a couple of sources MGR has ordered tooling from Germany for the RD/X60, but has yet to start moving the RD/X60 along in Birmingham, so obviously, the bulk of the cash has yet to materialise from China. However, this is only a matter of time, and once it is coming through, the the British and the Chinese can start investing and get things moving.
|Our focus is now firmly on the future.|
We continue to invest in the development
of the MG and Rover brands and to review
our cost base as we work towards the
planned collaboration with SAIC…
Kevin Howe: 28 Oct 2004
Kevin Howe spoke in positive terms when he briefed the press about today’s figures: “In an increasingly challenging environment for the automotive industry, we have reduced the Group’s losses for the fourth consecutive year to a level that is now less than 10 per cent of that in 1999, the last full year before we acquired the business from BMW. Our focus is now firmly on the future. We continue to invest in the development of the MG and Rover brands and to review our cost base as we work towards the planned collaboration with SAIC, announced in June 2004.”
Interestingly, Kevin Howe confirms in his shareholder statement that the company is commited to fixing the ills of the troubled CityRover. He said: “We are currently undertaking with TATA a comprehensive review of the overall competitiveness of CityRover following the recent introducton of new challengers into this fiercely competitive sector of the market.” He also confirmed that MG Rover has received its initial tranche of cash from the Chinese, and that the two companies intend to sign their final joint venture agreement in early 2005. So expect RD/X60 in late 2006/early 2007…
For a full copy of the shareholders’ report, you can download it here.
We like this depiction of the saloon RD/X60: let’s hope that AUTOCAR’s rendering is not a million miles away – a little bird tells us that it is pretty representative of the current design proposal.
Discovery 3 a Rover Group era design?
29 October 2004
With thanks to anon…
When the wraps came off the Land Rover Discovery 3 at the British Motor Show in May (which, sadly, was not its World Premiere), I happened to hear a whisper from one of the darker corners of the “Ford Hall” that this design was not that new at all. In fact, it had been well underway before the Ford takeover. As is the case with these stories, it was filed away for further reference, with the hope that further snippets would appear in the fullness of time…
Well, these things have a habit of coming out in the wash, and it is good to know that we get to hear these things at austin-rover.co.uk Towers.
It would seem that work began on the Discovery 3 sometime around 1994, a long time before the 2001 Range Rover was even a glint in its designers’ eyes. It was well-known that the Discovery was nearing the end of its useful life, and being the company’s biggest seller at the time, it made sense to replace it with something upto date; especially as the 1989 car was actually very closely based on the 1970 Range Rover.
The idea was a sound one, and now with BMW on board, at least there would be a healthy amount of cash available to finance the development of the new car. So, the new Discovery began to take shape under the guidance of prolific Rover Cars and Land Rover engineer Bill Shirley at the time. The styling was developed around this time, and the design or the current car has been taken from the Discovery 2 project, kicked off in 1994. According to our source: “…apart from the dip in the rear tailgate, the car is as designed by Land Rover in 1994, and the car as it stands today was testing in Lake Arrowhead California, 10 years ago!”
|…apart from the dip in the rear tailgate,|
the car is as designed by
Land Rover in 1994…
The attractive interior of the current car also seems to have been put together during this time. Our informant said: “The 2004 dash is identical to the 1994 original designed by a man called Mobblie, and even provision was made to incorporate the small monitor on the dash, quite advanced for 10 years ago. A Geoff Upex design was rejected.”
In the end, the project was canned by BMW, as Wolfgang Reitzle felt that the Range Rover P38A (also known as Pegasus) needed replacing as a greater matter of urgency than the Discovery did. So, the second generation Discovery, which was pencilled in for a launch date of 2001, was pushed aside in favour of the Range Rover, a car which benefited from the work already completed on (the stillborn) Discovery 2. Some of the engineering work from this project also found its way into the Discovery Phase 2, (codename: Tempest).
So, it looks like the development story of the Discovery 3 is an interesting one, which could span ten years…
BMW Executive hits out at Phoenix Four…
The Financial Times has pointed out a particularly unpleasant financial figure in this year’s report. Basically, the company’s Research and Development spend in the lowest that it has been since the company’s formation in 2001. According to the report MG Rover spent £14.7m on R&D last year, which is 20 per cent of what it was in the company’s first year. This spend represent a fraction of the budget required to get a volume car into production and highlights the plight of the company as it waits for an injection of Chinese cash.
However, MG Rover said that the low R&D spend reflects the regrouping of the company following the collapse of TWR and the neccessity to bring development of the RD/X60 in-house. Sad as it is to say, this seems to bring the pay of the directors into sharp relief, as they set up a £16.5m pension fund for themselves, handing themselves a four-way split of a £10m loan note, and separately taking control of the MGR Capital finance operation. Research and Development represents the lifeblood of the company, and its willingness to invest in its future, and these figures make sad reading.
At one per cent of the company’s annual turnover, this level of R&D spend is the lowest in the industry.
Daniel Ward, Rover’s new head of communications, told the FT that spending across the group for this year was “likely to double” as work got under way on the RD/X60 thanks to Chinese cash. Let’s hope that it does significantly more than double!
It is against this backdrop of doom and gloom that Jim O’Donnell, managing director of BMW GB, decided to vent his personal feelings on the matter. He said: “I think it is a disgrace. The Rover board pay themselves more than the BMW board if you include the pensions. I think it is the unacceptable face of capitalism. BMW gave them a real opportunity for £10.”
He made the comments at the annual BMW press dinner, and was clearly upset about the affair among other things. According to one source O’Donnell was a little worse for wear, and it was not just MG Rover and the Phoenix Four that he lashed out at, but it seems only these comments have made it into the press. The Telegraph journalist that he vented off to must have been almost too shocked to keep a hold of his dictaphone – as O’Donnell said some pretty scathing comments: (On the personal risk to the Phoenix Four in 2000 when they bought the company) “What is the risk? As far as I am aware, they did not risk a lot. If a private equity group acted like this. they would get slammed in the press.”
He also expressed regrets about BMW ever having been involved with the Rover Group. He said: “I regret BMW buying Rover in the first place. BMW tried very hard. They put a huge amount of investment into it and it was clear that it was not going to work. From a German point of view, we were able to walk away feeling that we have done our best and given the company a chance. With hindsight maybe Alchemy would be the better, I don’t know. BMW have done the honourable thing and they have been let down.”
BMW management in Munich have been quick to play down these press reports, and MG Rover has dismissed them without further comment, but it is obvious that there is still a great deal of bad blood between the two parties.
Codemasters competition winners…
Thanks to everyone who took part in the competition to win a shiny new copy of Codemasters’ Colin McRae Rally 2005. The winners were:
The games should be winging their way to you… congratulations!
Clarkson upto his old tricks…
Oh dear, oh dear… it seems that TV’s highest paid and most successful motoring journalist has seen fit – again – to rubbish the Rover name – and for no good reason…
In yesterday’s programme in the guest slot, the famously dry comedian Jimmy Carr admitted to owning a Rover 75 (which had been subjected to a sub-standard LPG conversion – who the hell was responsible for that?) JC’s response to the revelation was “what a dreadful car!”, to which Jimmy reacted defensively. The Rover 75 generally seems to have a good name in the press, and even CAR magazine (notoriously anti-MGR) seem to regard it as a well-sorted, if rather twee car.
In fact, it is hard to find a critical road test of the 75… certainly anything, which would cause anyone to regard it as dreadful.
So, JC has obviously found something so dreadful in the 75 – which no-one else has been able to find… or perhaps, he is simply getting tired of the MG Rover. It is a phenonemon not uncommon in the press – and there have been a few choice remarks made in private in about the way the company is heading. But comments like this, which are untrue, are doing nothing to help the situation. Unless, as has been said before, JC is waiting for the end, so he can get that book out.
Still, MGR fans could take solace in the fact that the driver of such a dreadful car managed to smoke around the Top Gear test track faster than anyone before…
Good on you, Jimmy.
Rover 75 Coupe and MG TF concepts debut at Autocar awards.
16 Nov 2004
Rover 75 Coupe Concept
It’s official – here’s the car that Rover fans have been waiting for since the launch of the 75 back in the autumn of 1998. The coupe version of what has been dubbed the best car in Rover’s history.
Looking at the design proposal, it is hard not to be impressed with the saloon to coupe transformation, and it demonstrates perfectly what the 800 started back in 1992. Big coupes nearly always look better than their saloon counterparts. The roof line is stunning, and it has gelled perfectly with the rest of the car.
According to MG Rover, the company’s design team wanted to mark the first 100 years of the Rover marque with a stylish design that would sit confidently as the latest in the line of renowned Rovers like the P4, the handsome P5 coupe, the innovative P6 2000 model, the bold SD1 hatchback and the classically elegant 800 Coupe. This objective has been achieved with the Rover 75 Coupe concept. The concept’s interior strongly focuses on Yew wood and Tan leather hide introducing the style of designer furniture into the automotive lounge, extending Rover’s trademark for a welcoming interior.
Peter Stevens, Rover’s design director says: ‘I want people to turn away for a moment from post modern brutalism and to enjoy the elegant and timeless lines of the 75 Coupe’s design. The true character of a Rover comes from its ability to present a cosseting environment with comfort and refinement being the high priorities, elements that should be expressed in the form and detailing of the exterior of the car. Heritage is a great strength for a marque as it gives you the terms of reference and something to build on for the future. That is exactly how we saw the challenge of presenting a Rover concept in its Centenary year.”
If nothing else, it brings a touch of British elegance and understatement to the sub-£30K coupe market, and hopefully it might pursuade a few premium car buyers to return to the Rover fold. No mention has been made about production as yet, but MG Rover would like to get it into production as soon as possible – it’ll certainly add a much-needed touch of glamour to the range.
MG GT Concept
Hinted at for some time in the press, the MG GT Concept marries the well-known capabilities of the MG TF chassis and the KV6 engine, and packages them up in a pretty new hard-top body. Not yet cleared for production, it is MG Rover’s ambition to get the car into production at the earliest opportunity, as long as the demand is there.
The company is playing on the heritage of the MGB and its transformation into the GT in 1965, and draws parallels between that car’s search for bigger engines and the additon of a 200bhp KV6 into this one. Raising power to 200bhp, performance is predicted to give the GT sub six second zero to 60mph acceleration and a top speed of 145mph. The increase in speed is aided by the reduced drag GT style, cutting the aerodynamic drag coefficient from 0.35 to 0.31.
As engineers and planners consider ideas for the next generation of the UK’s top selling sports car they have been researching the ‘fixed-head’ market. Many of the ‘warmer climate’ markets prefer sports cars to have an integrated, coupe style and air conditioning to cope with high summer temperatures. Also, recent models like the Audi TT have shown that hardtops can be highly popular for customers who prefer the style of a fixed-head coupe. Features of interest specified on the MG GT concept include 17” Gunsmoke five-spoke OZ alloy wheels, similar in design to the MG XPower SV. An extended front aero splitter is balanced by a longer tail-spoiler integrated into the bootlid design, generating reduced lift at speed.
New door mirrors feature integral side direction indicator lamps and the switch for the electronic door opening feature, that in the process have eliminated the external door handles for a clean exterior design profile. The interior is trimmed with Burgundy Red leather seats with the fascia and door casings also following the same colourway. Peter Stevens, MG’s design director says: ‘We would love to expand the MG TF range with a high-performance MG GT which has inspiring handling, practicality and great looks. The KV6 engine combines a superb soundtrack with a surge of power and a wider performance envelope to drive within – perfect for a sports car.”
Lets hope that the company can sort out engine access and installation with the car’s transformation into a coupe – if it wants more power, maybe the Sprintex supercharged version of the Australian ZT 220 can be squeezed in…
British to lose control of Rover (again)?
20 Nov 2004
Chinese carmaker SAIC is set to control a crucial joint venture with MG Rover under terms of a cooperation deal expected to win approval from Beijing early next year, MG Rover says.
The deal revealed on Saturday calls for injecting around £1 billion into the venture, providing crucial liquidity for the last British-owned volume carmaker and securing 6100 jobs at the Longbridge-based group.
It also gives ambitious Shanghai Automotive a solid base in Europe as it seeks to broaden its global reach. MG Rover spokesman Daniel Ward confirmed a report in the Independent newspaper that SAIC will own 70 percent and MG Rover 30 percent of the venture, which will develop and produce cars in China and England. It aimed to make 1 million cars a year.
Ward stressed, however, that MG Rover would remain independent. “It is not a takeover, it’s a partnership,” he said, reiterating MG Rover’s previous denial of reports that SAIC would acquire the group.
Ward said the £1 billion figure reflected estimates of what it would cost to develop a new range of models, the first of which would be a replacement for the Rover 45 due in 2006.
A new small car, a large executive model and a new sports car were set to follow. “The plan would be to build all the core models in both locations,” Ward said, with the partners focusing output on models tailored to meet local demand. New models would continue to be designed in Longbridge, he said. Rumours about a tie-up have circulated since June when SAIC and Rover said they had signed a cooperation agreement.
Final details of the accord are still being worked out, but the plan could be submitted to the Chinese government by year’s end and approval was expected by the end of January, Ward said.
SAIC officials weren’t available for comment.
MG Rover has been struggling to break even after being sold four years ago by Germany’s BMW for just £10. The Independent said there would be separate UK and Chinese companies to make the new models in Birmingham and Shanghai but the key assets and intellectual property rights would be contained in the venture, giving the Chinese effective control.
|There will be separate British and Chinese|
companies to manufacture the new models in
Birmingham and Shanghai but the key assets
and intellectual property rights of the two
carmakers will be contained in the Chinese
-controlled joint venture.
It said John Towers, chairman of MG Rover’s parent group Phoenix Venture Holdings, said the future of the company rested on the deal and he was confident it would be sealed.
Should the deal go through, it would open a major beachhead in Europe for Chinese automakers seeking to broaden their reach, even though Ward said SAIC was unlikely to export to Europe small cars it makes for the domestic market. SAIC is already the main Chinese partner of both General Motors and Volkswagen AG. It aims to become one of the world’s top six automakers by 2010 and has said it wants to list its stock overseas to raise a reported $2 billion.
It agreed last month to buy control of South Korea’s Ssangyong Motor Co, and executives have said SAIC would keep seeking overseas acquisitions and develop its own brand.
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