The MG Rover car company is the latest incarnation of a car manufacturing group that traces its roots back to the beginning of motor vehicle making in the UK. After the trauma of its sale by BMW last summer, MG Rover is now charting a course for the future. Gordon Poynter, MG Rover’s Director of Communications and Public Affairs, answered questions put exclusively to him by just-auto.
just-auto: Now that the dust has settled, how do you think the divorce of Rover from BMW has affected the company, in terms of both positives and negatives?
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two separate and differentiated brands – Rover and MG
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GP: The new MG Rover Group is a very different company from the organisation called Rover Group when it was part of BMW. In the first few weeks after the purchase there were some issues to manage with our employees, dealers and suppliers. They have all been fully briefed on the 5-year business plan for the new MG Rover Group and have seen steady progress in all areas over the 8 months since the purchase. In the last few months the press coverage of our plans, progress and products has been very positive adding another aspect to confidence.
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“The new MG Rover Group is a very different company” |
just-auto: The 25/45 Series are clearly derived from old Honda technology days. Does Rover still pay a technology royalty to Honda on each car produced? How much work has gone into keeping these cars updated?
GP: The Rover 45 is a product of a Honda Civic platform and the terms of the use of the platform are confidential. The platform is very modern and flexible and also BMW invested many millions in updating the plant and equipment that builds this car. The car was the best warranty performer in the BMW group in that period. The Rover 25 was developed extensively by BMW from the original platform and is one of the largest yet agile small car packages in the market. Both products will be replaced in 2004 in line with industry change cycle norms.
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just-auto: How satisfied are you with these models’ ability to compete in what is a high volume and very competitive segment of the car market? What is the basis of the marketing strategy?
GP: Our marketing strategy is clear – we will develop two separate and differentiated brands (Rover and MG) that will appeal to different customer target groups. We have two of the worlds leading automotive engineers working on our new products. Peter Stevens is internationally renowned as the designer of the McClaren F1, Lotus Elan, Jaguar XJR15 and many other iconic British cars. Rob Oldaker is one of the leading chassis and powertrain engineers in Europe and was both head of R and D at Rolls Royce/Bentley and MD at Cosworth Engineering. They will ensure each car meets the brand values. MG will offer a range of affordable sporty saloons and roadsters. Rover will offer saloons and estates aimed at the mainstream market which is based on comfort, good design and value for money- all of which the Rover brand offers.
just-auto: The 75 has had a generally good reception in the automotive press, but how do you feel about the overall level of volume that the car is achieving? What are the volume targets for 2001 and 2002 and can you give us an idea of how exports of the car are shaping up?
GP: The Rover 75 saloon is a great success and sold over 18000 units in the UK in 2000 making it the second best selling saloon in the compact executive sector and it outsold the entire UK volume of companies like Jaguar/Daimler, Alfa Romeo and Saab. Every Rover 75 built at Longbridge is already sold and the diesel in Europe has been an outstanding sales success. The Rover 75 Estate being launched in 2001 will open up a new segment which is very large in Germany and Italy as well as the UK. These are the volume markets for MG Rover Group. We do not give sales forecasts but are confident we will achieve our business plan targets for 2001.
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the X10 is based on Rover’s newest saloon, the 75
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just-auto: A range of sports saloons is planned as part of the plan to rebrand MG Rover as a sports-orientated carmaker. That offers the chance to broaden appeal to customers who’ll appreciate the MG heritage and prefer sports models. What are the main elements of the MG brand strategy?
GP: We are not rebranding MG Rover Group – that is a company. We are totally relaunching the MG brand as a sporty car brand offering authentic cars from £10000 to £30000. This includes involvement in all types of motorsport from the Le Mans 24-hour race, through touring car championships to world rallying. We are working with some of the leading motorsport companies in the world including Lola Cars International. The MGs available to the public will benefit from all of this technology and be available in the UK from 300 dealers. There will be some outrageous cars at the extremes of the brand as well as affordable 3 door hot hatches. The world’s press saw the new MG saloons for the first time on January 30 2001 and the reaction was outstanding.
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“Rover branded products will account for 75% of our sales in 2002.” |
just-auto: Can you confirm, however, that MG Rover’s intention is to maintain a presence in the mass-market segments of the car market represented by the 25/45 for the foreseeable future?
GP: The Rover brand with the Rover 25, Rover 45, Rover 75 saloon and shortly Rover 75 Estate will offer exceptional value, style and refinement in the mainstream market. Rover branded products will account for 75% of our sales in 2002.
just-auto: What is the overall unit volume objective for MG Rover as things currently stand?
GP: Our 5-year business plan has an average volume of around 200,000 units per annum. In some years it will be slightly higher and some years slightly lower. We sold 205,000 units in 2000.
just-auto: Under BMW there was a concerted effort to pitch Rover as a ‘premium’ brand. Was that, in retrospect, a misguided policy and how has that experience informed current thinking on branding? Is Rover now going to be a ‘value-driven’ brand?
GP: That is a question for BMW. Our position is clear.
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MG will become involved in Le Mans 24-hour
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just-auto: There was a story in the UK press recently that Rover is preparing to raise prices. Can you confirm that the story is incorrect and say something about your expectations for car prices in the UK market – and Rover cars – over the next year?
GP: We were the first car company to reduce prices in 2000 ahead of the DTI report and our sales success in the last 6 months of 2000 is proof of our Rover value strategy. We have no plans to increase UK car prices and the story was completely unfounded. Rover cars now start from under £9000 with excellent specification.
just-auto: Discussions with Proton about collaboration are reported to have made progress in the area of technical agreements, but without Proton wanting to take a large stake in the company or get more deeply involved with Rover. Can you confirm that that is the case?
GP: We have signed a confidentiality agreement with another major carmaker about talks on technical collaboration for a possible new medium car platform. We therefore can say no more. However, this is not about another company taking a stake in our business but merely about technical collaboration which is common in the industry. We have no need for external finance to develop our business and produce replacements for all our products over the next 5 years. On the medium car platform we are looking at 4 alternative strategies and will make a decision later this year. The development of the Rover 75 platform (the best front wheel drive platform in the world) is a potential and attractive route.
just-auto: There are those who argue that the Rover name just carries too much negative baggage and history to work successfully as a brand. Is that too pessimistic and would you ever consider ditching the brand completely?
GP: They obviously do not travel around the world. The Rover brand has a strong image in many markets in terms of product design, elegance, British character and comfort. Nearly 50% of our sales are outside the UK. We have strong plans to develop the Rover brand and the Rover 75 Estate is the first proof of that commitment.
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“The Rover brand has a strong image in many markets in terms of product design, elegance, British character and comfort.” |
just-auto: On the powertrain side, how do you plan to handle engine supply or development now that BMW controls much of what was formerly Rover’s engine-making capacity?
GP: We buy engines from Ford and BMW and have secure supply agreements in place. We are in talks about acquisition of the BMW powertrain plant at Longbridge which they wish to sell.
just-auto: Will you continue to work closely with Mayflower as a body panel provider? Could that relationship deepen?
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The MGF
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GP: Mayflower been involved as a strategic supplier on MGF since design concept and produce the body. This is an excellent example of how we see long term alliances with the component industry.
just-auto: What are the main challenges for Rover in terms of components supply? Are you looking to source more from mainland Europe, which was something BMW seemed keen to encourage for exchange rate reasons?
GP: We will continue to seek the best value from the component supply industry, which is international with key players having plants in several countries.
just-auto: Can you confirm that there are no plans, as reported, to overhaul your supplier payment system so that suppliers move from 60-day payment terms to 90 days?
GP: Correct – our terms are unchanged.
just-auto: What investment plans do you have for Longbridge and how are you seeking to raise productivity?
GP: BMW invested over £3 billion in what is now MG Rover over the last 5 years and this has all been fully depreciated so we have no depreciation to account for in our finances. Rover 75 is the result of £800 million investment of which £400m was in plant and equipment which is now fully installed in Longbridge. A new paint plant and a new assembly building are also included. We invested a further £100m in new product development in 2000 to support the launch of 4 new models in 2001. All our investment plans are fully funded within our 5-year business plan. Productivity has improved to well within European competitive levels and our flexible working arrangements with the employees and trade unions are working well.
