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MG Rover Group
From Wikipedia, the free encyclopedia. 
MG Rover was the
last domestically owned mass-production car manufacturer in the British
motor industry. The company was formed when BMW sold the car-making and
engine manufacturing assets of the original Rover Group to the Phoenix
Consortium in 2000.
MG Rover went into administration in 2005
and its key assets were purchased by Nanjing Automobile Group, with
Nanjing restarting MG sports car and sports saloon production in 2007.
The
Rover marque, the ownership of which had been retained by BMW, was sold
to Ford, who had bought the Land Rover company from BMW in 2000. The
rights to the dormant Rover brand were sold by Ford, along with Jaguar
Land Rover, to Tata Motors in 2008.
History of MG Rover
MG
Rover was formed from the parts of the former Rover Group volume car
production business which BMW sold off in 2000 due to constant losses
and a declining market share.
BMW had acquired the Rover Group
from British Aerospace in 1994 and had since sold the Land Rover
business to Ford, and split-off the MINI business as a new BMW
subsidiary based in Cowley.
MG Rover took control of the
remainder of the former Rover Group volume car business, which was
consolidated at the Longbridge plant.
Phoenix Consortium ownership
When
BMW sold off its interests, MG Rover was bought for a nominal £10 in
May 2000 by a specially-assembled group of businessmen known as the
Phoenix Consortium. The consortium was headed by ex-Rover Chief
Executive John Towers.
When Phoenix Consortium took over, their
first loss for the last eight months of 2000 were reported to be around
£400M. By 2004, the company had stemmed the losses to around £80M but
never got to the chance to achieve a profit.
MG Rover's best
year for car sales was their first full year of business, in 2001 —
when they sold over 170,000 cars. In the year of 2004, their sales had
declined to around 120,000, a steep decrease of 50,000.
The
company eventually ceased trading on 8 April 2005 after having debts of
over £1.4 billion and their proposed deal with SAIC collapsing.
Aborted deal with SAIC of China
In
June, 2004, it was learned that Shanghai Automotive Industry
Corporation had signed a joint venture partnership to develop new
models and technologies with MG Rover.
This led to much
speculation among the British media suggesting the Chinese company was
poised to launch a takeover. Later that year, in November, news broke
of an agreement between the two companies to create a joint venture
company to produce up to a million cars a year, with the production
shared between MG Rover's Longbridge site and locations in China.
SAIC
were to have a 70% stake in this company in return for a £1 billion
investment, with MG Rover owning the remaining 30%. However, this
agreement had to be ratified by the Chinese government, specifically
its National Development and Reform Commission (NDRC).
The Commission held the opinion that if BMW could not make a success of Rover, then it would be hard for SAIC to do so.
On
8 December 2004, Tata of India, which had cooperated over the export of
the Tata Indica as the CityRover, threatened to cease its agreement
with MG Rover if the SAIC tie-up went ahead, according to the Indian
press. Tata claimed the report was inaccurate two days later.
SAIC
did purchase the technical rights to manufacture Rover's 25 and 75
models, and for the Powertrain Ltd business, for £67M. It did not
acquire the Rover name, which was still owned by BMW at the time (See
'Brands' below).
In January 2005, it was revealed that British
Prime Minister Tony Blair had intervened to support the alliance
between MG Rover and SAIC. MG Rover could not give a date on which the
agreement would be finalized.
Figures released by the company showed that the sale of Rover-branded cars fell in 2004 compared to 2003.
In
April 2005 it was reported that the partnership deal with SAIC was in
trouble because the British Government had decided to withdraw its
offer of a £120 million loan to keep the deal going. On 7 April 2005
the company announced that it was suspending production because of
component shortages.
Later in the day, it was announced by
Patricia Hewitt, the Secretary of State for Trade and Industry, that
the company was being placed in receivership. Her statement was based
on a conversation with MG Rover chairman, John Towers. It was later
denied by MG Rover Group, although the company admitted that it had
engaged PricewaterhouseCoopers, the accountancy firm, to advise on its
current financial situation. In the event, MG Rover placed itself in
administration on 8 April 2005, a different status from receivership
under British law.
On the afternoon of 8 April 2005, British
Prime Minister Tony Blair and Gordon Brown, the Chancellor of the
Exchequer, and Richard Burden, Labour M.P. for Birmingham Northfield
visited Tony Woodley at the offices of the Transport and General
Workers' Union in Birmingham and stated that there might be some hope
for the future of the company, although not the original deal agreed
with SAIC.
In the media, any news about MG Rover was
overshadowed by the Pope's funeral and the problems of the register
office marriage of the Prince of Wales and his bride.
On 10
April 2005, MG Rover announced that they had received a £6.5M loan from
the British Government. This would cover workers' wages for one week
while buy-out proposals were made to SAIC. The same week, SAIC denied
it had ever made an offer to buy MG Rover and threatened to sue anyone
who attempted to make the 25 and 75 models.
Financial ruin
On
15 April 2005, it was announced that SAIC had once again rejected pleas
to buy out the company. With no other rescue deal in the pipeline, the
administrators were not in a position to seek further funding from the
government and announced that redundancy notices to Longbridge staff
would be issued.
By the end of April 2005, Sir Richard Branson
had reportedly expressed an interest in buying the remaining assets of
the company for the purpose of reviving the marque in order to enter
the hybrid automobile market, and several other parties were also
rumoured as wishing to buy the remnants. These included two Russian
businessmen, although one of them denied any interest in buying the
company's assets.
The Iranian state-owned car manufacturer,
SAIPA who had worked with MG Rover installing the K series engine in a
car for the Iranian market that was based on the old Mazda 121 and Kia
Pride, were also rumoured to be potential buyers.
SAIC had
claimed that it had already acquired Intellectual Property Rights in
some Rover product for £67million in the autumn of 2004, including the
Rover 25, the Rover 75 and the Rover Powertrain K-series engine, but
the Administrators advised that there was still interest in saving some
other parts of the company, including MG, and 13 May 2005 was set as
the deadline for bids from potential investors.
On 20 May 2005,
the Administrators announced that, after considering numerous
proposals, they had entered talks with two unnamed "overseas companies"
with a view to restarting one or more of the Longbridge production
lines. Nevertheless, the following week they informed creditors that
they by then expected the company to proceed instead to a creditors'
voluntary liquidation, setting the date for a preliminary Creditors'
Meeting to be held in Birmingham on 10 June 2005.
At that
meeting, creditors learned that so little of value was left in the
company that there would probably be negligible or even no repayment of
its outstanding debt and that, although three bidders were then still
negotiating to acquire the company intact as a going concern, the
Administrators had instructed their agents to prepare for the piecemeal
sale of the very few remaining assets in the event that satisfactory
negotiations for the sale of the entire business were not concluded.
On
14 July 2005, it was reported that Magma Holdings, a financial group
including former Ford Motor Company and General Motors executives,
working in conjunction with SAIC, would be making an offer for the
assets of both MG Rover and engine maker Rover Powertrain which, if
successful, would see at least some production being restarted at
Longbridge, and that talks with the other two interested parties –
China's Nanjing Automobile Group and Project Kimber (a consortium of
Birmingham businessmen led by David James) – were still in progress.
Nanjing
On
18 July, Magma Holdings and SAIC formalized their bid with a reported
offer of £60M, with a number of additional conditions. However, that
offer was not well-received and on 22 July, the Administrators
announced that the principle remaining assets of the group had been
sold to the Nanjing Automobile Group for around £53M, with a deposit of
around $5M. Nanjing Automobile Group indicating that their preliminary
plans involved relocating the Powertrain engine plant to China and
splitting car production into Rover lines in China and MG lines in the
West Midlands (though not necessarily at Longbridge), where a UK
R&D and technical facility would also be developed. But on 27
August, The Daily Telegraph reported that the balance of around £47M,
due on 22 August had not been paid. Citing confidentiality, the
Administrators declined to comment.
Nanjing Automobile started
shipping equipment from Longbridge to China on 15 September and,
according to a report in The Times on Saturday, 17 September, were
close to a deal with SAIC under which they would manufacture the Rover
25 and Powertrain engines while SAIC would produce a stretched Rover
75. Nanjing Automobile Group was reported to be in exclusive
negotiations with GB Sports Cars, a venture by former Rover managers,
to re-establish MG production at Longbridge.
In late October,
key ex-workers received letters from Nanjing Automobile Corp offering
10 months' work dismantling plant at Longbridge for reassembly in China
while talks with GB Sports Cars continued. However, after announcing
that the UK government had not offered any substantial assistance in
either grants or loans, Nanjing Automobile was also reported to have
begun negotiations with at least two other potential partners,
including "a wealthy San Francisco family", and, in early November,
Nanjing committed to making every effort "to resume production [at
Longbridge] at the beginning of 2007".
In August 2008, more than
three years after the facility had closed due to MG Rover's bankruptcy,
assembly at Longbridge of a lightly-revised MG TF roadster for the
European market, from Chinese-built complete knock down (CKD) kits,
restarted.
Official reports
The
UK Government commissioned reports into the collapse of the company.
The National Audit Office reported in March 2006 on the financial
support provided to the company. It commended the DTI's contingency
planning in 2004, but questioned whether the loan made in April 2005
achieved value for money.
The DTI commissioned accountants BDO
Stoy Hayward to report on the collapse of the company; this took four
years to complete at a cost of £14.8 million. The firm issued its
report to business minister Peter Mandelson in July 2009, and it is due
to be published on 11 September 2009.
The Serious Fraud Office
declined to mount an investigation, but Mandelson instructed lawyers to
prepare a case to disqualify the key figures at Phoenix from future
company directorships.
Popularity
The
MG Rover range initially consisted of five cars: the Mini, Rover 25,
Rover 45, Rover 75 and MG F along with car-derived van derivatives of
the 25.
The Mini was only built under temporary licence during
the first five months of MG Rover's existence, and since the 1980s had
only been built in limited numbers. After production finished, previous
owner BMW regained the rights to use the brand, and did so on an
all-new car that was launched in 2001: MINI.
The Rover 25 and
Rover 45 were recently facelifted versions of visibly ageing mid-1990s
designs, but production figures had been slightly decreased due to a
fall in demand, even though the Rover 25 had been Britain's
best-selling car of the month in April 2000. The acclaimed Rover 75 was
little over a year old, and after a slow start sales were rising. An
estate version was launched following the shift of production from
Cowley to Longbridge.
The replacement for the MG F, the MG TF
sports car was, inevitably, a relatively low-volume product, but it had
consistently been the most popular car in its sector since its 1995
launch.
The Rover 25 and Rover 45 endured disappointing sales
throughout MG Rover's existence, though their MG ZR and MG ZS sports
variants proved popular from their launch in 2001. The Rover 75 and its
MG ZT sports variant enjoyed more popularity.
The range further
expanded in 2003 with the launch of the smallest model, the
Indian-built CityRover, built as part of a venture with Tata, and a
flagship model, the MG XPower SV, based on the Qvale Mangusta. Both
cars, however, failed to achieve the sales figures that MG Rover had
hoped for.
Ultimately, MG Rover were building more cars than
they could sell, and this was a key factor in the firm's bankruptcy in
April 2005. Stocks lasted for some two years afterwards, with the last
MG Rover cars not leaving showrooms until around the time of
Longbridge's re-opening by new owners Nanjing Automobile.
The dates given
are those of the first car of each name, but these are often debatable
as each car may be several years in development.
Sources
Model-by-model history
Unofficial site
www.team.net/
www.mgxtreme.co.uk/history/history.php
www.alvis.plc.uk/
www.ownajag.com/jaguar-history.html
Leyland Truck & Bus
Daimler, Lanchester & BSA
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