UK: A marriage made in Munich.

UK: A marriage made in Munich. - This month Rover and BMW unveil the Rover 75, the first product of their union. Will the Anglo-German partnership lead to the return of Rover?

by Matthew Gwyther.
Last Updated: 31 Aug 2010

This month Rover and BMW unveil the Rover 75, the first product of their union. Will the Anglo-German partnership lead to the return of Rover?

It is unlikely that Rover will be allowing any more television documentary crews to conduct fly-on-the-wall exercises at the company for the foreseeable future. Ask anyone who's been docu-soaped and they will tell you it's like placing a ferret in your trousers: once bitten, twice shy. The BBC's When Rover Met BMW, which detailed aspects of the takeover of the British car manufacturer by the German company, was gruesomely watchable as it brought out just about every national and regional stereotype in the book. It made Rover look small.

Here were the bewildered and down-on-their-luck Midlands rust-belt types in their overalls and grey velcro-fastened shoes, trying to come to terms with being hit by a clinically engineered and ruthlessly efficient Bavarian war truck. Probably the most poignant scene of the lot was the preparation of the airport buffet for arriving BMW top brass. To put alongside her cheese and pineapple on cocktail sticks, a thoughtful Brummie dinner lady had gone to the trouble of tracking down not only some semi-authentic wurst but also some Colman's German mustard to accompany it. She carefully laid them out on the white linen and awaited the puff of rubber on tarmac as the executive jet touched down from Munich. Once they disembarked, the grim-faced Teutons in their sharply pressed Hugo Boss suits walked briskly past the spread. There was no time for sausage - here was a business for which they'd just shelled out £800 million to turn around. It was unfair, of course, but since when have journalists been interested in fairness?

This month sees the first appearance at the Motor Show of the fruit of the union between Rover and BMW: the Rover 75, a large saloon for which prices should start at around £19,000. Rover is praying for a positive reception. These days, in a desperately competitive and hugely over-supplied international market, every car is said to be 'make or break' for a manufacturer, but in the case of the 75 the phrase is indubitably true. For the first time in decades, Rover has had the time and, more importantly, the money to show what it can really do when given a proper chance to create a winner.

If it does not turn the heads and win the hearts of Audi, Mercedes, Alfa and even BMW drivers then bad times lay ahead for Rover's 40,000 employees.

You will not see many grey shoes at Rover's UK headquarters next to Birmingham airport these days. It is filled with young, well-dressed, purposeful people as good at their jobs as any other manufacturer worldwide. They are also fiercely proud of what they make and sell. When Management Today idly asked a Rover press officer if employee vehicle discounts applied to German cars now they are part of the BMW family, he replied, wounded: 'But why would any of us want to drive one of them?' Quite right, too.

He dreamt of owning his own Discovery. Now he has one and is delighted.

Pride and passion among the troops is one thing (such is the fanatical belief about their cars at the Land Rover plant in Solihull that bad-mouthing any aspect of what rolls off the production line is highly unadvisable), getting a reciprocal enthusiasm among the wider buying public is another.

They need to sell more cars and make people pay more money for them.

Observers were little short of amazed when BMW's bid became public in 1994. Still, BMW's enthusiasm for Rover makes sense. The two are a similar size, producing around half a million vehicles year each. From Rover's point of view if they could not stand on their own two feet then BMW was the best medium-term crutch available. BMW is an acknowledged master of engineering and manufacture and a very clever marketer. The Germans had no presence in the five-million-strong European market for sub-£12,000 three-and five-door hatchbacks. Neither did they have a four-wheel drive utility product. And the manoeuvre cocked a snook at BMW's arch rival Mercedes.

Before BMW even appeared over the horizon to take Rover off British Aerospace's hands, the British were learning naming and branding from the Munich maestros.

Indeed, the first lesson was you don't call cars Maestros you give them numbers. So Montegos, Metros, Allegros and Itals gave way to 100s, 200s, 400s and 600s as BMW already had residence in the 3, 5 and 7 slots. 'What we need to be,' Graham Day said back in the early 1980s, 'is the British BMW.'

So where has the company arrived at more than 20 years after Leyland and four years since the BMW takeover? You cannot begin to understand what Rover is about and what it wants to be without deconstructing the current model line-up and where its strengths and problems lie.

From the bottom upwards. That the Mini at 40 plus is still going is one of the most bizarre sideshows in the global car industry. (It has a sentimental value for BMW having been designed by Alec Issigonis who was the uncle of Bernd Pischetsrieder, BMWs chief executive.) It is pure heart over head but 8,000 were sold in Japan last year, as everyone from the fashion designer Paul Smith to The Avengers feature film gets in on customised marketing. The Mini's recent cinema commercial by Ammirati Puris Lintas featuring a penis length game show was one of the bawdiest on screen for ages and shows Rover's desperation to start talking turkey with the young.

The car is a fairground giggle but you would not want to have a hefty collision in one. The new Mini has now been put back to 2000 but there are interesting noises about 'bespoke' ordering which, if it is feasible to produce, could make a lot of sense.

The Rover 200 is a decidedly pretty machine and was the first of the old Rover image mould-breakers. Italians love it and its sales are 28% up this year in the UK on last. It does have severe drawbacks in its interior packaging, though: the rear seats are far too small, but it has performed creditably. Last year 62,365 were sold in the UK making it the eighth best-selling car in the country.

The 400: this is an elegant car to look at and pleasant to drive but qualitative research groups still show that this sort of Rover has a bit of a Radio 2 'pipe and slippers' reputation among the buying public.

The 600: its chrome and front grille gave it an anglicised kudos above its twin the Honda Accord. Again a pleasant, civilised vehicle, but last year BMW sold 40,312 3 series in the UK, twice as many as the number of 600s bought by Brits. And BMW has a third of the number of dealers of Rover.

The 800: each weekend The Sunday Telegraph's business pages contain a profile of a captain of industry. The standard format involves asking what car they drive. When was the last time the response was the Rover 800, the company's flagship? It is a beached whale of a car, which has the dubious distinction alongside such leviathans as the Alfa 164 and Citroen XM of having the worst depreciation rates of any car on the road.

MGF: this car, along with the Freelander, is the strongest in the portfolio. It is original, popular and showed a welcome return to some emotion and excitement in Rover cars.

Land Rover is a star performer as it is and Rover can only dream what could have been if the company's business in developing countries had not been ripped to pieces, principally by Toyota. With the kind of dealers and parts supply problems they have had in Africa, for example, any NGO operative will take a Landcruiser any time.

The basic Defender remains honest and agricultural, which is what it was intended to be right from the start. The Discovery is about to be revamped to regain some of the ground lost to white-hot competition from the likes of Jeep in the UK. The Freelander was a bull's-eye hit from the start with high build-quality standards. It is the best available for those who want that sort of thing.

And the Range Rover remains the monstrously priced and proportioned gin palace that continues to be the aspirational 4x4.

When BMW did this deconstructional analysis - in considerably more detail - there was quite a lot that worried them. A shotgun wedding between two unequal partners where one had come from a culture of survival and the other a culture of success was clearly going to lead to a sometimes stormy relationship. The bedding-in process has had painful aspects for both sides.

In a notorious article published in Car magazine in September 1996, the 18-stone German journalist Georg Kacher - who makes Alastair Campbell look poorly connected - claimed that operatives from the two companies were all but at each other's throats. An unnamed BMW manager said: 'Rover's strengths seem to be the creation of unnecessary friction, a disappointing no-risk attitude, and an amazing display of egoism.' Another unnamed engineer claimed of those Land Rover fraternity: 'They were ten times worse than the passenger car people. Because they were successful and profitable they were not prepared to listen. It took Wolfgang's Reitzle's (the tough guy initially sent over by BMW from Germany as chairman) iron fist to make it clear to Solihull that they need to act before the customers out there realise how mediocre the 4x4 products really are. Build quality is appalling, active safety standards vary enormously and the willingness to acknowledge and fix the faults was, early on, absolutely zero.'

This antagonism is flatly denied by present day Rover executives. 'There's tremendous mutual respect between the two sets of people,' Jim Macdonald, the managing director of Rover Cars UK, says. 'Everyone is willing to learn and that applies both ways. We are part of the BMW group and glad of that but we see ourselves as a British manufacturer and we're proud of that. If you break us in half then you'll find Rover stamped all the way through.'

A senior BMW person who would not be named was rather more charitable than Kacher's interviewees when speaking to Management Today this August: 'There are quite of lot of BL-era people still there and they're war-ravaged folk who have spent years hunkering in the bunker with their creative spirit suppressed. A lot are very good indeed. What they've gone through is a huge cultural change and we've had to start right from the roots of the products. You cannot overcome the problems that Rover had overnight.

The example of Ford and Jaguar shows that quite clearly. Brand building has to be clear but true to itself. But make no mistake we're in this for the long term. BMW never takes a bite and then lets go. When get a hold we just go on shaking.' Reassuringly chilling.

It's easier to shake from the inside. Now, all the key roles in marketing and management at Rover are occupied by BMW people. Chief executive Walter Hasselkus is a gentler operator than Reitzle, his predecessor. He is aided by two key personnel brought in from BMW UK: Tom Purves and Martin Runnacles as sales and marketing director and marketing director respectively. All three are highly respected, smart men.

So what has been done about brand-building? For years before BMW came along it had been realised that for Rover, in the car market, the only way was up. They had to shift themselves away from the big volume producers such as Ford and General Motors and begin persuading the public that Rover was a premium brand. That took Marks & Spencer a long, long time. (BMW itself stumbled along for many years making humble bubble-cars before it was saved from the ignominy of becoming a mere component supplier to Mercedes. It was saved by a near-blind battery maker, Herbert Quandt, in 1959 - his family still hold a majority shareholding to this day.)

Rover's UK market share has dropped steadily from 12% as recently as 1996 to below 10% now and something as low as 7% would be acceptable, according to some Rover people. This is fine provided Rover sells more expensive, higher-margin cars. The diminishing slice of the cake might look slightly alarming in the short term but it genuinely does not seem to bother them. The fact that the antiquated Metro or 100 has finally been put out to grass in the last 12 months is a significant factor in lowering sales numbers here.

Jim Macdonald is unperturbed: 'Market share is not a measure of how much a customer wants to buy a branded product,' he says. 'BMW has only 3% in the UK and Land Rover 2% but both are highly successful. Market share is merely a measure of how many cars a manufacturer churns out.' And, he could have added, it is then forced to shift at whatever price with what effect that has on residual sale value. Even Renault, on a bit of a numbers charge at the moment, knows that model-based advertising blitzes are no substitute for long-term brand identity. Anyone can build a car - even the Koreans - but it's tougher to build a brand.

So, to build the solid bedrock of a profitable company, Rover has plumped for Britishness: the television commercials for the 200 and 400 feature Roxy Music as the background music and a Mockney voice-over that says British is modern and British is stylish; pearly queens are bronzed seductresses with the jewel lodged in their gorgeous belly button not clapped-out old East End has-beens.

As British Airways went for its multi-national tail-fins and ditched the Union Jack and Jaguar played the Limey angle down, Rover went for the volte face. It is only now that such a move is possible, as Martin Runnacles acknowledges, because playing up the Britishness of mass-produced cars at most points in the last 25 years would make home-based punters run a mile. On the Continent they are more sanguine about our design and production abilities: Rover sold 60% of its production abroad last year.

What may worry some of the patriots among us is that as fast as Rover were climbing abroad the Cool Britannia battle bus, Tony Blair and his side-kick Peter Mandelson seemed to be jumping off, fearing that it was heading down the wrong road.

Some people like this nationalism and think it works; others are not so sure. Peter Wallis (aka Peter York) of the management consultancy SRU is concerned: 'This positioning worries me. It feels a bit fugitive. I think you need to be more precise about what Britishness is and what's good about it. Maybe that line would play better in foreign places. I want it to work but I'm not sure. It takes so much time to go upmarket and so much sacrifice is involved.'

Why not play up BMW more so that some of those positives will rub off on Rover? (There will be a host of BMW components under the skin of the 75 and the car will be better for it.) 'We have many debates about how "BMWd" should Rover be,' Runnacles concedes. 'At one level the brand should stand on its own but on another it's very tempting to highlight that we are part of the BMW group with all that involves. In some foreign markets, though, that's not so reassuring. Britishness means real quality to many Europeans.'

So what is 'Roverness' now in Martin Runnacles mind's eye? 'It's an interpretation of British style and spirit. It does look backwards to the heritage of great British design of the past but it is modern. The new 75, for example, has a chrome strip right down its side and a solid piece of wood across its dashboard. Classic British style is indescribable but it's the way the collar sits properly on a fine Jermyn Street shirt. That's how our cars will sit on the road. People know it when they see it.'

And what do the outsiders in the know think about Rover's chances? Dan Jones of the Cardiff Business School is an experienced observer and expert in lean production. His prognosis does veer towards the gloomy but has to be listened to in full: 'I've been watching Rover for years and I've been optimistic in the past but now, I'm afraid I've finally turned sceptical. It's probably too early to say if they it is going to make it but the marketplace has turned impossibly tight recently. The competition is just so good these days, even the Japanese products.'

At production level things are bad. The Economist Intelligence Unit has put Rover's plants among the least efficient in Europe. Longbridge, in particular, is almost hopeless.

Those 1,500 redundancies they have recently announced will have to be just a start as they are so over-manned. Cowley is far more modern but way under capacity. Solihull, however, is well laid out and potentially very good.

Above and beyond that, all may not be well at BMW itself. The new 3 series is not the leap ahead of the competition that it needed to be and the Audi A4 and even the Alfa 156 will move in hard on that patch. With the Mercedes and Chrysler tie-up BMW has started to look small and vulnerable in the medium term. It needs to be larger and more powerful and the worry is that Rover is taking up more of its time than would be healthy.

What's certain is that if the Rover 75 fails then Rover will be a very different company a few years down the line, probably producing just a few odd, individually branded cars.

Geoff Upex, a gaunt, thoughtful man, has done the round-the-clock trip at Rover. Since he joined Austin Rover in 1983, the head of design has been through quite a number of ups and downs with the government, Honda, British Aerospace and now BMW as his masters. 'We've ended up in the best place we could have,' he says. With an estimated £600 million per year going into Rover, BMW has, after all, given Upex the money he needed to do his job properly.

His task 'designing Roverness' is now very tough indeed. 'Back in the '50s as a car designer you could do whatever you wanted. But now throughout the world manufacturers all use the same supply base, we all have the same technology for putting them together and the cars are made from the same materials. They all conform to the same aerodynamic, safety, emission and noise requirements.

So what makes someone buy one car versus another? Character. This involves finer and finer levels of difference.

'But I'll tell you what I heard once that I think rings true: The Japanese make tools, the Germans make machines and the British make cars. That sums it up for me. A British car has a human element in it - a warm feeling about it. The great British cars all have that in them. They're often not rational, they are voluptuous and quirky. A BMW is an incredibly admirable machine.

'When we launched the Rover 200 in Italy I drove a car from Portofino to Turin. Nobody had seen it before and people swarmed over it. "Bella," they said. Now, when we researched the new 75 in a clinic in Manchester one of the adjectives they used to describe it was "beautiful". Mancunians don't use that word often and rarely about cars but the 75 most definitely is. Richard Woolley, who designed it, said the one thing he wanted was that when people walked away having locked it they would always glance back for one last look.'

On the way out from Upex's office we stumble, by accident, upon the still-secret Rover 75 sitting in the car park minding it own business between final test-drives before production begins. Even with some masking disguising the back it did look rather 'bella'. Aptly, it will go on sale next March when the thoughts of young, and not so young men, turn to love.

ROVER CHASES BMW

BMW total production 1997 672,238

BMW UK sales 1997 63,500

3 series 40,312 7 series 3,350

5 series 14,913 8 Series 563

Rover total production 1997 522,466

Rover UK sales 1997 217,262

200 62,365 800 7,383

400 61,913 MGF 7,616

600 20,683 Mini 2,299

Land Rover made 127,420 cars in 1997 of which a mere 30,271 were bought in

the home market.

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