RE: The Red Octagon Returns, Along With The 'K-Series
Discussion
steven211 said:
will261058 said:
Is this what you are calling "my pathetic response"?You are even more stupid than I thought! This was not a comment on the MG6 chassis design. I was laughing at the fact that he called it "New car from the ground up" then added "apart from a few 75 bits".
It is an all new platform anyway, only bit that comes from the 75 is the sub frame, that is all.
MGJohn said:
steven211 said:
BMW f
ked up the K-series anyway, at first they used a wet liner, but when BMW bought Rover group they would not invest in developing a bigger engine, so Rover engineers had to change to a damp liner which is where all the problems started, early K-series were very reliable engines, shame BMW ruined it. I was told this by my teacher who was an engineer at Rover, and allot of other people have said this as well. My dads old 214SLI wedge did 220,000 miles and never had HGF, very reliable car. HGF is easy to fix anyway, just fit a MLS gasket on it, simples.
Shuuush Steven. Some of us did not need to be told by our teachers, we saw the evidence with our own eyes. ked up the K-series anyway, at first they used a wet liner, but when BMW bought Rover group they would not invest in developing a bigger engine, so Rover engineers had to change to a damp liner which is where all the problems started, early K-series were very reliable engines, shame BMW ruined it. I was told this by my teacher who was an engineer at Rover, and allot of other people have said this as well. My dads old 214SLI wedge did 220,000 miles and never had HGF, very reliable car. HGF is easy to fix anyway, just fit a MLS gasket on it, simples.PH : Shirley a nest bed of the most anti-Rover and MG non-enthusists in the known universe. ..
Like Cpl. Jones said about the Jairmans, PHers dont like it up 'em Cap'n...
BMW can do no wrong. Rover Group was in safe Bavarian hands obviously as soon as they took over the company all those years ago.......
.More seriously, earlier K-Series blocks were the stronger closed deck type.
The Bavarians invested close to zilch when stretching and stretching the little 1.1 K ever upwards towards 1.8 Litres. Had they simply invested in scaling up the original design that surely would prvide a better scenario. They did not do that.
Earlier Closed Deck K-Series.
Later Stretched to 1.8 K-Series ~ spot the differences.
The closed deck option was discontinued in the interests of commonality economies across the range of engines from 1.1 to 1.8. To the experienced eye, those differences are huge !
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Finally, even on K-Series, cylinder head gaskets rarely ever 'fail' on any car. They are invariably firts damaged by some other agency, usually overheating following coolant los .. ON ANY CAR.
Some of the UBER rated Gerry Built product are prone to such so called 'failures' ... and far worse.
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k up" the k series but rather the rover engine design team did under BAE stewardship! 
will261058 said:
You might want to check your history on that one. The 1.8 K came out with the MGF in 1995. BMW only took over in 1994 from British Aerospace. Even rover wouldnt develope an engine in such a short time so I think you will find that BMW didnt "fk up" the k series but rather the rover engine design team did under BAE stewardship!
I am afraid they did fk up" the k series but rather the rover engine design team did under BAE stewardship! k it up, all they needed to do is delete the bit of aluminum around the liners to make it open deck, and put damp liners inside, put different valves inside, wouldn't of took long to do it, a couple of months. My teacher was an engineer at Rover, so obviously he knows the truth of what gone on, he tells me allot of stuff that they wanted to do, but BMW didn't fund it.will261058 said:
MGJohn said:
Had they simply invested in scaling up the original design that surely would prvide a better scenario. They did not do that.
You might want to check your history on that one. The 1.8 K came out with the MGF in 1995. BMW only took over in 1994 from British Aerospace. Even rover wouldnt develope an engine in such a short time so I think you will find that BMW didnt "fk up" the k series but rather the rover engine design team did under BAE stewardship! At that time and for some years previously, BAe were short of funds. The sale of the Rover Group was very convenient for them for several reasons. BMW had the resources and possibly had the best of intentions at the start of their ownership control, but that did not last long and the final BMW fiasco at the launch of the Rover 75 was a true indication of their changed intentions. It was deliberate and planned after what appeared to be a good start when they first acquired the company.
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anonymous said:
[redacted]
You may be able to help confirm or deny this story I heard back in the 1990s prior to the BMW takeover. Apparently, in a nutshell, BMW Management visited the factory whilst assessing the possibility of the takeover and were gobsmacked at the power output of the small lightweight K-Series during part of that assessment process.Even by today's engine's standards, the 1.4 K-Series still punches way above its weight. I like them and we have six cars in the family with various K-Series power units. The one just behind your ears in my son's elise is a joy to listen to ....
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MGJohn said:
will261058 said:
MGJohn said:
Had they simply invested in scaling up the original design that surely would prvide a better scenario. They did not do that.
You might want to check your history on that one. The 1.8 K came out with the MGF in 1995. BMW only took over in 1994 from British Aerospace. Even rover wouldnt develope an engine in such a short time so I think you will find that BMW didnt "fk up" the k series but rather the rover engine design team did under BAE stewardship! At that time and for some years previously, BAe were short of funds. The sale of the Rover Group was very convenient for them for several reasons. BMW had the resources and possibly had the best of intentions at the start of their ownership control, but that did not last long and the final BMW fiasco at the launch of the Rover 75 was a true indication of their changed intentions. It was deliberate and planned after what appeared to be a good start when they first acquired the company.
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Bae were not short of funds. They realised they didnt want Rover sucking them dry and were realigning their business anyway. They also sold their holding in Airbus Industries to concentrate on the Arms industry and are now the second largest arms dealers in the world. That does not sound like a company that was "short of Funds" only 10 years ago and it also proves they were not interested in investing in an ailing car company, yet none of the vitriol is heading in their direction. A little information is always dangerous and there are lots of people on here with just that. Its easy to blame BMW but remember they were not the only ownwers nor were they the last. The Pheonix consortium were no saints, lining their own pension funds the way they did, at the expense of the workers while facelifting the 75 and turning it into an inferior car in the process with cost cutting and reduced quality. BMW did have a stab at Rover but soon realised there was a danger of BMW itself being dragged down so they cut their losses. What business wouldnt do that?
will261058 said:
Rover engine design were responsible for the stretch to 1.8 litres long before BMW got involved and remember they had stretched it to 1.6 before that. There were problems with castings and materials not to mention the marginal cooling system. To blame BMW for a lack of investment in an engine which was already designed and signed off before they were even involved is rediculous.
Bae were not short of funds. They realised they didnt want Rover sucking them dry and were realigning their business anyway. They also sold their holding in Airbus Industries to concentrate on the Arms industry and are now the second largest arms dealers in the world. That does not sound like a company that was "short of Funds" only 10 years ago and it also proves they were not interested in investing in an ailing car company, yet none of the vitriol is heading in their direction. A little information is always dangerous and there are lots of people on here with just that. Its easy to blame BMW but remember they were not the only ownwers nor were they the last. The Pheonix consortium were no saints, lining their own pension funds the way they did, at the expense of the workers while facelifting the 75 and turning it into an inferior car in the process with cost cutting and reduced quality. BMW did have a stab at Rover but soon realised there was a danger of BMW itself being dragged down so they cut their losses. What business wouldnt do that?
Who am I going to believe you or an ex Rover engineer who knows what they are talking about? Its funny how reliable the K-series was until they had to make it a 1.6 and 1.8, they didn't even develop a 1.6/1.8 K until BMW bought them as BMW didn't want them to use Honda engines, BMW hated the K-series as well as Rover got so much power out of a small engine. Like I said it wouldn't of took long to change the design, a few months maybe, the K-series was originally designed to only be a 1.4 maximum. Yes they had a few problems with casting on later engines with as the K-series used LPS casting, as BMW wanted to make the production process faster, so they couldn't test the engines before the car came off the production line. And you would of thought that BMW would of investigated any head gasket problems and invested money to fixing them wouldn't you?Bae were not short of funds. They realised they didnt want Rover sucking them dry and were realigning their business anyway. They also sold their holding in Airbus Industries to concentrate on the Arms industry and are now the second largest arms dealers in the world. That does not sound like a company that was "short of Funds" only 10 years ago and it also proves they were not interested in investing in an ailing car company, yet none of the vitriol is heading in their direction. A little information is always dangerous and there are lots of people on here with just that. Its easy to blame BMW but remember they were not the only ownwers nor were they the last. The Pheonix consortium were no saints, lining their own pension funds the way they did, at the expense of the workers while facelifting the 75 and turning it into an inferior car in the process with cost cutting and reduced quality. BMW did have a stab at Rover but soon realised there was a danger of BMW itself being dragged down so they cut their losses. What business wouldnt do that?
Edited by steven211 on Monday 21st February 00:26
Edited by steven211 on Monday 21st February 00:26
Edited by steven211 on Monday 21st February 01:20
MGJohn said:
You may be able to help confirm or deny this story I heard back in the 1990s prior to the BMW takeover. Apparently, in a nutshell, BMW Management visited the factory whilst assessing the possibility of the takeover and were gobsmacked at the power output of the small lightweight K-Series during part of that assessment process.
Even by today's engine's standards, the 1.4 K-Series still punches way above its weight. I like them and we have six cars in the family with various K-Series power units. The one just behind your ears in my son's elise is a joy to listen to ....
.
Yep my teacher says that BMW hated the K-series as they were so powerful, I think they still have the highest power to weight ratio of small engines, not sure on the figure or if it is still the highest but it was an amazing engine.Even by today's engine's standards, the 1.4 K-Series still punches way above its weight. I like them and we have six cars in the family with various K-Series power units. The one just behind your ears in my son's elise is a joy to listen to ....
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steven211 said:
will261058 said:
Rover engine design were responsible for the stretch to 1.8 litres long before BMW got involved and remember they had stretched it to 1.6 before that. There were problems with castings and materials not to mention the marginal cooling system. To blame BMW for a lack of investment in an engine which was already designed and signed off before they were even involved is rediculous.
Bae were not short of funds. They realised they didnt want Rover sucking them dry and were realigning their business anyway. They also sold their holding in Airbus Industries to concentrate on the Arms industry and are now the second largest arms dealers in the world. That does not sound like a company that was "short of Funds" only 10 years ago and it also proves they were not interested in investing in an ailing car company, yet none of the vitriol is heading in their direction. A little information is always dangerous and there are lots of people on here with just that. Its easy to blame BMW but remember they were not the only ownwers nor were they the last. The Pheonix consortium were no saints, lining their own pension funds the way they did, at the expense of the workers while facelifting the 75 and turning it into an inferior car in the process with cost cutting and reduced quality. BMW did have a stab at Rover but soon realised there was a danger of BMW itself being dragged down so they cut their losses. What business wouldnt do that?
Who am I going to believe you or an ex Rover engineer who knows what they are talking about? Its funny how reliable the K-series was until they had to make it a 1.6 and 1.8, they didn't even develop a 1.6/1.8 K until BMW bought them as BMW didn't want them to use Honda engines, BMW hated the K-series as well as Rover got so much power out of a small engine. Like I said it wouldn't of took long to change the design, a few months maybe, the K-series was originally designed to only be a 1.4 maximum. Yes they had a few problems with casting on later engines with as the K-series used LPS casting, as BMW wanted to make the production process faster, so they couldn't test the engines before the car came off the production line. And you would of thought that BMW would of investigated any head gasket problems and invested money to fixing them wouldn't you?Bae were not short of funds. They realised they didnt want Rover sucking them dry and were realigning their business anyway. They also sold their holding in Airbus Industries to concentrate on the Arms industry and are now the second largest arms dealers in the world. That does not sound like a company that was "short of Funds" only 10 years ago and it also proves they were not interested in investing in an ailing car company, yet none of the vitriol is heading in their direction. A little information is always dangerous and there are lots of people on here with just that. Its easy to blame BMW but remember they were not the only ownwers nor were they the last. The Pheonix consortium were no saints, lining their own pension funds the way they did, at the expense of the workers while facelifting the 75 and turning it into an inferior car in the process with cost cutting and reduced quality. BMW did have a stab at Rover but soon realised there was a danger of BMW itself being dragged down so they cut their losses. What business wouldnt do that?
Edited by steven211 on Monday 21st February 00:26
Edited by steven211 on Monday 21st February 00:26
Edited by steven211 on Monday 21st February 01:20
will261058 said:
Listen I dont care who you believe. All you need to do is check the facts as documented to realise that the 1.6/1.8 engines were stretched by ROVER ENGINE DESIGN LONG BEFORE BMW bought the company. You might also want to ask yourself why a company like BMW that is famous for building engines like the four cylinder 1.5 Formula 1 engine back in the 70s that produced 1500 bhp and provided the engine for what was the fastest road car for 10 years in the 90s the Mclaren F1. You seem to be listening to the wrong people. But dont take my word for it, do some proper research and I dont mean Wikipdedia. You will find that this is all well documented recorded FACT. Not some opinions by people who dont know what they are talking about or have an axe to grind. Oh and why dont you try reading my post a bit more thoroughly, save me having to repeat myself, then you might even have some answers to the other points I have raised.
I don't use wikipedia, the real facts come out of the mouths by people like my teacher who were Rover engineers, he has told me everything that they did, he was on the development of it, tested the engines, took them apart, they had montegos going around with the engines and were bullet proof. He KNOWS what he is talking about as he worked on the engine he is the FACT, I would rather listen to an ex engineer then read some dodgy website written by someone who has an opinion. He recently sold a BMW so its not like he hates BMW. I ask myself why a company like BMW didn't investigate the K-series problems after they started having problems, I smell a rat. Don't believe the Germans and the Internet, only the people who worked hands on the engine know the FACTS.Edited by steven211 on Monday 21st February 02:04
davepoth said:
Remember when Land Rover was bought by Ford they solved the HG problem in about an afternoon's worth of work, and for very little money. It wasn't a bad engine design, but some issues were left to fester due to lack of investment.
Yep they did, new gasket, stronger lower oil rail to make the engine stiffer as the damp liners made it less stiff.With respect, Ford did not solve the HG problem, the solution (which in my experience is hardly a universal panacoea) was to engineer the KV6 gasket to 4 cylinders and use a shim to prevent porosity on the head surface becoming a problem and banish fire ring roll-in. According to reliable sources within Rover, the HG fix was a smokescreen to convince Ford that somehting was being done, the real improvement in reliability came from manufacturing the LR engines on a separate line where liner heights were more carefully set together with the new gasket and shim. The lower rail isnt that much stiffer than the old, a greater increase in block rigidity was acheived by deleting the chamfers at the bottom of the bolt holes..
Dave
Dave
The K-Series was launched in 1989 - 5 years before the BMW takeover. IIRC the 1.6 came out in the mid-90's - not sure when the 1.8 did - late 90's?
The initial 1.4 16v unit in the 200 was indeed quite revolutionary for the time when most competitors where using wheezy old engines and it sold accordingly in droves. By the mid to late 90's others had caught up but, as usual, rather than taking their 5 year head start and moving further ahead lack of investment, will, planning or whatever meant Rover stayed still.
The initial 1.4 16v unit in the 200 was indeed quite revolutionary for the time when most competitors where using wheezy old engines and it sold accordingly in droves. By the mid to late 90's others had caught up but, as usual, rather than taking their 5 year head start and moving further ahead lack of investment, will, planning or whatever meant Rover stayed still.
confused_buyer said:
The K-Series was launched in 1989 - 5 years before the BMW takeover. IIRC the 1.6 came out in the mid-90's - not sure when the 1.8 did - late 90's?
The initial 1.4 16v unit in the 200 was indeed quite revolutionary for the time when most competitors where using wheezy old engines and it sold accordingly in droves. By the mid to late 90's others had caught up but, as usual, rather than taking their 5 year head start and moving further ahead lack of investment, will, planning or whatever meant Rover stayed still.
I don't think most of the competition had caught up - the 1.4 16v was still punting out more power than many manufacturers were getting from 1.6 and bigger engines - even today, the 1.4 16v is still putting out a decent amount of power for a non-turbo 1.4 - and some manufacturers are still producing 1.6s with similar power.The initial 1.4 16v unit in the 200 was indeed quite revolutionary for the time when most competitors where using wheezy old engines and it sold accordingly in droves. By the mid to late 90's others had caught up but, as usual, rather than taking their 5 year head start and moving further ahead lack of investment, will, planning or whatever meant Rover stayed still.
The Crack Fox said:
Why does any thread with MG / Rover in the title descent into the same old HGF stories ? MG could launch a titanium chassis'd 200 mph microcar that runs on marmite and costs £2 and we'd still end up with the bore-fest that is Head Gaskets... 
PSSST! This is PH. Decrying home product is what many are good at. Our media went into Overkill mode with the so called head gaskets failures and a Nation who still excel at the self-inflicted, consumed the negativity avidly.As far as I'm aware, there is not one instance of a fatality as a result of a damaged Rover cylinder head gasket so called failure. Other manufacturers have had far more serious faults some resulting in fatalities but, do our media go into incessant and prolonged overkill mode? No they do not for numerous legal reasons. The ailing Rover Group and the asset stripped, cheery picked remnant MG-Rover in 2000 when BMW bottled it were easy meat.
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The Crack Fox said:
Why does any thread with MG / Rover in the title descent into the same old HGF stories ? MG could launch a titanium chassis'd 200 mph microcar that runs on marmite and costs £2 and we'd still end up with the bore-fest that is Head Gaskets...
Good question. People just have very fixed views I suppose. Pub lore, rather than facts, is strong on PH. That is disapointing given that this is supposed to be an enthusiasts website..For the record, this is my understanding of what was behind the great Rover / BMW debacle. This is based on first hand reports, conversations I have had with senior people in Germany and a little digging around in documents that are freely available on the web and elsewhere,
I’m writing this in a hurry, so please excuse in advance any typos and other minor errors. In essence, this is what happened….
The Great Rock and Rover Swindle
In the mid 1990s, the BMW board was looking hard at its product range.
There were concerns that the company was over reliant on sales of the 3 series.
The 7 was not a big seller (relatively speaking) and barely covered the cost of its development. The 5 was profitable, but under increasing attack from the E class Mercedes and whilst it enjoyed top dog status technically, even the 5 could not support BMW alone.
No, the real bread and butter was the 3 series, and concern was being expressed that BMW had already rung as many changes on this theme as was available to them - compact, saloon, coupe, cabrio and touring. The M3 halo model worked well too.
It was noted that to compete in the increasingly popular smaller car segment a better solution was going to be required. The 3 Compact was really not very good and was too expensive to make, despite using earlier generation mechanicals. Buyers in this segment were more conscious of space and practicality and the compact simply lost out to rivals from companies such as VW (and yes even Rover) in this regard.
It was felt that BMW needed to expand its ranges and add vehicles in sectors both upwards and downwards. But herein lay the problem. Just how far and wide could the BMW brand be stretched before BMW customers were offered a product that they would not buy because they could not relate it to the brand, or worse, before the core values of the brand were undermined?
The 7 series upper limit had established the ceiling to the BMW brand. The ultra expensive versions simply did not sell in the sorts of numbers necessary to justify their development and the % resale value of these cars was awful, hence BMWs interest in Rolls Royce to provide the ultimate rung on the BMW product ladder.
The lower limit was the 3 compact, but this was not competitive and really only sold because of its badge. Going smaller than this would be tough if BMW was to retain its trademark RWD package.
Clearly, BMW needed FWD for this smaller sector, but this was the antitheses of BMW brand philosophy.
BMW also wanted to broaden the 5 series range with an SUV type vehicle for the lucrative North American Market, but following some work with customer focus groups it was uncertain whether customers would see the BMW brand stretch towards the SUV sector.
The upshot of all this was that in the early 90s, some beancounters in Munich were really concerned that BMWs routes for growth were somewhat restricted, constrained it would seem by the very brand image and core values that had secured the company’s success in the late 1970s and throughout the 1980s.
BMW, they said, was vulnerable to a concerted attack by a major manufacturer with deeper pockets and greater economies of scale, eager to gain access to BMWs pricing and margins. The Lexus and Infiniti programmes by Toyota and Nissan in the USA caused many a sleepless night in Bavaria.
Expansion was the answer, but expansion through the creation or adoption of new brands that would allow BMW to market products that did not have to adhere to BMW brand values, but which nevertheless could offer BMW the sorts of economies of scale in terms of core components (engines, transmissions, electronics, climate and sub systems) that would ensure it could protect its margins going forward in the event of a successful attack on their tradition sectors by Toyota, Nissan et al.
BMW began to cast around to look for an acquisition target. Through their (excellent) working relationship with BAe (through the BMW aero engine division) Rover Group became the focus of their attentions. The marriage looked perfect. Rover had an iconic small car brand – Mini, that could easily sit below the BMW brand without detracting from the latters brand message. Rover also had one of the two global Iconic SUV brands – Land Rover/Range Rover (the other being Jeep) and this potentially could allow BMW to grow their US market share via SUV sales in the event that the then mooted X5 failed to find favour with buyers.
BAe was happy to sell Rover. It had looked at the costs of redeveloping Longbridge and the fact that several cars in the range were in need of replacement. Fling in the fact that BAe had been largely forced to take Rover off the Govts hands and was in an industry with very little synergy or opportunities for savings from joint engineering and BMW represented to best deal in town. So the company was sold with much fanfare.
At this point the BMW strategy was simple. “Keep what we need, get as much money as we can whilst we have the assets (Govt loans and subsidies, sales of land etc) spend as little as possible on product development, without being seen to do so, (hence lots of press announcements about design projects that mostly never took place) and bail out with as big a damaging (to Rover) fanfare as possible thereby ensuring the likely death of a (albeit minor) competitor.
Remember too that at the time of the acquisition BMW and Rover built about the same number of vehicles..
This was plan was enacted very quickly.
1, The 800 replacement that Rover had almost ready to go (based on a revised, widened 800 platform) was canned
2, Changes were made to the K series spec - the selection of plastic dowels for the head location, etc – thereby leading to greatly exacerbated problems with the HGF issue – in other words a minor problem was made much worse and the legend of K series HGF began to gather momentum
3, The R100 production line was closed with no replacement. Now, the 100 sold more than 100,000 cars annually, (it was in effect Rovers 3 series in terms of cash generation) and the effect on Rover cash flow was huge.
The official reason given was the “horrendous” Euro NCAP crash test results of 97, which ranked to R100 as only 1 star. In fact the report, which is still available on line makes it clear that with only a little work the R100 could easily have got more stars..
Yet, BMW felt that such a low score merited the immediate cessation of production.
Go have a look at the 3 series NCAP test for the same year – it scored 1.5 stars……
No replacement for the R100 was ever started.
4, The new Mini project was started. Rover paid for the entire engineering on this from its own cash flow. Bizarrely, the K series (at the time, still the lightest and most compact engine in its class) was dropped from the line up in favour of a Chrysler engine, built at a plant in Brazil… This only makes sense if you consider that the plan to sell off the dregs of Rover once it had been asset stripped could only work if Rover retained its own engine building capability. The K was Rovers mainstream and thus had to stay with Rover. Also, since BMW had deliberately sabotaged the K reputation through the use of the plastic dowels and the refusal to update tooling which was worn out, it was not going to be possible to use the K in the Mini
5, A new mid range Rover was started.. to replace the 400/45. Rover paid for all of this. This was vital, given the significant license costs that Rover had to pay to Honda each year on the older chassis. Drawings and CAD renderings of this vehicle were published by several major UK car magazines, BMW was absolutely furious at the leak – with good reason as it turns out since it very nearly exposed their scam.
This new car, paid for by Rover in large measure would eventually see the light of day as the BMW 1 series…..
6, The new Range Rover was started, and BMW charged this to Rovers accounts also. (by now the Rover books, which had been profitable under BAe looked horrendous with the company spending on R+D for BMW at an unprecedented rate, but with sales chopped by a third or more following the closure of the R100 line)
BMW also managed to get all the 4wd expertise it needed for the X5 and X3, and as these vehicles were launched, it became clear that the BMW brand could be stretched and so the Land Rover brand would not be required. BMW dressed this up for sale to Ford (but made sure in the process that for the time being at least, Ford would have to pay BMW for the completion of the dev work and the subsequent supply of key components (engines etc)
7, The anticipated launch of the MGF in the USA was cancelled. The MG brand still had massive following in the USA and had once been valued as one of the 3 most valuable brands in the USA. The MGF was a thorn in BMWs side. Dynamically superior to the Z3 and arguably much better looking, the little F consistently trounced the Z3 in road tests by motor magazines and TV shows. The engineering work to take the F to the USA was never signed off and the F was allowed to sit undeveloped.
8, The Rover engineers were not entirely helpless though. Their 800 replacement had been merely a stopgap for what was to become the R75
This car, with its Rover designed floorpan had a better torsional rigidity than the 5 series BMW and potentially offered a real threat.
Yet, here BMW saw a real opportunity. They allowed Rover to finish the development of this car and even allowed Rover engineers to use several major components to speed development (Z axle rear end, aircon and electrics systems etc)
But it was a con. Whilst Rover engineers twittered excitedly about being allowed finally to have two mouldings for the handbrake surround/centre console for LHD and RHD markets, BMW now had their exit strategy in place. The R75 would be launched to massive public and press praise - “ looks like a baby Bentley, class leading ride and refinement, better than the S type Jaguar (launched at the similar time) a real small limo experience” were some of the comments …… yet at the launch Bernd Pisch effectively warned that Rovers days were nearly over. The result was that the leasing companies wouldn’t touch the 75 at competitive rates.
This severely restricted sales….
The red ink on the Rover balance sheet grew worse.. and of course, all the while BMW claimed in the media that it was doing its best with its English patient.
It pocketed a nice Government subsidy to develop the Hams Hall site for engines. The NG range of engines was supposed to power both future BMW and Rover ranges. Odd then that the NG is not designed for transverse fitment, witness the use of Peugeot engines in later MINIs…….
BMWs “good work” on the K series was also bearing fruit with warranty claims for HGF rising and the little engines reputation sinking like a stone.
Rover paid for Cowley works to be completely refettled. (it cost tens of millions) but never saw the benefit of its investment… This is the current MINI factory owned by BMW…..
When the end came, BMW looked like heros for having tried so hard with their English Patient. “So much money lost” was the cry, but a quick perusal of the actual balance sheet of the deal shows that BMW lost almost nothing, once IP, dev costs of new models (which Rover paid for but BMW retained), land sales and the sale of Land Rover to Ford are taken into account. What they gained though was a couple of effectively brand new factories. A new range of cars in an iconic sub brand ( MINI) , a new engine range paid for by Rover and HMG (the British taxpayer) and all the IP they needed for the 4wd and Fwd technologies they might need in the future.
The much ballyhooed “dowry” of thousands of Rover cars on airfields (and cited on many a previous MGR bashing thread on PH) was another con. Rover had begged BMW to slow production lines to prevent a build up of unsold stock. Such stock undermines used car values, undermines the brand and also costs money to build. Rover had to build these cars, lose money on them. Instead of keeping quiet about the stock pile, BMW circulated a list of sites where these cars could be photographed….
Now, there’s lots more I could go into, and for everything I’ve written here there are another 5 points that should be made. But there is no point.
Most of you have swallowed the story that BMW put out hook line and sinker.
MGR deserved all it got in the eyes on most haters. Goebbels would be proud.
It’s easy to blame the Phoenix 4. After all they were in charge when it all finally collapsed. But that’s another story that is far from being as simple as the media have portrayed it. And the end, when it came, was bizarre, with Patricia Hewitt waiting till John Towers had boarded his plane in China before marching into Longbridge at nine o’clock in the evening to close what was at that time a PRIVATE limited company…
By the time Towers landed at Heathrow, his company was no more…
For the record, it cost the British Government more in terms support for MGR workers made redundant than it would have done for them to underwrite the MGR pension fund deficit (the only outstanding point of negotiation between SAIC and MGR) SAIC had asked the government to underwrite the deficit because they (SAIC) felt (not unreasonably) that Gordon Browns “windfall tax” on private pension funds had largely created the problem in the first place.
Now you might want to ask why BMW was making urgent calls to Whitehall at this time, but hey, whats the point, you haters know best. HGF every five minutes wasn’t it?
andymadmak said:
The Crack Fox said:
Why does any thread with MG / Rover in the title descent into the same old HGF stories ? MG could launch a titanium chassis'd 200 mph microcar that runs on marmite and costs £2 and we'd still end up with the bore-fest that is Head Gaskets...
Good question. People just have very fixed views I suppose. Pub lore, rather than facts, is strong on PH. That is disapointing given that this is supposed to be an enthusiasts website..For the record, this is my understanding of what was behind the great Rover / BMW debacle. This is based on first hand reports, conversations I have had with senior people in Germany and a little digging around in documents that are freely available on the web and elsewhere,
I’m writing this in a hurry, so please excuse in advance any typos and other minor errors. In essence, this is what happened….
The Great Rock and Rover Swindle
In the mid 1990s, the BMW board was looking hard at its product range.
There were concerns that the company was over reliant on sales of the 3 series.
The 7 was not a big seller (relatively speaking) and barely covered the cost of its development. The 5 was profitable, but under increasing attack from the E class Mercedes and whilst it enjoyed top dog status technically, even the 5 could not support BMW alone.
No, the real bread and butter was the 3 series, and concern was being expressed that BMW had already rung as many changes on this theme as was available to them - compact, saloon, coupe, cabrio and touring. The M3 halo model worked well too.
It was noted that to compete in the increasingly popular smaller car segment a better solution was going to be required. The 3 Compact was really not very good and was too expensive to make, despite using earlier generation mechanicals. Buyers in this segment were more conscious of space and practicality and the compact simply lost out to rivals from companies such as VW (and yes even Rover) in this regard.
It was felt that BMW needed to expand its ranges and add vehicles in sectors both upwards and downwards. But herein lay the problem. Just how far and wide could the BMW brand be stretched before BMW customers were offered a product that they would not buy because they could not relate it to the brand, or worse, before the core values of the brand were undermined?
The 7 series upper limit had established the ceiling to the BMW brand. The ultra expensive versions simply did not sell in the sorts of numbers necessary to justify their development and the % resale value of these cars was awful, hence BMWs interest in Rolls Royce to provide the ultimate rung on the BMW product ladder.
The lower limit was the 3 compact, but this was not competitive and really only sold because of its badge. Going smaller than this would be tough if BMW was to retain its trademark RWD package.
Clearly, BMW needed FWD for this smaller sector, but this was the antitheses of BMW brand philosophy.
BMW also wanted to broaden the 5 series range with an SUV type vehicle for the lucrative North American Market, but following some work with customer focus groups it was uncertain whether customers would see the BMW brand stretch towards the SUV sector.
The upshot of all this was that in the early 90s, some beancounters in Munich were really concerned that BMWs routes for growth were somewhat restricted, constrained it would seem by the very brand image and core values that had secured the company’s success in the late 1970s and throughout the 1980s.
BMW, they said, was vulnerable to a concerted attack by a major manufacturer with deeper pockets and greater economies of scale, eager to gain access to BMWs pricing and margins. The Lexus and Infiniti programmes by Toyota and Nissan in the USA caused many a sleepless night in Bavaria.
Expansion was the answer, but expansion through the creation or adoption of new brands that would allow BMW to market products that did not have to adhere to BMW brand values, but which nevertheless could offer BMW the sorts of economies of scale in terms of core components (engines, transmissions, electronics, climate and sub systems) that would ensure it could protect its margins going forward in the event of a successful attack on their tradition sectors by Toyota, Nissan et al.
BMW began to cast around to look for an acquisition target. Through their (excellent) working relationship with BAe (through the BMW aero engine division) Rover Group became the focus of their attentions. The marriage looked perfect. Rover had an iconic small car brand – Mini, that could easily sit below the BMW brand without detracting from the latters brand message. Rover also had one of the two global Iconic SUV brands – Land Rover/Range Rover (the other being Jeep) and this potentially could allow BMW to grow their US market share via SUV sales in the event that the then mooted X5 failed to find favour with buyers.
BAe was happy to sell Rover. It had looked at the costs of redeveloping Longbridge and the fact that several cars in the range were in need of replacement. Fling in the fact that BAe had been largely forced to take Rover off the Govts hands and was in an industry with very little synergy or opportunities for savings from joint engineering and BMW represented to best deal in town. So the company was sold with much fanfare.
At this point the BMW strategy was simple. “Keep what we need, get as much money as we can whilst we have the assets (Govt loans and subsidies, sales of land etc) spend as little as possible on product development, without being seen to do so, (hence lots of press announcements about design projects that mostly never took place) and bail out with as big a damaging (to Rover) fanfare as possible thereby ensuring the likely death of a (albeit minor) competitor.
Remember too that at the time of the acquisition BMW and Rover built about the same number of vehicles..
This was plan was enacted very quickly.
1, The 800 replacement that Rover had almost ready to go (based on a revised, widened 800 platform) was canned
2, Changes were made to the K series spec - the selection of plastic dowels for the head location, etc – thereby leading to greatly exacerbated problems with the HGF issue – in other words a minor problem was made much worse and the legend of K series HGF began to gather momentum
3, The R100 production line was closed with no replacement. Now, the 100 sold more than 100,000 cars annually, (it was in effect Rovers 3 series in terms of cash generation) and the effect on Rover cash flow was huge.
The official reason given was the “horrendous” Euro NCAP crash test results of 97, which ranked to R100 as only 1 star. In fact the report, which is still available on line makes it clear that with only a little work the R100 could easily have got more stars..
Yet, BMW felt that such a low score merited the immediate cessation of production.
Go have a look at the 3 series NCAP test for the same year – it scored 1.5 stars……
No replacement for the R100 was ever started.
4, The new Mini project was started. Rover paid for the entire engineering on this from its own cash flow. Bizarrely, the K series (at the time, still the lightest and most compact engine in its class) was dropped from the line up in favour of a Chrysler engine, built at a plant in Brazil… This only makes sense if you consider that the plan to sell off the dregs of Rover once it had been asset stripped could only work if Rover retained its own engine building capability. The K was Rovers mainstream and thus had to stay with Rover. Also, since BMW had deliberately sabotaged the K reputation through the use of the plastic dowels and the refusal to update tooling which was worn out, it was not going to be possible to use the K in the Mini
5, A new mid range Rover was started.. to replace the 400/45. Rover paid for all of this. This was vital, given the significant license costs that Rover had to pay to Honda each year on the older chassis. Drawings and CAD renderings of this vehicle were published by several major UK car magazines, BMW was absolutely furious at the leak – with good reason as it turns out since it very nearly exposed their scam.
This new car, paid for by Rover in large measure would eventually see the light of day as the BMW 1 series…..
6, The new Range Rover was started, and BMW charged this to Rovers accounts also. (by now the Rover books, which had been profitable under BAe looked horrendous with the company spending on R+D for BMW at an unprecedented rate, but with sales chopped by a third or more following the closure of the R100 line)
BMW also managed to get all the 4wd expertise it needed for the X5 and X3, and as these vehicles were launched, it became clear that the BMW brand could be stretched and so the Land Rover brand would not be required. BMW dressed this up for sale to Ford (but made sure in the process that for the time being at least, Ford would have to pay BMW for the completion of the dev work and the subsequent supply of key components (engines etc)
7, The anticipated launch of the MGF in the USA was cancelled. The MG brand still had massive following in the USA and had once been valued as one of the 3 most valuable brands in the USA. The MGF was a thorn in BMWs side. Dynamically superior to the Z3 and arguably much better looking, the little F consistently trounced the Z3 in road tests by motor magazines and TV shows. The engineering work to take the F to the USA was never signed off and the F was allowed to sit undeveloped.
8, The Rover engineers were not entirely helpless though. Their 800 replacement had been merely a stopgap for what was to become the R75
This car, with its Rover designed floorpan had a better torsional rigidity than the 5 series BMW and potentially offered a real threat.
Yet, here BMW saw a real opportunity. They allowed Rover to finish the development of this car and even allowed Rover engineers to use several major components to speed development (Z axle rear end, aircon and electrics systems etc)
But it was a con. Whilst Rover engineers twittered excitedly about being allowed finally to have two mouldings for the handbrake surround/centre console for LHD and RHD markets, BMW now had their exit strategy in place. The R75 would be launched to massive public and press praise - “ looks like a baby Bentley, class leading ride and refinement, better than the S type Jaguar (launched at the similar time) a real small limo experience” were some of the comments …… yet at the launch Bernd Pisch effectively warned that Rovers days were nearly over. The result was that the leasing companies wouldn’t touch the 75 at competitive rates.
This severely restricted sales….
The red ink on the Rover balance sheet grew worse.. and of course, all the while BMW claimed in the media that it was doing its best with its English patient.
It pocketed a nice Government subsidy to develop the Hams Hall site for engines. The NG range of engines was supposed to power both future BMW and Rover ranges. Odd then that the NG is not designed for transverse fitment, witness the use of Peugeot engines in later MINIs…….
BMWs “good work” on the K series was also bearing fruit with warranty claims for HGF rising and the little engines reputation sinking like a stone.
Rover paid for Cowley works to be completely refettled. (it cost tens of millions) but never saw the benefit of its investment… This is the current MINI factory owned by BMW…..
When the end came, BMW looked like heros for having tried so hard with their English Patient. “So much money lost” was the cry, but a quick perusal of the actual balance sheet of the deal shows that BMW lost almost nothing, once IP, dev costs of new models (which Rover paid for but BMW retained), land sales and the sale of Land Rover to Ford are taken into account. What they gained though was a couple of effectively brand new factories. A new range of cars in an iconic sub brand ( MINI) , a new engine range paid for by Rover and HMG (the British taxpayer) and all the IP they needed for the 4wd and Fwd technologies they might need in the future.
The much ballyhooed “dowry” of thousands of Rover cars on airfields (and cited on many a previous MGR bashing thread on PH) was another con. Rover had begged BMW to slow production lines to prevent a build up of unsold stock. Such stock undermines used car values, undermines the brand and also costs money to build. Rover had to build these cars, lose money on them. Instead of keeping quiet about the stock pile, BMW circulated a list of sites where these cars could be photographed….
Now, there’s lots more I could go into, and for everything I’ve written here there are another 5 points that should be made. But there is no point.
Most of you have swallowed the story that BMW put out hook line and sinker.
MGR deserved all it got in the eyes on most haters. Goebbels would be proud.
It’s easy to blame the Phoenix 4. After all they were in charge when it all finally collapsed. But that’s another story that is far from being as simple as the media have portrayed it. And the end, when it came, was bizarre, with Patricia Hewitt waiting till John Towers had boarded his plane in China before marching into Longbridge at nine o’clock in the evening to close what was at that time a PRIVATE limited company…
By the time Towers landed at Heathrow, his company was no more…
For the record, it cost the British Government more in terms support for MGR workers made redundant than it would have done for them to underwrite the MGR pension fund deficit (the only outstanding point of negotiation between SAIC and MGR) SAIC had asked the government to underwrite the deficit because they (SAIC) felt (not unreasonably) that Gordon Browns “windfall tax” on private pension funds had largely created the problem in the first place.
Now you might want to ask why BMW was making urgent calls to Whitehall at this time, but hey, whats the point, you haters know best. HGF every five minutes wasn’t it?
.... and some fell on stoney ground ....
.
andymadmak said:
Good question. People just have very fixed views I suppose. Pub lore, rather than facts, is strong on PH. That is disapointing given that this is supposed to be an enthusiasts website..
For the record, this is my understanding of what was behind the great Rover / BMW debacle. This is based on first hand reports, conversations I have had with senior people in Germany and a little digging around in documents that are freely available on the web and elsewhere,
I’m writing this in a hurry, so please excuse in advance any typos and other minor errors. In essence, this is what happened….
The Great Rock and Rover Swindle
In the mid 1990s, the BMW board was looking hard at its product range.
There were concerns that the company was over reliant on sales of the 3 series.
The 7 was not a big seller (relatively speaking) and barely covered the cost of its development. The 5 was profitable, but under increasing attack from the E class Mercedes and whilst it enjoyed top dog status technically, even the 5 could not support BMW alone.
No, the real bread and butter was the 3 series, and concern was being expressed that BMW had already rung as many changes on this theme as was available to them - compact, saloon, coupe, cabrio and touring. The M3 halo model worked well too.
It was noted that to compete in the increasingly popular smaller car segment a better solution was going to be required. The 3 Compact was really not very good and was too expensive to make, despite using earlier generation mechanicals. Buyers in this segment were more conscious of space and practicality and the compact simply lost out to rivals from companies such as VW (and yes even Rover) in this regard.
It was felt that BMW needed to expand its ranges and add vehicles in sectors both upwards and downwards. But herein lay the problem. Just how far and wide could the BMW brand be stretched before BMW customers were offered a product that they would not buy because they could not relate it to the brand, or worse, before the core values of the brand were undermined?
The 7 series upper limit had established the ceiling to the BMW brand. The ultra expensive versions simply did not sell in the sorts of numbers necessary to justify their development and the % resale value of these cars was awful, hence BMWs interest in Rolls Royce to provide the ultimate rung on the BMW product ladder.
The lower limit was the 3 compact, but this was not competitive and really only sold because of its badge. Going smaller than this would be tough if BMW was to retain its trademark RWD package.
Clearly, BMW needed FWD for this smaller sector, but this was the antitheses of BMW brand philosophy.
BMW also wanted to broaden the 5 series range with an SUV type vehicle for the lucrative North American Market, but following some work with customer focus groups it was uncertain whether customers would see the BMW brand stretch towards the SUV sector.
The upshot of all this was that in the early 90s, some beancounters in Munich were really concerned that BMWs routes for growth were somewhat restricted, constrained it would seem by the very brand image and core values that had secured the company’s success in the late 1970s and throughout the 1980s.
BMW, they said, was vulnerable to a concerted attack by a major manufacturer with deeper pockets and greater economies of scale, eager to gain access to BMWs pricing and margins. The Lexus and Infiniti programmes by Toyota and Nissan in the USA caused many a sleepless night in Bavaria.
Expansion was the answer, but expansion through the creation or adoption of new brands that would allow BMW to market products that did not have to adhere to BMW brand values, but which nevertheless could offer BMW the sorts of economies of scale in terms of core components (engines, transmissions, electronics, climate and sub systems) that would ensure it could protect its margins going forward in the event of a successful attack on their tradition sectors by Toyota, Nissan et al.
BMW began to cast around to look for an acquisition target. Through their (excellent) working relationship with BAe (through the BMW aero engine division) Rover Group became the focus of their attentions. The marriage looked perfect. Rover had an iconic small car brand – Mini, that could easily sit below the BMW brand without detracting from the latters brand message. Rover also had one of the two global Iconic SUV brands – Land Rover/Range Rover (the other being Jeep) and this potentially could allow BMW to grow their US market share via SUV sales in the event that the then mooted X5 failed to find favour with buyers.
BAe was happy to sell Rover. It had looked at the costs of redeveloping Longbridge and the fact that several cars in the range were in need of replacement. Fling in the fact that BAe had been largely forced to take Rover off the Govts hands and was in an industry with very little synergy or opportunities for savings from joint engineering and BMW represented to best deal in town. So the company was sold with much fanfare.
At this point the BMW strategy was simple. “Keep what we need, get as much money as we can whilst we have the assets (Govt loans and subsidies, sales of land etc) spend as little as possible on product development, without being seen to do so, (hence lots of press announcements about design projects that mostly never took place) and bail out with as big a damaging (to Rover) fanfare as possible thereby ensuring the likely death of a (albeit minor) competitor.
Remember too that at the time of the acquisition BMW and Rover built about the same number of vehicles..
This was plan was enacted very quickly.
1, The 800 replacement that Rover had almost ready to go (based on a revised, widened 800 platform) was canned
2, Changes were made to the K series spec - the selection of plastic dowels for the head location, etc – thereby leading to greatly exacerbated problems with the HGF issue – in other words a minor problem was made much worse and the legend of K series HGF began to gather momentum
3, The R100 production line was closed with no replacement. Now, the 100 sold more than 100,000 cars annually, (it was in effect Rovers 3 series in terms of cash generation) and the effect on Rover cash flow was huge.
The official reason given was the “horrendous” Euro NCAP crash test results of 97, which ranked to R100 as only 1 star. In fact the report, which is still available on line makes it clear that with only a little work the R100 could easily have got more stars..
Yet, BMW felt that such a low score merited the immediate cessation of production.
Go have a look at the 3 series NCAP test for the same year – it scored 1.5 stars……
No replacement for the R100 was ever started.
4, The new Mini project was started. Rover paid for the entire engineering on this from its own cash flow. Bizarrely, the K series (at the time, still the lightest and most compact engine in its class) was dropped from the line up in favour of a Chrysler engine, built at a plant in Brazil… This only makes sense if you consider that the plan to sell off the dregs of Rover once it had been asset stripped could only work if Rover retained its own engine building capability. The K was Rovers mainstream and thus had to stay with Rover. Also, since BMW had deliberately sabotaged the K reputation through the use of the plastic dowels and the refusal to update tooling which was worn out, it was not going to be possible to use the K in the Mini
5, A new mid range Rover was started.. to replace the 400/45. Rover paid for all of this. This was vital, given the significant license costs that Rover had to pay to Honda each year on the older chassis. Drawings and CAD renderings of this vehicle were published by several major UK car magazines, BMW was absolutely furious at the leak – with good reason as it turns out since it very nearly exposed their scam.
This new car, paid for by Rover in large measure would eventually see the light of day as the BMW 1 series…..
6, The new Range Rover was started, and BMW charged this to Rovers accounts also. (by now the Rover books, which had been profitable under BAe looked horrendous with the company spending on R+D for BMW at an unprecedented rate, but with sales chopped by a third or more following the closure of the R100 line)
BMW also managed to get all the 4wd expertise it needed for the X5 and X3, and as these vehicles were launched, it became clear that the BMW brand could be stretched and so the Land Rover brand would not be required. BMW dressed this up for sale to Ford (but made sure in the process that for the time being at least, Ford would have to pay BMW for the completion of the dev work and the subsequent supply of key components (engines etc)
7, The anticipated launch of the MGF in the USA was cancelled. The MG brand still had massive following in the USA and had once been valued as one of the 3 most valuable brands in the USA. The MGF was a thorn in BMWs side. Dynamically superior to the Z3 and arguably much better looking, the little F consistently trounced the Z3 in road tests by motor magazines and TV shows. The engineering work to take the F to the USA was never signed off and the F was allowed to sit undeveloped.
8, The Rover engineers were not entirely helpless though. Their 800 replacement had been merely a stopgap for what was to become the R75
This car, with its Rover designed floorpan had a better torsional rigidity than the 5 series BMW and potentially offered a real threat.
Yet, here BMW saw a real opportunity. They allowed Rover to finish the development of this car and even allowed Rover engineers to use several major components to speed development (Z axle rear end, aircon and electrics systems etc)
But it was a con. Whilst Rover engineers twittered excitedly about being allowed finally to have two mouldings for the handbrake surround/centre console for LHD and RHD markets, BMW now had their exit strategy in place. The R75 would be launched to massive public and press praise - “ looks like a baby Bentley, class leading ride and refinement, better than the S type Jaguar (launched at the similar time) a real small limo experience” were some of the comments …… yet at the launch Bernd Pisch effectively warned that Rovers days were nearly over. The result was that the leasing companies wouldn’t touch the 75 at competitive rates.
This severely restricted sales….
The red ink on the Rover balance sheet grew worse.. and of course, all the while BMW claimed in the media that it was doing its best with its English patient.
It pocketed a nice Government subsidy to develop the Hams Hall site for engines. The NG range of engines was supposed to power both future BMW and Rover ranges. Odd then that the NG is not designed for transverse fitment, witness the use of Peugeot engines in later MINIs…….
BMWs “good work” on the K series was also bearing fruit with warranty claims for HGF rising and the little engines reputation sinking like a stone.
Rover paid for Cowley works to be completely refettled. (it cost tens of millions) but never saw the benefit of its investment… This is the current MINI factory owned by BMW…..
When the end came, BMW looked like heros for having tried so hard with their English Patient. “So much money lost” was the cry, but a quick perusal of the actual balance sheet of the deal shows that BMW lost almost nothing, once IP, dev costs of new models (which Rover paid for but BMW retained), land sales and the sale of Land Rover to Ford are taken into account. What they gained though was a couple of effectively brand new factories. A new range of cars in an iconic sub brand ( MINI) , a new engine range paid for by Rover and HMG (the British taxpayer) and all the IP they needed for the 4wd and Fwd technologies they might need in the future.
The much ballyhooed “dowry” of thousands of Rover cars on airfields (and cited on many a previous MGR bashing thread on PH) was another con. Rover had begged BMW to slow production lines to prevent a build up of unsold stock. Such stock undermines used car values, undermines the brand and also costs money to build. Rover had to build these cars, lose money on them. Instead of keeping quiet about the stock pile, BMW circulated a list of sites where these cars could be photographed….
Now, there’s lots more I could go into, and for everything I’ve written here there are another 5 points that should be made. But there is no point.
Most of you have swallowed the story that BMW put out hook line and sinker.
MGR deserved all it got in the eyes on most haters. Goebbels would be proud.
It’s easy to blame the Phoenix 4. After all they were in charge when it all finally collapsed. But that’s another story that is far from being as simple as the media have portrayed it. And the end, when it came, was bizarre, with Patricia Hewitt waiting till John Towers had boarded his plane in China before marching into Longbridge at nine o’clock in the evening to close what was at that time a PRIVATE limited company…
By the time Towers landed at Heathrow, his company was no more…
For the record, it cost the British Government more in terms support for MGR workers made redundant than it would have done for them to underwrite the MGR pension fund deficit (the only outstanding point of negotiation between SAIC and MGR) SAIC had asked the government to underwrite the deficit because they (SAIC) felt (not unreasonably) that Gordon Browns “windfall tax” on private pension funds had largely created the problem in the first place.
Now you might want to ask why BMW was making urgent calls to Whitehall at this time, but hey, whats the point, you haters know best. HGF every five minutes wasn’t it?
Yep, that is what I have been told by my teacher, my uncle (worked at Longbridge for 30+ years) and many other people. Would BMW admit this? No of course not, but you can't trust the Germans.For the record, this is my understanding of what was behind the great Rover / BMW debacle. This is based on first hand reports, conversations I have had with senior people in Germany and a little digging around in documents that are freely available on the web and elsewhere,
I’m writing this in a hurry, so please excuse in advance any typos and other minor errors. In essence, this is what happened….
The Great Rock and Rover Swindle
In the mid 1990s, the BMW board was looking hard at its product range.
There were concerns that the company was over reliant on sales of the 3 series.
The 7 was not a big seller (relatively speaking) and barely covered the cost of its development. The 5 was profitable, but under increasing attack from the E class Mercedes and whilst it enjoyed top dog status technically, even the 5 could not support BMW alone.
No, the real bread and butter was the 3 series, and concern was being expressed that BMW had already rung as many changes on this theme as was available to them - compact, saloon, coupe, cabrio and touring. The M3 halo model worked well too.
It was noted that to compete in the increasingly popular smaller car segment a better solution was going to be required. The 3 Compact was really not very good and was too expensive to make, despite using earlier generation mechanicals. Buyers in this segment were more conscious of space and practicality and the compact simply lost out to rivals from companies such as VW (and yes even Rover) in this regard.
It was felt that BMW needed to expand its ranges and add vehicles in sectors both upwards and downwards. But herein lay the problem. Just how far and wide could the BMW brand be stretched before BMW customers were offered a product that they would not buy because they could not relate it to the brand, or worse, before the core values of the brand were undermined?
The 7 series upper limit had established the ceiling to the BMW brand. The ultra expensive versions simply did not sell in the sorts of numbers necessary to justify their development and the % resale value of these cars was awful, hence BMWs interest in Rolls Royce to provide the ultimate rung on the BMW product ladder.
The lower limit was the 3 compact, but this was not competitive and really only sold because of its badge. Going smaller than this would be tough if BMW was to retain its trademark RWD package.
Clearly, BMW needed FWD for this smaller sector, but this was the antitheses of BMW brand philosophy.
BMW also wanted to broaden the 5 series range with an SUV type vehicle for the lucrative North American Market, but following some work with customer focus groups it was uncertain whether customers would see the BMW brand stretch towards the SUV sector.
The upshot of all this was that in the early 90s, some beancounters in Munich were really concerned that BMWs routes for growth were somewhat restricted, constrained it would seem by the very brand image and core values that had secured the company’s success in the late 1970s and throughout the 1980s.
BMW, they said, was vulnerable to a concerted attack by a major manufacturer with deeper pockets and greater economies of scale, eager to gain access to BMWs pricing and margins. The Lexus and Infiniti programmes by Toyota and Nissan in the USA caused many a sleepless night in Bavaria.
Expansion was the answer, but expansion through the creation or adoption of new brands that would allow BMW to market products that did not have to adhere to BMW brand values, but which nevertheless could offer BMW the sorts of economies of scale in terms of core components (engines, transmissions, electronics, climate and sub systems) that would ensure it could protect its margins going forward in the event of a successful attack on their tradition sectors by Toyota, Nissan et al.
BMW began to cast around to look for an acquisition target. Through their (excellent) working relationship with BAe (through the BMW aero engine division) Rover Group became the focus of their attentions. The marriage looked perfect. Rover had an iconic small car brand – Mini, that could easily sit below the BMW brand without detracting from the latters brand message. Rover also had one of the two global Iconic SUV brands – Land Rover/Range Rover (the other being Jeep) and this potentially could allow BMW to grow their US market share via SUV sales in the event that the then mooted X5 failed to find favour with buyers.
BAe was happy to sell Rover. It had looked at the costs of redeveloping Longbridge and the fact that several cars in the range were in need of replacement. Fling in the fact that BAe had been largely forced to take Rover off the Govts hands and was in an industry with very little synergy or opportunities for savings from joint engineering and BMW represented to best deal in town. So the company was sold with much fanfare.
At this point the BMW strategy was simple. “Keep what we need, get as much money as we can whilst we have the assets (Govt loans and subsidies, sales of land etc) spend as little as possible on product development, without being seen to do so, (hence lots of press announcements about design projects that mostly never took place) and bail out with as big a damaging (to Rover) fanfare as possible thereby ensuring the likely death of a (albeit minor) competitor.
Remember too that at the time of the acquisition BMW and Rover built about the same number of vehicles..
This was plan was enacted very quickly.
1, The 800 replacement that Rover had almost ready to go (based on a revised, widened 800 platform) was canned
2, Changes were made to the K series spec - the selection of plastic dowels for the head location, etc – thereby leading to greatly exacerbated problems with the HGF issue – in other words a minor problem was made much worse and the legend of K series HGF began to gather momentum
3, The R100 production line was closed with no replacement. Now, the 100 sold more than 100,000 cars annually, (it was in effect Rovers 3 series in terms of cash generation) and the effect on Rover cash flow was huge.
The official reason given was the “horrendous” Euro NCAP crash test results of 97, which ranked to R100 as only 1 star. In fact the report, which is still available on line makes it clear that with only a little work the R100 could easily have got more stars..
Yet, BMW felt that such a low score merited the immediate cessation of production.
Go have a look at the 3 series NCAP test for the same year – it scored 1.5 stars……
No replacement for the R100 was ever started.
4, The new Mini project was started. Rover paid for the entire engineering on this from its own cash flow. Bizarrely, the K series (at the time, still the lightest and most compact engine in its class) was dropped from the line up in favour of a Chrysler engine, built at a plant in Brazil… This only makes sense if you consider that the plan to sell off the dregs of Rover once it had been asset stripped could only work if Rover retained its own engine building capability. The K was Rovers mainstream and thus had to stay with Rover. Also, since BMW had deliberately sabotaged the K reputation through the use of the plastic dowels and the refusal to update tooling which was worn out, it was not going to be possible to use the K in the Mini
5, A new mid range Rover was started.. to replace the 400/45. Rover paid for all of this. This was vital, given the significant license costs that Rover had to pay to Honda each year on the older chassis. Drawings and CAD renderings of this vehicle were published by several major UK car magazines, BMW was absolutely furious at the leak – with good reason as it turns out since it very nearly exposed their scam.
This new car, paid for by Rover in large measure would eventually see the light of day as the BMW 1 series…..
6, The new Range Rover was started, and BMW charged this to Rovers accounts also. (by now the Rover books, which had been profitable under BAe looked horrendous with the company spending on R+D for BMW at an unprecedented rate, but with sales chopped by a third or more following the closure of the R100 line)
BMW also managed to get all the 4wd expertise it needed for the X5 and X3, and as these vehicles were launched, it became clear that the BMW brand could be stretched and so the Land Rover brand would not be required. BMW dressed this up for sale to Ford (but made sure in the process that for the time being at least, Ford would have to pay BMW for the completion of the dev work and the subsequent supply of key components (engines etc)
7, The anticipated launch of the MGF in the USA was cancelled. The MG brand still had massive following in the USA and had once been valued as one of the 3 most valuable brands in the USA. The MGF was a thorn in BMWs side. Dynamically superior to the Z3 and arguably much better looking, the little F consistently trounced the Z3 in road tests by motor magazines and TV shows. The engineering work to take the F to the USA was never signed off and the F was allowed to sit undeveloped.
8, The Rover engineers were not entirely helpless though. Their 800 replacement had been merely a stopgap for what was to become the R75
This car, with its Rover designed floorpan had a better torsional rigidity than the 5 series BMW and potentially offered a real threat.
Yet, here BMW saw a real opportunity. They allowed Rover to finish the development of this car and even allowed Rover engineers to use several major components to speed development (Z axle rear end, aircon and electrics systems etc)
But it was a con. Whilst Rover engineers twittered excitedly about being allowed finally to have two mouldings for the handbrake surround/centre console for LHD and RHD markets, BMW now had their exit strategy in place. The R75 would be launched to massive public and press praise - “ looks like a baby Bentley, class leading ride and refinement, better than the S type Jaguar (launched at the similar time) a real small limo experience” were some of the comments …… yet at the launch Bernd Pisch effectively warned that Rovers days were nearly over. The result was that the leasing companies wouldn’t touch the 75 at competitive rates.
This severely restricted sales….
The red ink on the Rover balance sheet grew worse.. and of course, all the while BMW claimed in the media that it was doing its best with its English patient.
It pocketed a nice Government subsidy to develop the Hams Hall site for engines. The NG range of engines was supposed to power both future BMW and Rover ranges. Odd then that the NG is not designed for transverse fitment, witness the use of Peugeot engines in later MINIs…….
BMWs “good work” on the K series was also bearing fruit with warranty claims for HGF rising and the little engines reputation sinking like a stone.
Rover paid for Cowley works to be completely refettled. (it cost tens of millions) but never saw the benefit of its investment… This is the current MINI factory owned by BMW…..
When the end came, BMW looked like heros for having tried so hard with their English Patient. “So much money lost” was the cry, but a quick perusal of the actual balance sheet of the deal shows that BMW lost almost nothing, once IP, dev costs of new models (which Rover paid for but BMW retained), land sales and the sale of Land Rover to Ford are taken into account. What they gained though was a couple of effectively brand new factories. A new range of cars in an iconic sub brand ( MINI) , a new engine range paid for by Rover and HMG (the British taxpayer) and all the IP they needed for the 4wd and Fwd technologies they might need in the future.
The much ballyhooed “dowry” of thousands of Rover cars on airfields (and cited on many a previous MGR bashing thread on PH) was another con. Rover had begged BMW to slow production lines to prevent a build up of unsold stock. Such stock undermines used car values, undermines the brand and also costs money to build. Rover had to build these cars, lose money on them. Instead of keeping quiet about the stock pile, BMW circulated a list of sites where these cars could be photographed….
Now, there’s lots more I could go into, and for everything I’ve written here there are another 5 points that should be made. But there is no point.
Most of you have swallowed the story that BMW put out hook line and sinker.
MGR deserved all it got in the eyes on most haters. Goebbels would be proud.
It’s easy to blame the Phoenix 4. After all they were in charge when it all finally collapsed. But that’s another story that is far from being as simple as the media have portrayed it. And the end, when it came, was bizarre, with Patricia Hewitt waiting till John Towers had boarded his plane in China before marching into Longbridge at nine o’clock in the evening to close what was at that time a PRIVATE limited company…
By the time Towers landed at Heathrow, his company was no more…
For the record, it cost the British Government more in terms support for MGR workers made redundant than it would have done for them to underwrite the MGR pension fund deficit (the only outstanding point of negotiation between SAIC and MGR) SAIC had asked the government to underwrite the deficit because they (SAIC) felt (not unreasonably) that Gordon Browns “windfall tax” on private pension funds had largely created the problem in the first place.
Now you might want to ask why BMW was making urgent calls to Whitehall at this time, but hey, whats the point, you haters know best. HGF every five minutes wasn’t it?
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