The BMC/Leyland show at the newly-branded British Motor Museum at Gaydon on 3 July was my first sight of the Austin AR6 prototype, the car that was meant to replace both the Mini and the Metro in around 1988-89. Until I saw the AR6 in the metal, I was in no doubt that the main reason for the axing of the AR6 was on budget grounds – there was talk of a £400 million price tag for the project, though no doubt a great chunk of that was for the new K-Series engine.
Back in 1986, the new BL Chairman, Graham Day, had been charged by the Margaret Thatcher-led Conservative Government with the task of getting the company fit enough to be sold off before it consumed any more taxpayers’ money. The three years before Graham Day arrived at BL were dramatic to say the least, with the pendulum of fortune swinging away from Austin Rover when victory seemed within its grasp.
For perhaps a year from the spring of 1983, Britain seemed to endure ‘Maestro mania’, with both BL management and media pundits convinced that Austin Rover was back to rude health. The Montego followed on in April 1984 but, instead of the recovery programme gaining momentum, in the second half of 1984 it actually went into reverse. Now obviously quality on these cars was a consideration, as AROline’s Mike Humble, has testified, but the vicious price war in the showrooms was another factor as the big American owned giants, Ford and Vauxhall, slugged it out for sales supremacy.
The decision by Ford to retain rear-wheel drive for its Cortina replacement, the Sierra, was exploited by Vauxhall, which had the excellent front-wheel-drive Cavalier MkII, and a sales war broke out, with both companies offering incentives to attract the big fleet sales. Many fleet buyers were so impressed with the Cavalier that they then began looking at the Astra as an Escort alternative, and sales of that model increased too. Indeed, I recall an Autocar magazine road test where the 1300 Astra MkI was preferred over both the Escort and Maestro.
Throw into this mix the new Maestro, which everyone thought would be superb and make the same sales impact as the earlier Metro, then you had a recipe for Car Wars. Ford and Vauxhall were not going to give up market share easily to the newcomer from Austin Rover, and the cutting of margins hurt Austin Rover more than its American owned rivals. This sales war effectively neutralised the Montego in 1984, and its impact sales-wise was minimal. When Graham Day took control of BL in May 1986 Austin Rover could no longer compete as a manufacturer of bread and butter cars.
Such was the nature of the 1980s car wars, as the decade wore on Ford actually increased its UK market share as Vauxhall wilted, despite the General Motor’s subsidiary arguably having a more advanced range. The Ford Fiesta may have been upgraded to a five-speed gearbox in 1983, but it was a 1976 design, the Escort dated from 1980 and, whilst the Sierra was from 1982, it still retained rear-wheel drive when the rest of the industry had by and large adopted front-wheel drive. What this showed was that investment in advanced technology counted for nothing if the showroom price was not right.
Graham Day was therefore confronted with a conundrum: bring the AR6 to production and hope for the best, or opt for a cheaper option and re-engineer the existing Metro to accept the K-Series engine.
The problem for advocates of the AR6 was that Ford were now selling more Ford Fiestas in the UK than the entire annual production of Metros at Longbridge. How many AR6s would Austin Rover have to sell annually to make it viable and, in the then pertaining market conditions, was it feasible? Also, because of the abortive attempts to sell Austin Rover to Ford in early 1986, Ford probably had a rough idea of the AR6’s economics.
They certainly knew what it cost to make the existing Metro at Longbridge and had incentivised buyers towards their own Fiesta. By January 1987 the media was reporting that Austin Rover was going to axe the AR6 and install the K-Series engine in the existing Metro. The BBC even devoted an edition of The Money Programme to it. Labour MPs John Smith and Doug Hoyle raised the matter in the House of Commons.
In the aftermath of the Westland affair, there was an anti-foreign ownership of British business atmosphere, a notion that incompetence and under investment as long as it was British, was preferable to takeovers by foreign companies with managers thoroughly trained in whatever it took to get the job done properly. The demise of the AR6 and Rover’s further embrace of Honda with the AR8, which became the 1989 Rover 200, along with the arrival of Honda, Nissan and Toyota as UK-based manufacturers caused a resentment in some quarters that now seems laughable.
The demise of the AR6 was seen as a tragedy, the end of Austin Rover’s ability to individually develop a small car to follow on from the Austin 7, A35, Mini and Metro. Austin Rover never officially acknowledged the cancellation of the AR6 and the last mention in the news files appears to be the April 1987 of CAR Magazine, where Rover Chairman Graham Day was interviewed.
On AR6, the ‘new Metro’, Day insisted that the questions were much more complex than ‘chop Metro‘ or ‘dress-up Metro’ as they had been portrayed in press discussion of the product up to then.
That, he said, was simplistic: ‘We don’t have to take the low-end decision for some time. When we do, we’ve got a series of decisions to make. Just take a look at the basic class. You’ve got competition from places like Korea. You’ve got Eastern Europe. And we have to take a decision at the Metro level, which will last at least 13 years. So we’re trying to make it a very careful one. That base car has got to be price competitive…’
‘One of the small car issues – and I’m not prepared to draw a firm conclusion – is that if you push for a larger product at the low end, you risk vacating the class altogether. We know that some of the cars in the Metro’s class are bigger than ours, but we’re not sure we should follow them up. That’s just a cheap way of using the other fellow’s market research. What if it’s wrong? Or he hasn’t done any? Our research says the Metro is seen as a particularly handy little car.’
Having now seen the AR6 for real, what Graham Day said makes sense. The surviving prototype at Gaydon is a five-door car and, when photographed in isolation, it looks okay. But when seen alongside other exhibits, the AR6 is a big car for a supermini, even by today’s standards. It certainly looks larger than the Ford Fiesta MkIII of 1989, which would have been its main rival in the market place. The decision to re-engineer the existing Metro with the K-Series Metro, because Rover believed consumers wanted a smaller car, was backed up by Nissan with the K11 Micra, which was also a compact super-mini, and a very successful one at that.
I can now see the coherent thinking behind the axing of the AR6. The AR6 was too big, and would have been sold at a budget price in a cutthroat market dominated by the Ford Fiesta, which after a decade on sale now had strong brand values.
On the other hand the AR8 collaboration with Honda was only a little larger than the AR6, was cheaper and could be sold at a premium price. Roy Axe signed off the AR8 design in August 1986, but it was not until December that year that Rover and Honda officially agreed to develop the car. From then on progress was very rapid indeed, with the AR8 being renamed the R8, and announced to the public in October 1989.
Fortunately, despite the apparently rapid development programme, the second-generation Rover 200 had none of the quality issues which had come as standard with previous BL cars – that then begs this question: how much of the AR6 was in the R8? Certainly the K-Series version of the R8 probably owed a lot to the AR6, which had thoroughly evaluated the new engine.
So was the cancellation of the AR6 a disaster? In hindsight, I think not. An all-new supermini with a K-Series engine was a good idea, but the AR6 was not the right car for the job. Its cancellation in favour of the AR8 resulted in the Rover 200, which sold 950,000 cars at a premium price.
Moreover, the AR6 was not the only British car under development at the time which never made it to the showrooms. Sir John Egan, the Chairman of Jaguar, was telling the media that an XJ-S replacement, called the F-Type, was in the pipeline. This was the XJ41/42, which met its demise after the Ford takeover in 1990 when it did not meet their criteria for a successful sports car.
In the end, Rover did produce an all British small car with the K-Series engine. This was the third-generation Rover 200, the R3 of 1995, and it was still smaller than the AR6. In 1997 Rover built more than 144,000 of them, impressive, but not Ford Fiesta-type volumes.
Those who decry Rover for failing to bring the AR6 to fruition should remember the ludicrous volumes which BMW expected the Rover 75 to achieve in order to pay its way – volumes way in excess of any previous British executive car. It was BMW which solved the problem of selling a small car manufactured in a higher-cost European country. Buy a brand associated with small cars – in this case MINI – and design a new car which retailed at a premium price.
That was a strategy which worked…