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An eye opener and certainly warrents more googling :shock:
From pistonheads.com
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. The 7 series upper limit had been established - hence the BMW interest in RR. The lower limit was the 3 compact, but this was not competitive. BMW needed FWD for this smaller sector, but this was the antitheses of BMW brand philosophy. BMW also felt that they could 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.
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.. – 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) and the effect on Rover cashflow 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 it was doing its best. It pocketed a nice 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…….
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) 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 this very thread) 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 . 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.
Goebbels would be proud.
From pistonheads.com
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. The 7 series upper limit had been established - hence the BMW interest in RR. The lower limit was the 3 compact, but this was not competitive. BMW needed FWD for this smaller sector, but this was the antitheses of BMW brand philosophy. BMW also felt that they could 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.
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.. – 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) and the effect on Rover cashflow 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 it was doing its best. It pocketed a nice 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…….
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) 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 this very thread) 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 . 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.
Goebbels would be proud.
.
