By on February 17, 2015

800px-Rover_75_Tourer_2001_rear

Sometimes, the automotive marques we all know and love have to go bust. Such was the case of Duesenberg, Oldsmobile, Hispano-Suiza, and Talbot-Lago despite their heritage and today’s strong collector-car market for those brands. Unfortunately, in the 2000s, Rover had to join them. However, it wasn’t without a fight, as detailed in End of the Road: BMW and Rover- A Brand Too Far. The book explores BMW’s massive investment in the Rover Group throughout the 1990s and how it became disastrous for all parties involved. Through piecing together news reports about BMW and Rover during the period and conducting interviews with people involved in the sale, the book gives a hard look at the relationship between the Rover Group and BMW during the 1990s and why BMW ended up paying a large amount of money to get rid of Rover in 2000.

At the beginning, the authors, business journalist Andrew Lorenz, and academic Dr. Chris Brady, give a profile of Rover before its sale to BMW in 1994. Then, Rover was a subsidiary of British Aerospace, who had bought the Rover Group from the British government in 1988, which at the time was going through its own troubles with its aircraft operations in the early 1990s. In order to survive, British Aerospace had to get rid of its non-core businesses, of which Rover was one. Therefore, the Rover management began looking for buyers of the car company. Volkswagen was interested in adding Rover; however, they were coming off badly from the 1990s financial crisis and couldn’t match what BMW paid.

The buying of Rover by BMW was overseen by then BMW CEO Bernd Pischetsrieder, whose goal was to increase the volume of cars made by the BMW Group. Throughout the 1990s, automakers realized they needed to grow in order to survive. That sort of reasoning led to automaker purchases such as Volkswagen taking a large stake in Skoda, Daimler buying Chrysler, and Renault eventually forming an alliance with Nissan. BMW’s purchase of Rover was seen as significant in that it was a midsize automaker (at the time) buying what was more or less another midsize automaker.

During the time of the sale, Rover’s cars were largely Hondas underneath the skin, utilizing Honda platforms and many Honda parts. Honda owned twenty percent of Rover as well. It had a profitable side in the form of Land Rover, but that was included with the Rover sale just so the company could be sold. In fact, Honda was the preferred buyer during the sale of Rover, but Honda didn’t want to buy Rover outright, just increase its ownership stake. Their own valuation of Rover was much lower than the 800 million pounds that BMW was willing to pay. The sale  also included the MG, Mini, Triumph, Riley, Wolseley, Austin, and Morris names (BMW still owns Austin and a couple of others).

Initially, BMW took a very hands-off approach to the running of Rover. They expected the existing British management to take the Rover brand upmarket. As BMW had little experience running factories outside of Germany, that was seen as a mistake by Lorenz and Brady. In the authors’ view, that kept BMW from experiencing firsthand the weakness of the Rover brand. To illustrate some of their points in the book, the authors reference the five-part BBC documentary When Rover Met BMW. Though the documentary was started before BMW ownership, BMW still allowed the documentary to continue filming after the sale. In it, Wolfgang Reitzle, who had then become the chairman of Rover, was seen as irritated with Rover management, especially when stuck in traffic with one of Rover’s managers. Lorenz and Brady characterize the documentary as giving “the television audience a rare insight into a struggling merger.”

As things became worse at Rover, BMW began to bring in its own staff to the UK. Land Rover quality was a huge problem, and warranty repairs represented another financial loss to the company with Pischetsrieder referring to it as ‘a scandal.’ BMW managers also worked hard on the Rover branding, attempting to take it upmarket and working hard on the Rover 75 (above) to help re-launch the brand. By 1997, Rover was costing BMW over 600 million pounds a year. Rover also got a new chairman, Walter Hasselkus, who had come up the ranks at BMW for turning around its once-struggling motorcycle division. Other joint ventures were considered, such as one with Chrysler, which resulted in a joint venture engine plant in Brazil. (That plant ultimately made engines for the Mini and some versions of the PT Cruiser.)

A strengthening British pound, which significantly increased the prices of Rovers in Europe, and would severely hamper Rover sales abroad, did further damage to BMW’s Rover strategy. I talso meant that the possibility of exporting Rovers to the United States would be in jeopardy. Furthermore, BMW had to deal with the British political situation with regard to Rover’s Longbridge plant, an immense part of the economy for the West Midlands region of the UK. Such was the case when BMW asked for 200 million pounds of aid to keep Longbridge open; however, the government didn’t wish to provide the funds necessary because of the optics of the situation. Additionally, any possibility of a further tie-up with Chrysler was halted when Daimler bought them. The lukewarm launch of the Rover 75 was perhaps the final straw. Despite critical acclaim, it never achieved financial success.

Eventually, the Rover purchase resulted in major executive upheaval for BMW. At the top level of BMW, factions between executives had formed. One was behind Bernd Pischetsrieder and putting more resources into Rover, while the top-level faction was led by Wolfgang Reitzle, the number two man at BMW who was in charge of marketing and product development who wanted to shed Rover. On February 5, 1999, Bernd Pischetsrieder and Wolfgang Reitzle ended up resigning on the same day as the Quandt family (BMW’s owners) and BMW chairman Eberhard von Kuenheim felt they were distracting the company with their politics. Such was the impact the Rover purchase had on BMW that something drastic had to be done about Rover.

Surprisingly, the book argues that much of Rover’s troubles wasn’t due to the unions. Sure, there were more employees than were needed considering Rover’s sales, but the British workers’ unions knew largely what was at stake and knew what footing Rover was standing on. In 1999, the unions agreed to a 35-hour workweek without cutting any jobs and agreed to a reduction in their pay raises for the next few years. This was accomplished without protests and strikes, as the workers knew the company was on the line. In fact, other automakers were surprised by how British unions agreed to such low terms, as when such provisions were implemented in BMW’s German factories, a six-week strike took place, while the British agreed to the terms in two months after they were proposed.

Overall, End of the Road: BMW and Rover- A Brand Too Far is a good, short read for those who want to know what happened behind-the-scenes during the last major attempt to get Rover and its brands back on their feet. It will explain the reasoning behind Land Rover sale to Ford and BMW’s retention of MINI, which has paid off in dividends for BMW during the last ten years. It explains why Rover Group eventually ended up being sold to the state-owned Shanghai Automotive Industry Corporation (SAIC) after passing through the hands of a private-equity consortium called Phoenix, which took many of the liabilities from the Rover deal that BMW no longer wanted. In the end, the book provides a very comprehensive look into an automotive merger gone wrong for everyone involved.

Satish Kondapavulur is a writer for Clunkerture, where about a fifth of the articles are about old cars and where his one-time LeMons racing dreams came to an end, once he realized it was impossible to run a Ferrari Mondial. Since he’s writing about Rover, he needs to inform you of his search for a good P38 Range Rover and is hoping that you might know of one for sale.

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44 Comments on “Book Review: End of the Road: BMW and Rover- A Brand Too Far...”


  • avatar
    spreadsheet monkey

    Awaits the inevitable lazy cliches about Britain: lazy, unproductive, medieval, commie-pinko-lefties, yada yada

  • avatar
    319583076

    “Such was the case when BMW asked for 200 million pounds of aid to keep Longbridge open; however, the government didn’t wish to provide the funds necessary because of the optics of the situation.”

    Care to elaborate on the “optics of the situation”?

  • avatar
    Satish Kondapavulur

    Instead of “optics,” I meant to say “politics.” (Silly Microsoft Word.)

    As for the politics, it had to do with the image of Tony Blair’s “New Labour” party and how they weren’t going to spend extreme amounts of public money just to ensure people could keep their jobs, like Labour championed with British Leyland in the 1970s and 1980s.

    • 0 avatar
      mike978

      If I am not mistaken the request came right in the middle of the 2005 General Election. Therefore it was a big issue since the West Midlands has quite a few marginal consistuencies and the Labour Government only won by 3% of the vote (but with many more MP’s due to the variable size of the constituencies).

      • 0 avatar
        ExPatBrit

        BMW didn’t own Rover in 2005

        This is 7 years earlier at the launch of the Rover 75 at the UK motor show.

        From Wikipedia:

        “The public unveiling of the car at the Birmingham Motor Show was unfortunately over-shadowed by a speech by BMW chairman, Bernd Pischetsrieder, containing criticism of the British Government’s attitude to financial assistance in the redevelopment of the Rover Longbridge factory (where the new Mini and R30 was to have been produced). Press reaction interpreted this as saying that BMW were unhappy with continuing financial losses and were intending to close Rover down.

        This undoubtedly scared off many prospective buyers, despite the very positive reaction to the car itself.”

        No wonder Pischetsrieder AKA Burnt Fish Trousers was sacked.

  • avatar
    Tstag

    BMW made one mistake after the other. The first one was to replace John Towers. Towers had successfully picked Rover off the floor and made the company profitable. Unfortunately his vision of Rover was different to BMWs. Towers believed Rover didn’t have the brand equity to go premium in one shot. Whilst he wanted to take Rover upmarket he wanted to execute the move more gradually. For this reason he backed a Honda takeover rather than a BMW buyout.

    BMW were completely out of touch with the Rover brand so that as Rover went upmarket sales plummeted. Rover was the third largest brand in the UK with 15% of the market when Towers was in charge. By the time they finished they had 3%.

    BMW should have backed Towers original plan and given him the German managers he needed to make it work. They should have grown Land Rover first and then relaunched MG as a direct rival to Porsche. Rover should have been reduced to one semi premium model selling through Range Rover dealers. And Triumph should have been relaunched as a maker of premium sports hatchbacks using as many BMW parts as possible. The only part if the plan they should have stuck with was MINI.

    The small Rovers should have been canned and then a Rover should have begun a drift upmarket.

    JLR now own the Rover brand. Perhaps they can do the job BMW never finished

    • 0 avatar
      CJinSD

      Wasn’t most of River’s 15% market share due to sales of cars at the low end of the high volume segments? It’s one thing to lament their collapsed market share. It’s another to propose a different plan that would have also abandoned the majority of their existing customers.

  • avatar
    Tstag

    One correction to the above article. JLR now own the Rover brand. Saic own MG (sadly). Tata would have been a much better owner!

  • avatar
    CoreyDL

    The 75 was probably an okay car from everything I’ve read, but it was simply too stodgy and not enough retro-modern. Rover seemed to be an old brand selling things to old British people who were wise to the fact that it was actually a Honda, but only willing to buy British.

    Not much of a market for that.

    That being said, I loved the later Rover 800 (initially aka Legend then aka Sterling 827) in either sedan or coupe format, and would happily drive one about in America today.

    http://www.classic-autoglas.com/wp-content/uploads/2011/09/rover_800_turbo_coupe.jpg

    They had a Vanden Plas style formality which I really liked.

    • 0 avatar
      ExPatBrit

      The later car was the Rover 75, the Sterling 800 series debacle was almost 20 years prior to that.

      The 75 didn’t have a Honda engine. It was the mostly Rover developed K series, which ended up having reliability issues with head gaskets. Took many years to correct but doomed resale on all of their vehicles.

      Ford inherited a lot of warranty issues with K series motors in the Freelander after buying LR from BMW. Supposedly they came out with a fix first.

  • avatar
    jimbob457

    As a former Rover owner in the form of a ’87 Sterling 825 and an ’87 827, my impression was that pre-merger Rover just wasn’t a very good automobile maker.

    I was happy with both my Sterlings because I bought them used at a very low prices. Here in the US, their reputation was mud based largely on terrible electronics in the ’85 and ’86 models.

    I still remember what my mechanic said to me after he replaced the shocks on my 827: “too much dog and not enough Honda” Both my two Rover/Sterlings eventually bit the dust short of 150k miles.

    For Rover to engineer a decent suspension for the Sterling ought not to have been to difficult. Its drive train and chassis were from the Acura Legend. Just copy its suspension.

    • 0 avatar
      CoreyDL

      A man of great taste and distinction, I have some inquiries for you:

      What killed your Sterlings in the end?
      How much attention did they garner while you owned them?
      Was getting parts a bear back in those days?
      Did you take it to Honda for servicing?

      • 0 avatar
        cpthaddock

        You’ll find a detailed account of the Rover 800 series / Honda Legend here:

        http://ateupwithmotor.com/model-histories/acura-legend-rover-800-sterling/

        It’s been a while since I read it, but I recall that the suspension design was impacted by differences between Honda and Rover

        • 0 avatar
          28-Cars-Later

          Great link, thanks.

        • 0 avatar
          Robert Gordon

          Rover engineers have a different recollection of this:

          http://www.aronline.co.uk/blogs/cars/rover/800/the-cars-rover-800-development-history/

          • 0 avatar
            CJinSD

            There are also Rover engineers that claim to have designed the first BMW Mini even though you can turn one over and see that it has the same suspension as a BMW introduced in 1991.

        • 0 avatar
          CoreyDL

          This (extensive!) story from AUWM on the 800/Legend was excellent. Learned lots of stuff.

          Acura would be entirely different today if Rover and Honda could have collaborated a little more efficiently. Rover didn’t want to put away their pride, even though Honda was writing the checks.

      • 0 avatar
        jimbob457

        The 287 tied up with a small herd of elk one night on a back country New Mexico road, and it was never the same. The almost new 285 really make my ex-wife look good, but time eventually make them both look a bit doggy.

        Both cars garnered lots of comment. The 825 really looked good with a fantastic leather interior. The 827 looked a bit weird, but as a luxury 4-door hatchback that would move, it suited my needs exactly.

        The local Sterling dealership was nearby and owned by a guy I want to high school with. Even there, I did have, on one occasion, to wait for a part to be shipped.

    • 0 avatar
      28-Cars-Later

      If you read the link, BL consciously chose to use struts and a beam axle for what they felt was a more European feel. They compromised with Honda allowing their preferred suspension in the rear and a double wishbone up front.

      “The difficulty with that approach, from Honda’s perspective, was that greater wheel travel requires firmer damping to maintain body control. Honda engineers also argued that struts suffered a high level of initial friction that made them inherently harsher than double wishbones over small bumps. Those were compromises to which Europeans were accustomed, but that many American and Japanese buyers perceived as too hard. The head of Honda’s R&D organization, Nobuhiko Kawamoto, maintained that he didn’t want the HX to have the stiff-legged feel of high-end German sedans.

      The eventual compromise was to use double wishbones up front and struts in back. The front suspension was much like the Accord’s: an anti-roll bar, a lower control arm triangulated by a radius rod, an upper wishbone connected to a curved steering knuckle extension (which Honda called a twisted upper arm), and a strut-like coil-over shock absorber mounted between the inner fender and the lower control arm. In back, the coil spring was divorced from the strut and mounted on the lower control arm, which was triangulated by a trailing link and fitted with a rear anti-roll bar.”

      http://ateupwithmotor.com/model-histories/acura-legend-rover-800-sterling/

  • avatar
    dswilly

    I wish BMW would have spent a little more money and developed a decent engine for the Disco. Then all of these great Discos wouldn’t be junk due to the bad engine. And yes, they are all bad.

    • 0 avatar
      ExPatBrit

      In the US Range Rover that was the venerable 3.5 liter V8 that Leyland purchased the design and tooling for, in the late 60s from General Motors .

      It’s a good engine, in it’s day used my Rover, Morgan , TVR, MG and Triumph and lot’s of Kit cars. You can still buy new ones today.

      It was the implementation that was a problem along with increasing the cubic inch capacity.

  • avatar
    Robert Gordon

    What an awful error laden review…or perhaps it is the book that’s at fault. Either way you should have fact checked –

    For instance the Austin name is not owned by BMW it is owned by SAIC. The Rover Group wasn’t sold to SAIC, the MG brand and a few others were as well as parts of the Longbridge plant. The Rover Brand now rests with Tata, whom may well resurrect it in due course.

  • avatar
    jim brewer

    Learned to drive on a Rover 2000. Dad found out they were even safer than a Volvo and bought a used one as his teenage children began to drive.

    That car, not BMW actually started the sports sedan segment. Fantastic handling with the same fundamental set up as an Alpha: McPherson strut front Dedion rear.
    The feel of a Rover shifter is one of the best anywhere. Incredible disk brakes.

    Poor overall reliability, of course. So it had no chance.

    Drove the much-vaunted 3500 version of the same car. Not the fake Ferrari Daytona version. I thought it overrated. Its just the engine on a ’64 Buick Wildcat, after all.

    • 0 avatar
      CJinSD

      The Rover 2000(P6) came out a year after the BMW 1500, which basically formed the template for every BMW for the next thirty years. Besides, Alfa-Romeo had been building sporting sedans on a chassis design first introduced under a sports car since 1955.

      The Rover V8 was derived from the engine used in ’61-’63 Buick Specials. The Wildcat used a 401 ci iron-block V8. The Rover P6 also didn’t have MacPherson struts in the front, instead having a unique and convoluted design involving a bell crank, horizontally mounted springs, two lateral control arms, a leading arm, and the most complex steering linkage ever seen. Supposedly, the suspension design was created in anticipation of the space requirements for Rover’s still-born turbine engine.

      • 0 avatar
        jim brewer

        The British websites seem insistent that rover 2000 was a McPherson strut “variant”

        I suppose its a matter of opinion whether you mark the start of the sports sedan with BMW with the 1500 (1962) or the 1800 (1964). Given the 0-60 speed of 15 seconds of the 1500 and the crudity of the vehicle I’d give the nod to rover.

        Yeah. The 3500 engine was on the Buick special not the wildcat.

  • avatar
    Joss

    The 75 was pricey and nothing special. It wasn’t even particularly powerful.

    What would BMW do with Riley & Wolseley? Add snouts & fins to MINI? Few even remember obscure Brit badge engineering.

  • avatar
    CJinSD

    It seems like Honda’s valuation was correct. Not taking a larger stake in Rover is probably the best decision Honda management ever made.

  • avatar
    STS_Endeavour

    I absolutely loved the look of the 75, but the interior seemed cramped. Wouldn’t have minded having one in the US though. I’d love to watch people try to figure out what it was. In later years they came with Ford’s robust and reliable Modular V8, but to distinguish this, Rover whacked the front end with the ugly stick. I was tickled to read that the 75 once won Japan’s import car of the year.

    • 0 avatar
      outback_ute

      Surely the V8 rwd version was one of the biggest mistakes made by a car company (well on a small scale anyway), they can’t have made money on those.

      • 0 avatar
        spreadsheet monkey

        Agreed, this was a desperate last roll of the dice, spending what little money the company had left on adapting a FWD chassis to make it RWD, in the hope of some favourable press coverage and a bit of “fast car” glamour. Rover’s conservative buyers predictably hated it. These cars are beginning to appreciate in value in Britain (to the point where they are not much cheaper than an early E39 M5), partly for the novelty value, and partly because they represent an interesting part of Rover’s final chapter.

  • avatar

    If you read about Rover´s positioning in the decade before BMW took over you´ll read how they tried to position it a natural market niche, sporty premium cars. Car magazine hailed the Rover 200 as a BMW 3-series competitor. Whether or not they had a chance at succeeding is another question but it was a sensible place to try to be. There only three natural positions in the market: luxury, sporty or economy. Sporty/affordable is possible while luxury/affordable doesn´t really go over as the middle market brands like Lancia, Volvo and then finally Rover found out. Putting Rover towards the sporty, premium end was a logical move. When BMW forced Rover into the comfort/luxury but affordable sector they ruined their chances of ever getting anywhere. Other factors then added to their woes like the cars not being quite good enough for the price.
    I had a look at some owner reviews for the 75 and found little mention of quality woes. http://www.parkers.co.uk/cars/reviews/owners-reviews/rover/75/saloon-2004/ has some data.
    For your amusement, have a look at this botched ad from the period just as Rover was being sold, when Rover tried to pack a V6 into a Honda Ballade-related car, the 400. The USP, a V6 in a smallish car was lost in the small print while the ad played up the car´s Britishness.
    http://driventowrite.com/2014/09/05/theme-advertising-how-to-distract-buyers-from-the-usp/

  • avatar
    Paddan

    Is it wrong that I want a Rover 2000 TC?

    • 0 avatar
      cpthaddock

      Not in the least.

      When the question was asked here which automaker you’d bring back if you had the chance, I waxed nostalgically for the Rover of my youth. The Rover that created the 2000 TC and the SD1. I guess that makes two of us now!

      I saw a pretty sharp 2000 TC on Bring a Trailer not so long ago, but they make a Citroen DS Safari seem common.

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