MG-Rover.org Forums banner

1 - 20 of 110 Posts

·
Registered
Joined
·
1,236 Posts
Discussion Starter · #1 ·
I read this at http://www.bloomberg.com/apps/news?pid=20601101&sid=a4beOTWxpb3c&refer=japan

BMW made what Raab calls the biggest error in its corporate history in 1994, when it bought Britain's Rover Group for 800 million pounds ($1.6 billion) with a notion to enter the mass market. He says there was a belief in the industry at the time that size mattered -- that carmakers considered too small would be bought out and would have too few resources for research and development.

Rover was a money-losing operation when BMW acquired it and remained so for the years BMW owned it. In 1999, it was the main contributor to BMW's $1 billion loss, the biggest in the company's history. In 2000, BMW threw in the towel and sold Rover for 10 pounds.


I thought it may have been making a little money or breaking even at least but I'm not sure.
 

·
Premium Member
Joined
·
31,560 Posts
Well, they were part of BaE at the time, they were never owned by Honda.

But yeah, I'm sure they were at least break even for a few years prior to 1994.
 

·
Premium Member
mg_zt_t
Joined
·
21,913 Posts
I read this at http://www.bloomberg.com/apps/news?pid=20601101&sid=a4beOTWxpb3c&refer=japan

BMW made what Raab calls the biggest error in its corporate history in 1994, when it bought Britain's Rover Group for 800 million pounds ($1.6 billion) with a notion to enter the mass market. He says there was a belief in the industry at the time that size mattered -- that carmakers considered too small would be bought out and would have too few resources for research and development.

Rover was a money-losing operation when BMW acquired it and remained so for the years BMW owned it. In 1999, it was the main contributor to BMW's $1 billion loss, the biggest in the company's history. In 2000, BMW threw in the towel and sold Rover for 10 pounds.


I thought it may have been making a little money or breaking even at least but I'm not sure.
CORRECTION: It sold the asset stripped remnants of the former Rover Group for that tenner. These remnants latterly became known as MG-Rover. I believe Land Rover asset was sold by BMW to Ford for £1.8 Billion and amongst other things, the key 'Mini' asset was retained by them.

Despite lack of real interest let alone decent investment by BAe during their stweardship, the former Rover Group enjoyed limited success in the few years prior to the BMW Takeover.
.
 

·
Registered
Joined
·
1,236 Posts
Discussion Starter · #5 ·
Despite lack of real interest let alone decent investment by BAe during their stewardship, the former Rover Group enjoyed limited success in the few years prior to the BMW Takeover.
BAE should be ashamed at their cynical attitude to Rover.
The comment "BMW made what Raab calls the biggest error in its corporate history in 1994, when it bought Britain's Rover Group" ignores the fact that the Honda colaboration was getting Rover in the right direction and that Rover wasn't an error. Not checking that Honda was happy and would continue with it's arrangement with Rover was the biggest error.
The comment "that carmakers considered too small would be bought out and would have too few resources for research and development" paniced them into a sale without due dilligence. Without the cost savings sharing platforms etc with Honda, BMW had to act to get another sharing programme under way and it didn't. Why didn't they share BMW platforms and take MGR rear wheel drive? Wouldn't Fiat have done a sharing deal? The lack of action indicates there were divisions and lack of unity within BMW of the direction they ought to be taking. I wonder why these journalists simplistically assume all the problems were with MGR and not with BMW management decisions taken after purchase.
 

·
Registered
cityrover
Joined
·
4,366 Posts
If I recall correctly BAe bought Rover (although initially they were only after Land Rover) to get their cash flow. BAe traditional cash flow was sporadic on completion of big aero orders...so buying something like Rover gave them an all round cash flow to level out the peaks and troughs. I'm sure it was breaking even on average over that time but it had a liking for development budgets that of course was also needed elsewhere in BAe.
 

·
Registered
Joined
·
6,679 Posts
BAE should be ashamed at their cynical attitude to Rover.
The comment "BMW made what Raab calls the biggest error in its corporate history in 1994, when it bought Britain's Rover Group" ignores the fact that the Honda colaboration was getting Rover in the right direction and that Rover wasn't an error. Not checking that Honda was happy and would continue with it's arrangement with Rover was the biggest error.
The comment "that carmakers considered too small would be bought out and would have too few resources for research and development" paniced them into a sale without due dilligence. Without the cost savings sharing platforms etc with Honda, BMW had to act to get another sharing programme under way and it didn't. Why didn't they share BMW platforms and take MGR rear wheel drive? Wouldn't Fiat have done a sharing deal? The lack of action indicates there were divisions and lack of unity within BMW of the direction they ought to be taking. I wonder why these journalists simplistically assume all the problems were with MGR and not with BMW management decisions taken after purchase.
There was in fact an approach made to Chrysler with a view to Rover sharing components with Chrysler vehicles. That plan was scuppered by Daimler buying out, sorry merging with, Chrysler. This is the reason why the Mini ended up with the distinctly unimpressive Chrysler 1.6 engine.
 

·
Registered
Joined
·
2,044 Posts
yep be running around in 3rd generation civic/400s. And jazz/100 and accord/600 and legend/800.
ok i think im dreaming toooo much. :lol:

But seriously Rover/version of the current civic would have been great.
 

·
Registered
Joined
·
9,119 Posts
I think the new Honda Legend would have made a very nice Rover and would have sold well.

Honda would also have had access to advanced diesel and technology long before they were able to release versions of their own and of course, there would also have been Land Rover and MG; a VTEC powered MGF/TF would have been smashing, or even better a Honda-engineered VVC. :)
 

·
Registered
mg_zt
Joined
·
1,505 Posts
Rover averaged about £50million profit per year under BAe. In the latter years under Towers £100million was nearly achived
 

·
Registered
Joined
·
104 Posts
Rover was modestly profitable when BMW took over, but it was also a loss-maker.

To explain this seeming paradox: Rover was profitable according to the accounting system the company had always used, but then BMW adopted its accounting methods for the Viking under which Rover was considered to have made a small loss.

I don't think there was necessarily anything underhand in this, just that the Blue Propellor wanted to standardise its management and accounting procedures.

Perhaps it only goes to show that accountancy is a rum old business - one I do not want to know anything about as a fairly sane human being - and you can pretty much make the balance sheet show what you want if you are so minded.

Enron, anyone?

Scenario time:

You have a gun with only one bullet. Who do you shoot: the accountant, the lawyer, the politician, the journalist, or Peter York?
 

·
Registered
Joined
·
3,531 Posts
Originally Posted by king arthur: There was in fact an approach made to Chrysler with a view to Rover sharing components with Chrysler vehicles. That plan was scuppered by Daimler buying out, sorry merging with, Chrysler. This is the reason why the Mini ended up with the distinctly unimpressive Chrysler 1.6 engine.
Never heard that before, but it does go a long way toward explaining why BMW went all the way to Chrysler Brasil for the MINI's engines. A shame that alliance wasn't pursued, as it probably would have worked out.*



*At least for Chrysler anyway. Selling the 75 as a Chrysler would have been amazing, selling the PT Cruiser as a Rover would not.
 

·
Registered
Joined
·
1,236 Posts
Discussion Starter · #19 ·
Pft!! I really do wish Honda owned Rover, ah well no good dweling in the past.
I believe Honda had 10% of Rover and BAe the rest. BAe went to Honda and offered them the lot. Most of MGR sales were in the UK and Honda was concerned the British public would be put off by a foreign owner* so offered to take the stake up to 20%. BAe, wanting to sell them went to BMW. Berndt P was keen but not so much the Quandts, the owners. Berndt P prevailed and they took the 90%. Honda didn't want BMW in the picture left, taking their rear drive platforms with them. This left BMW with a big problem. (I read that Honda don't do deals with other car companies but Mr Honda was an anglophile, so made an exception with Rover. Also, BAe is not in the automotive industry, so was acceptable as a partner. However, BMW isn't Anglo, and Honda technologies in Rovers would be open for BMW to see). BMW's subsequent dithering and internal wrangling over what to do with Rover was BMW's problem. Rover wasn't the English patient BMW claimed it was.

*If only Honda had known the British public wouldn't have given a toss. When Peugeot recently closed Ryton have the UK public reacted? Absolutely. By buying more of them as Peugeot market share has climbed since.
 

·
Registered
Joined
·
6,679 Posts
Honda had 20% of Rover and Rover had 20% of Honda's UK operations. It is often quoted that BMW bought Rover for £800m, which is in fact incorrect - they had to buy out Honda's share for a further £200m so ended up paying £1bn for Rover.

Before BAe sold to BMW, they approached Honda and Honda offered to increase their stake to 49% (or was it 45%, I can't quite remember).
 
1 - 20 of 110 Posts
Top