Biggest failure in BMW history.  Why was the Rover hijacking a disaster?

Biggest failure in BMW history. Why was the Rover hijacking a disaster?

In the early 1990s, BMW did not know what failure was. Production has grown steadily since 1962, and from 1960 every year was closed with profits. In addition, in 1992, BMW for the first time in history sold more cars than Mercedes. And soon after that, it decided to buy the British Rover concern.

Every increase has its limits. Although in the years 1962-1992 BMW production grew without interruption (with the exception of one drop in 1974 caused by the global oil crisis), the Bavarian company realized that in the automotive industry the time of great concern for many products was approaching and now it is needed in moderation significantly increase the amount.

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The BMW brand at that time did not allow the increase in sales, and the company – for fear of damaging its image – did not want to start in areas that could provide such growth. In the early 1990s, even the front-wheel drive 2 Series was considered, but it was found that such a car did not suit BMW.

Well, if BMW took over another company, its models could compete in areas where the Bavarian brand should be avoided. Sales would increase dramatically and BMW would have a greater guarantee of stability.

Photo: MG Rover

Rover 400: the most popular car of this brand in 1996. Despite everything in the upper class, the BMW 3 Series sold more than 2 times the best in Western Europe then (data: JATO Dynamics).

In addition, the cost of building new models was constantly increasing around the world. If BMW were to take on another player, it could split them into more cars, split platforms and other components. There was also one more thing at stake. BMW may be afraid that by not buying any company, it may itself be taken over by a bigger player.

So BMW started looking around. One of the ideas was … to take a Porsche, but the plans did not come out. Finally, in January 1994, the Munich concern bought the Rover group.

Irony of fate

The Rover concern was not just created by Rover. The group included several other brands, including Land Rover, Mini, Morris, MG, Triumph, Wolseley, Riley, Austin-Healey and Austin.

Yes, the same Austin under whose license the first BMW car was built.

Produced in the years 1929-1932, the small BMW 3/15 PS was an improved version of the Austin Seven license.

BMW 3/15 PSPhoto: BMW

BMW 3/15 PS

Rover itself at the time of the acquisition celebrated the 90th anniversary of the production of its first car. Before 1904, Rover produced, among others, bicycles.

What else, apart from tradition, has BMW got? The most valuable and expected products were undoubtedly the Land Rover and the Mini. In addition, BMW, specializing in rear-wheel drive models, had access to front and 4×4 technology. Munich was also thinking about empowering Austin and Riley.

Unfortunately, the Rover range did not impress. In addition, the manufacturer himself did not enjoy any special reputation outside of England. Only 40 percent of the total was sold outside the UK. total production.

In 1995, the BMW concern, improved by Rover, produced more than a million cars annually (1 million 98.6 thousand units) for the first time in history. Two years earlier, in 1993, there were less than twice as many (533,000 units). And, basically, this is where the bright sides of the story end.

It’s getting worse

During the reign of BMW, the production of Rover at first increased rapidly (from 375.6 thousand cars in 1994 to 522.5 thousand in 1997), but then it started to decline suddenly (to 392 thousand cars in 1999). Rover’s market share has fallen even in its home country of England: from 13.4% in 1993 to 8.9%. in 1998, new Rovers based on BMW technology could not help, because even today it takes three or four years to build a car.

Rover 75Photo: MG Rover

Rover 75

The first novel was presented in 1998: it was the Rover 75, a high-class model based on the BMW Series 5 platform. Unfortunately, its sale had to be delayed for six months to overcome quality deficiencies. In addition, within hours of the car’s enthusiastic launch, BMW began to publicly complain about the performance of Rover’s factory in Longbridge.

Justice, performance. Not only did the Rover concern have too many factories for its level of production, but also their efficiency left much to be desired. It was the same with platforms. In 1996, Rover had twice as many BMWs, which only increased the cost.

Until the bad one came. The pound began to rise.

Pounds of trouble

Strengthening the British currency against the mark, franc or lira meant two things first. BMW’s investment costs in Rover have skyrocketed, as have prices for Land Rovers, Minis and Rovers themselves in Europe. In fact, in the late 90s, apart from England, about 60 percent. The production of the rover, but it was still very low.

The pound strengthened in 1997. At BMW, it began to wonder what to do next, especially since Rover had already taken on a lot of people, taking up a lot of time and resources that were needed elsewhere.

The acquired Rover concern also included the MG.  In 1995, the MG F made its debut, pre-built by a German company.Photo: MG Rover

The acquired Rover concern also included the MG. In 1995, the MG F made its debut, pre-built by a German company.

Walter Hasselkus, responsible for BMW for Rover since 1996, resigned in 1998 not only from this job, but also from sitting on the board of the Bavarian concern. A year later, two other board members resigned: Wolfgang Reitzle (R&D, sales, marketing) and BMW’s own president, Bernd Pischetsrieder.

In the same year, in 1999, BMW production fell for the first time since 1962 for reasons unrelated to the state of the world economy. Growth wouldn’t come until 2002, but BMW wouldn’t have Rover by then.

Cheap separation

In 2000, BMW decided to sell the British concern. This led to the resignation of three other board members – this time Carl-Peter Forster (producer), Wolfgang Ziebart (R&D) and Henrich Heitmann (sales). In total, about six managers left the board in just two years, which is rare in such large companies.

In May 2000, BMW sold Rover to the British Phoenix Venture Group, in which they worked, among other things, the former president of Rover (John Towers), the former chief designer of Rover (Nick Stephenson) and the salesman of Rover (John Edwards). The deal included, among other things, the Longbridge factory, the rights to sell current Rover and MG models, and the rights to the Austin, MG, Morris and Wolseley brands. The whole thing cost £10, which shows how much BMW wanted to finish the British period.

BMW retained the rights to the Rover, Triumph and Riley brands, and above all, Land Rover and Mini. The first was sold 15 days later to Ford, and the second was turned into a successful player.

Along with the sale of Rover, BMW kept the Mini, and in 2001 the production of a new generation of the model began.Photo: BMW

Along with the sale of Rover, BMW kept the Mini, and in 2001 the production of a new generation of the model began.

BMW closed 2000 not very happily, because it was the first annual loss since 1959. This was, however, only related to the disposal of Rover, as the sales of cars in 2000 brought a profit. It sounded promising.

The reasons for BMW’s failure

Why didn’t BMW come out with Rover? Analysts say several reasons. The most important of them are:

  • Initial lack of management commitment: BMW invested hundreds of millions of dollars each year in Rover, but gave the British a lot of freedom. If they had started using their management techniques right away, maybe this relationship would have ended differently. The Bavarian concern reportedly feared that full control over Rover’s operations would harm its distinctive character and make British cars look similar to BMWs.

  • A highly optimistic vision of Rover’s potential as a brand.

  • By slowly integrating platforms and features.

  • In addition to the full performance of Rover factories.

  • An increase in the value of the pound against other currencies.

  • No more experience in installation. BMW has so far retained exceptional autonomy and independence, and its only major automotive activity was the acquisition of the small company Glas in 1966.

A happy ending? Not for everyone

Although BMW removed Rover, it still became a multi-brand player – below BMW was the flourishing Mini, above – Rolls-Royce, which the German concern bought in 1998. In addition, the BMW range grew significantly, because the company was not and waste more time and money to fix your Rover. The offer was improved by, among others, the compact family (series 1, X1, and later also series 2), SUVs (X3, X5 and X6) and new versions of the body (for example “six” convertible and “five” Gran Turismo) .

How did its new owner, the British Phoenix Venture Group, deal with Rover? Nope. In 2005, MG Rover went bankrupt and the company was taken over by China’s Nanjing Automobile.