Book Review: End of the Road: BMW and Rover- A Brand Too Far

Sometimes, the automotive marques we all know and love have to go bust. Such was the case of Duesenberg, Oldsmobile, Hispano-Suiza, and Talbot-Lago despite their heritage and today’s strong collector-car market for those brands. Unfortunately, in the 2000s, Rover had to join them. However, it wasn’t without a fight, as detailed in End of the Road: BMW and Rover- A Brand Too Far. The book explores BMW’s massive investment in the Rover Group throughout the 1990s and how it became disastrous for all parties involved. Through piecing together news reports about BMW and Rover during the period and conducting interviews with people involved in the sale, the book gives a hard look at the relationship between the Rover Group and BMW during the 1990s and why BMW ended up paying a large amount of money to get rid of Rover in 2000.

At the beginning, the authors, business journalist Andrew Lorenz, and academic Dr. Chris Brady, give a profile of Rover before its sale to BMW in 1994. Then, Rover was a subsidiary of British Aerospace, who had bought the Rover Group from the British government in 1988, which at the time was going through its own troubles with its aircraft operations in the early 1990s. In order to survive, British Aerospace had to get rid of its non-core businesses, of which Rover was one. Therefore, the Rover management began looking for buyers of the car company. Volkswagen was interested in adding Rover; however, they were coming off badly from the 1990s financial crisis and couldn’t match what BMW paid.

The buying of Rover by BMW was overseen by then BMW CEO Bernd Pischetsrieder, whose goal was to increase the volume of cars made by the BMW Group. Throughout the 1990s, automakers realized they needed to grow in order to survive. That sort of reasoning led to automaker purchases such as Volkswagen taking a large stake in Skoda, Daimler buying Chrysler, and Renault eventually forming an alliance with Nissan. BMW’s purchase of Rover was seen as significant in that it was a midsize automaker (at the time) buying what was more or less another midsize automaker.

During the time of the sale, Rover’s cars were largely Hondas underneath the skin, utilizing Honda platforms and many Honda parts. Honda owned twenty percent of Rover as well. It had a profitable side in the form of Land Rover, but that was included with the Rover sale just so the company could be sold. In fact, Honda was the preferred buyer during the sale of Rover, but Honda didn’t want to buy Rover outright, just increase its ownership stake. Their own valuation of Rover was much lower than the 800 million pounds that BMW was willing to pay. The sale also included the MG, Mini, Triumph, Riley, Wolseley, Austin, and Morris names (BMW still owns Austin and a couple of others).

Initially, BMW took a very hands-off approach to the running of Rover. They expected the existing British management to take the Rover brand upmarket. As BMW had little experience running factories outside of Germany, that was seen as a mistake by Lorenz and Brady. In the authors’ view, that kept BMW from experiencing firsthand the weakness of the Rover brand. To illustrate some of their points in the book, the authors reference the five-part BBC documentary When Rover Met BMW. Though the documentary was started before BMW ownership, BMW still allowed the documentary to continue filming after the sale. In it, Wolfgang Reitzle, who had then become the chairman of Rover, was seen as irritated with Rover management, especially when stuck in traffic with one of Rover’s managers. Lorenz and Brady characterize the documentary as giving “the television audience a rare insight into a struggling merger.”

As things became worse at Rover, BMW began to bring in its own staff to the UK. Land Rover quality was a huge problem, and warranty repairs represented another financial loss to the company with Pischetsrieder referring to it as ‘a scandal.’ BMW managers also worked hard on the Rover branding, attempting to take it upmarket and working hard on the Rover 75 (above) to help re-launch the brand. By 1997, Rover was costing BMW over 600 million pounds a year. Rover also got a new chairman, Walter Hasselkus, who had come up the ranks at BMW for turning around its once-struggling motorcycle division. Other joint ventures were considered, such as one with Chrysler, which resulted in a joint venture engine plant in Brazil. (That plant ultimately made engines for the Mini and some versions of the PT Cruiser.)

A strengthening British pound, which significantly increased the prices of Rovers in Europe, and would severely hamper Rover sales abroad, did further damage to BMW’s Rover strategy. I talso meant that the possibility of exporting Rovers to the United States would be in jeopardy. Furthermore, BMW had to deal with the British political situation with regard to Rover’s Longbridge plant, an immense part of the economy for the West Midlands region of the UK. Such was the case when BMW asked for 200 million pounds of aid to keep Longbridge open; however, the government didn’t wish to provide the funds necessary because of the optics of the situation. Additionally, any possibility of a further tie-up with Chrysler was halted when Daimler bought them. The lukewarm launch of the Rover 75 was perhaps the final straw. Despite critical acclaim, it never achieved financial success.

Eventually, the Rover purchase resulted in major executive upheaval for BMW. At the top level of BMW, factions between executives had formed. One was behind Bernd Pischetsrieder and putting more resources into Rover, while the top-level faction was led by Wolfgang Reitzle, the number two man at BMW who was in charge of marketing and product development who wanted to shed Rover. On February 5, 1999, Bernd Pischetsrieder and Wolfgang Reitzle ended up resigning on the same day as the Quandt family (BMW’s owners) and BMW chairman Eberhard von Kuenheim felt they were distracting the company with their politics. Such was the impact the Rover purchase had on BMW that something drastic had to be done about Rover.

Surprisingly, the book argues that much of Rover’s troubles wasn’t due to the unions. Sure, there were more employees than were needed considering Rover’s sales, but the British workers’ unions knew largely what was at stake and knew what footing Rover was standing on. In 1999, the unions agreed to a 35-hour workweek without cutting any jobs and agreed to a reduction in their pay raises for the next few years. This was accomplished without protests and strikes, as the workers knew the company was on the line. In fact, other automakers were surprised by how British unions agreed to such low terms, as when such provisions were implemented in BMW’s German factories, a six-week strike took place, while the British agreed to the terms in two months after they were proposed.

Overall, End of the Road: BMW and Rover- A Brand Too Far is a good, short read for those who want to know what happened behind-the-scenes during the last major attempt to get Rover and its brands back on their feet. It will explain the reasoning behind Land Rover sale to Ford and BMW’s retention of MINI, which has paid off in dividends for BMW during the last ten years. It explains why Rover Group eventually ended up being sold to the state-owned Shanghai Automotive Industry Corporation (SAIC) after passing through the hands of a private-equity consortium called Phoenix, which took many of the liabilities from the Rover deal that BMW no longer wanted. In the end, the book provides a very comprehensive look into an automotive merger gone wrong for everyone involved.

Satish Kondapavulur is a writer for Clunkerture, where about a fifth of the articles are about old cars and where his one-time LeMons racing dreams came to an end, once he realized it was impossible to run a Ferrari Mondial. Since he’s writing about Rover, he needs to inform you of his search for a good P38 Range Rover and is hoping that you might know of one for sale.