ROVER AUTOMOBILE: ( CASE 6-14)

SUMMARY:
lord Austin founded the Austin Motor Company which became British Motor Company in 1952
after merger of Moens and Rover.Rover and MG are heritage brands in the automotive market.
Owners of Company changed a lot of business techniques to run Rover Britains last volume of
car maker but he never secured. Rover suffered with frequent ownership changes declining
performance of the company. A labour government in 1963, layland merge with British motor
corporation to creat a gained national champions in motor industry. layland took Rover as an
upscale brand into mass market without achieving genuine mass scale. it became issue in 1972
and among them the first big British companies collapse after shock of oil prices.
Natioanalization was not successful when Wilson government took Layland into states hand in
1975.over eight years the government put 900 million euro to sustain its existence but failed.
Partnership with honda gave rover a technology lifeline but at a cost Rover gave up the right to
compete with Honda in US markets and became dependent on Honda based cars but privitization
does not work .
In 1994 when rover sold to BMW, needed to increase its scale without decreasing the quality of
brand. but BMW moved slowly in establishing control over Rover that was the major
obstacle.BMW was continuosly suffering with loses in last year of its ownership ,they lost 300
million euoro on the rovers operation.
by 2000 when BMW had given up any hope they announced the sale of Rover to Alchemy,
private equity, after that Phoenix arises and it claimed that rover could be serverd as volume car
producer. Phoenix deal with BMW which was complexso after some years of loses it was clear to
the Phoenix that Rover could only survive in a global car world giants if it secured a sustainable
partnership with another mass car producer.In 2004 time is running out for phoenix,the company
needed a partner and turned to emerging markets.a joint venture with Indias Tata did not work
out.On the other hand relationship with China Brilliance wasted more time and money.A Chinese
enterprenuer showed interest in buying power trains.th eengine company,then the plan was for
MG Rover technology and yangs investement to provide entry to the Chinese market but that
deal was failed.
Rover survived by cutting cost and selling assets. In addition the 427 million euoro loan from
BMW and stock worth 350 million euro, the company sold their assets. Durig Phoenix
ownership of Rover operating loses exceeded 500 million euro.Meanwhile the phoenix directors
caused outrage by awarding themselveslavish pay and perks,including a 10 million euroloan, a
165 million euro pensions and control of a lucrative car loans business,More over valuable assets
were taken out of Rover and put into phoenix.
In april 2005 SAIC bought Rover and SAICs claim that it had exclusive rights to the brand and
to produce Rover cars and engines but that claim was rejected.In july 2005 china's oldest
company, Nanjing Automobile bought MG Rover for 53 million euro. Both were jointly
responsible for Rover collapse when both withdrew with joint ventures with Rover because of
company's financial weakness.
Nanjing faced some challenges in getting Rover production started again like finishing
development work on engines, finding suppliers for component, finding distributers, recruiting

managers and employees, design rights for engine etc

In march 2007 Nanjing began production there of a car derived from the MG TF and a sallon for
chinese market which was Rebirth of Rover.Although the brand is too small to succeed in the
mass market,and yet to retain its prestige position,leading to the failure to establish a strong
position in international market.