Rover to the Dead-end Road (Part 2)
December 2002

The last editorial "Rover to the dead-end road" aroused some criticism from lovers of MG and Rover. Some criticized it as base on imagination rather than facts and figures. Some said it was not right to reward Phoenix’s efforts with negative comments. Originally I have no plan to respond, but then I discovered that Autocar magazine gave MG Rover an "Outstanding Achievement" award in its annual award, and that article was full of rubbish. I decided to respond. 

The British magazine praised MG Rover "took less than a year to launch the MG ZS, ZR and ZT saloons, followed soon after by the all-new Rover 75 estate and the facelifted MG TF sports car. 

Well, that’s not bad, but the MG line of sports sedans are no more than tuned versions of Rover 25, 45 and 75, with breathing-enhanced engines and stiffer suspensions setting. They even look like tuner’s cars. The same goes for MG TF. Rover 75 estate was developed in the BMW-era. When BMW handed over Rover to Phoenix, the 75 estate was already caught road-testing without disguised. Therefore I don’t see creating them in short time as a special achievement. 

"These have already been responsible for turning the company’s fortunes around, swelling UK sales by 2.5% year-on-year." 

MG Rover always reports good news and hide bad news. To shut up those criticizing me for without showing facts and figures, here I give you MG Rover’s sales figures in Western Europe, supplied by ACEA - the industrial organization consist of 13 biggest European car makers: 

MG-Rover sales in Western Europe  

Year  Cars sold (rounded to thousands) 
1997  349,000 
1998  304,000 
1999  228,000 (BMW started negotiating selling Rover) 
2000  198,000 (Phoenix took over Rover in May) 
2001  160,000 

What about this year? according to ACEA, sales from Jan to Nov this year amounted to 130,530 units, down 12% from last year’s 148,369 units in the same period. Sales of the whole year 2002 is therefore projected to 143,000 units.  

The fact is, home country UK is the only market sees sales not dropped, thanks to the effort Autocar and other British magazines which help creating an image of revival - Autocar even used advertising-style of strong phrases such as "this has to rate as one of the biggest comebacks in automotive history." However, if we minus domestic sales from the above Western Europe figures, we may see sales dropped by as much as 25%* in Mainland Europe! this is by all means a crisis. 

What about worldwide sales? MG Rover is very weak in markets outside Europe. According to my 1998 data, some 80% of the MG and Rover-brand cars were sold in Western Europe. If this ratio remain unchanged, we can see this year the company will sell under 180,000 cars worldwide. 

Most industrial analysts agree that a non-premium-brand mass production car maker needs to produce 2 million or more cars per year in order to survive while remain independent. MG Rover now produces less than one-tenth of that amount. More alarming is that it needs 4 different platforms to do 180,000 cars - the Rover 25, 45, 75 and MG TF. You can see how weak the demand each model has. When demands drop, component prices increase. Also, the factory cannot utilize maximum efficiency. They are therefore impossible to be profitable. For comparison, most other European car makers, such as Renault, PSA and Volkswagen, need 6 platforms to achieve annual volume of 2-3 million cars. 

Year 2003 will be a hard year to MG Rover. Apart from the image-ruining Tata and the low-volume MG SV, it won’t launch any new cars. Both Rover 25 (MG ZR) and 45 (ZS) are very outdated now. Demands of the 75 will continue to slide, as its rivals get stronger and stronger. The Longbridge plant will inevitably layoff workers. 

2004 will see the replacement to Rover 45 (based on TCV concept). MG has no concrete plan yet for the replacement of 25 (may be terminated) and 75. Even the replacement of MG TF is still uncertain. MG Rover seems lack of cash to develop these cars, so it is desperately finding a partner to share development cost and platforms. Unfortunately, time and cash reserve are running out. The judgement day will be in 2004. 

Mark Wan

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