Europe South Asia Asia Pacific Americas Middle East Africa BBC Homepage World Service Education

Front Page



UK Politics







Talking Point
On Air
Low Graphics

Wednesday, February 10, 1999 Published at 15:54 GMT

Business: The Company File

The end of Rover is nigh

No Rover would fit under this bonnet

BMW of Germany says it is committed to Rover, but as the BBC's Rodney Smith argues the UK car maker could have a better future under the wings of another car giant.

[ image: Rodney Smith]
Rodney Smith
British Trade and Industry Secretary Stephen Byers has pledged to work hard to secure the jobs of Rover's UK workforce.

What he means is that he is preparing himself and the rest of Britain for a possible announcement by BMW of Germany that it plans to sell its profits drain - the Rover Group which it bought five years ago.

At risk, the livelihoods of 14,000 workers at Rover, and potentially 50,000 at companies which supply Rover. The final figure could be far higher, says noted motor industry analyst Krish Bhashkar. His team calculates that as many as 200,000 British workers are directly or indirectly reliant on Rover.

They would be wise to expect the worst.

The reason: BMW may be unable to continue supporting Rover. It may even cease to be BMW.

Its problems all come down to - platforms.

The platform has replaced the chassis as the backbone and sub-exoskeleton of the modern motor car.

The trend among successful, large, multi-model car manufacturers is to build as many models on as few platforms or chassis as possible. Thus the VW Golf platform is also used by SEAT and Skoda models. Alfa Romeo and Lancia are based on Fiat hardware, and even Saab uses the same basic platform as General Motors' basic European saloon, the Opel/Vauxhall Vectra.

But Rover does not and cannot use BMW platforms. BMW produces a relatively modest model list, all firmly committed to a conventional engine-in-the-front, driving-the-rear-wheels layout.

The Rover Group is the rump of the company which pioneered transverse-engined front wheel drive cars back in the 1960s (actually the late 1950s if you want to be pedantic). Technically, the two manufacturers are culturally as different as could be. Basic layouts are so different that one could not be introduced to the other without huge change.

BMW recognised when it bought Rover that platform rationalisation would never be an option. It bought RG for its Mini and its Land Rover models, which don't fit the general platform argument anyway.

BMW planned to run an altogether different range of vehicles alongside its mainstream Bavarian vehicles. The new-from-the-ground-up Rover 75 was to have been the first of these. It is a Rover design, with a transverse engine in the front.

BMW is in a quandary. What would you do if you had bought a car; it failed to perform as you'd hoped, didn't carry all your family in comfort, and kept needing repairs at a cost that was draining your household budget?

You'd get rid of it. That is what the industry thinks BMW will probably do.

The British government will pay probably a great deal of money, to try to save Rover jobs.

But the case has so weakened BMW that it's now at risk of being bought by another much bigger car manufacturer. Like Ford - even though the company insists that it is not in negotiations for a BMW take-over.

Ford has about $20bn to spend, even after buying Volvo at the end of January. Simple estimates reckon BMW would cost it about $15bn.

The Quandt family has said it won't sell its shares - but it owns a minority of only 46% of shares. There are also rumours that there have been signs of dissent within the family, with some in favour of a reduced holding.

Purchase by a global manufacturer like Ford or General Motors could be the only thing which would save Rover and 200,000 British workers.

Because unlike BMW, any of the really big groups could offer Rover the thing it most needs - a common platform. Then names hidden behind the Rover badge, Riley, Morris, Austin, Wolseley, not to mention MG and Land Rover, could re-emerge to survive well past the year 2000.

Advanced options | Search tips

Back to top | BBC News Home | BBC Homepage | ©

The Company File Contents

Relevant Stories

10 Feb 99 | The Company File
BMW 'not for sale'

08 Feb 99 | The Company File
Government backs Rover

07 Feb 99 | The Company File
Union calls for Rover deal

05 Feb 99 | The Company File
Battle for BMW driving seat

Internet Links

BMW group

The BBC is not responsible for the content of external internet sites.

In this section

Microsoft trial mediator welcomed

Vodafone takeover battle heats up

Christmas turkey strike vote

NatWest bid timetable frozen

France faces EU action over electricity

Pace enters US cable heartland

Mannesmann fights back

Storehouse splits up Mothercare and Bhs

The rapid rise of Vodafone

The hidden shopping bills

Europe's top net stock

Safeway faces cash demand probe

Mitchell intervenes to help shipyard

New factory creates 500 jobs

Drugs company announces 300 jobs

BT speeds internet access

ICL creates 1,000 UK jobs

National Power splits in two

NTT to slash workforce

Scoot links up with Vivendi

New freedom for Post Office

Insolvent firms to get breathing space

Airtours profits jump 12%

Freeserve shares surge

LVMH buys UK auction house

Rover - a car firm's troubles