Science Fair Project Encyclopedia
MG Rover Group
MG Rover was the largest independent manufacturer of cars in the British motor industry. They came from the de-merger of the two historic marques of MG and Rover from BMW in 2000. They are based in Longbridge in Birmingham, on a site that has been a car factory since the Austin company was founded there in 1905. After a turbulent five year existence, in which the company struggled to make a profit and maintain its independence, it finally collapsed in the Spring of 2005. Sir Richard Branson has reportedly expressed interest in buying the remaining assets for reviving the marque and for entering the hybrid automobile market.
MG Rover are the heirs of the British Leyland Motor Corporation, which was formed in 1968 as the result of mergers between many British car firms. In 1975 British Leyland was effectively nationalized due to financial difficulties.
BL's new chairman Sir Michael Edwardes saw that the only way to make the company competitive again was to collaborate with the Japanese. In 1979, he began negotiations with Honda to co-develop new models and to share manufacturing facilities. The first product of this relationship was the Triumph Acclaim, and led to a long succession of Honda-influenced Rover badged models. Edwardes also implemented a ruthless programme of cutbacks and factory closures which saw the death of many of famous British marques. To reflect the resulting two-brand strategy, BL was renamed as the Austin Rover Group in 1982, and this was shortened in 1986 to simply the Rover Group.
- 1986 Leyland Trucks subdivision sold to DAF; Split into two with the Van side became independent LDV in 1993, and the Truck side sold to Paccar of the USA.
- 1986 Leyland Bus floated off; bought by Volvo in 1988
- 1987 Unipart spare parts division sold off via management buyout
- 1988 Rover Group privatised; sold to British Aerospace
- 1994 Rover Group sold to BMW; 17-year collaboration with Honda ends
- 2000 Land Rover sold to Ford
- 2000 Mini retained by BMW, maintaining car production at the Cowley assembly plant.
- 2000 Remainder of company now independent as the MG Rover Group
- 2001 MG Rover bought Qvale of Italy
- 2002 MG Rover agrees to collaborate with Tata of India
- 2005 Collaborative deal with Shanghai Automotive Industry Corporation (SAIC) collapses, forcing the company into administration, and eventual bankruptcy.
Many car brands that were formerly the property of British Leyland have passed on to MG Rover. The brands of Alvis and Jaguar (including Daimler and Lanchester, as well as the American rights to Vanden Plas) were sold off by British Leyland before it became Rover Group, and Land Rover was sold to Ford in the BMW days.
These brands are owned by MG Rover:
- 1895 Wolseley
- 1905 Austin
- 1912 Morris
- 1913 Vanden Plas (outside the US & Canada)
- 1923 MG created by Morris
- 1952 Austin-Healey created by Austin
- 1987 Sterling created as a separate brand in the US by the Rover Group
- 1986 Qvale (date of first car - company was in existence longer)
These brands are owned by BMW:
- 1959 Mini originally used as a sub-brand on the Morris versions of the car (the Austin version was called the Austin Se7en). Made a brand in its own right by British Leyland in 1969
- 1898 Riley
- 1904 Rover (This is licensed to MG Rover)
- 1923 Triumph as a car brand - the motorcycle brand owned is by Triumph Motorcycles
These brands are owned by Ford:
- 1947 Jaguar
- 1921 Alvis
- 1892 Daimler
- 1898 Lanchester
- 1959 Vanden Plas (US & Canada Rights Only)
- 1947 Land Rover (Created by Rover)
Sale from BMW to Phoenix Consortium
When BMW sold off its interests, MG Rover was bought for a nominal £10 by a specially-assembled group of businessmen known as the Phoenix Consortium. The consortium was headed by ex-Rover Chief Executive John Towers.
The links with other companies developed since 2000 presumably draw on MG Rover's history. Qvale was once the primary US importer of MGs, a relationship that started back in 1947 . British Leyland had links with India going back to 1948, but Tata was associated with Daimler of Germany until 2001.
Potential deal with SAIC of China and its collapse
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 were 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 was of the mind that if BMW could not make a success of Rover, then it would be hard for SAIC to do so.
On December 8, 2004, Tata of India, which had cooperated over the export of the Tata Indica as the CityRover, threatened ceasing 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 business, for £67 million last year. It did not acquire the Rover name, which is still owned by BMW.
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 both SAIC and the British Government had discovered that MG Rover's finances were in a far more parlous condition than had previously been thought. On 7 April 2005 the company announced that it was suspending production because of parts' shortages. Later in the day, it was 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 to receivership under British law.
On 8 April 2005, British Prime Minister Tony Blair and Gordon Brown, the Chancellor of the Exchequer, visited Longbridge and stated that there may be some hope for the future of the company, although not the original deal agreed with SAIC.
On 10 April 2005, MG Rover announced that they had received a 6.5 Million Pounds loan from the British Government 1. This would cover worker wages for one week while buy-out proposals are 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.
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, PWC announced that redundancy notices to Longbridge staff would be issued. The remains of the company will be put under administration. Sir Richard Branson has reportedly expressed interest in buying the remaining assets of the company for the purpose of reviving the marque and for entering the hybrid automobile market.
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