 | |
| Industry | Automobiles |
|---|---|
| Predecessor | Rover Group |
| Founded | 2000; 25 years ago (2000) |
| Defunct | April 2005; 20 years ago (2005-04) |
| Fate | Administration, with £1.4 billion in debt, later liquidated |
| Successor | MG Motor |
| Headquarters | Longbridge,Birmingham, United Kingdom |
Number of locations | |
Key people |
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| Brands | |
| Parent | Phoenix Venture Holdings |
| Subsidiaries |
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| Website | web |
MG Rover Group was a Britishcarmaker that existed between 2000 and 2005. It was the last domestically owned mass-production car manufacturer in theBritish motor industry. The company was formed whenBMW sold the car-making and engine manufacturing assets of the originalRover Group toPhoenix Venture Holdings in 2000.
MG Rover went into administration in 2005 and its key assets were purchased byNanjing Automobile Group,[1] with Nanjing restartingMG sports car and sports saloon production in 2007. During that year Nanjing merged withSAIC Motor (the largest vehicle manufacturer in China). During 2009 the UK subsidiary was renamedMG Motor UK. TheMG TF was manufactured at the former MG Rover Longbridge plant and sold within the UK from 2008 to 2010. In 2011 the first all new MG for 16 years (theMG 6) was launched in the UK (assembled at the Longbridge factory). During 2013 a supermini was added to the line up (theMG 3), this went on to help MG Motor become the fastest growing car manufacturer within the UK in 2014.
TheRover brand, which had been retained by BMW and licensed to MG Rover, was sold toFord, which had boughtLand Rover from BMW in 2000. The rights to the dormant Rover brand were sold by Ford, along with theJaguar Cars andLand Rover businesses, toTata Motors in 2008.
MG Rover Group was formally dissolved on 28 May 2023,[2] more than 18 years after it was originally put into administration in April 2005.[3]
MG Rover was formed from the parts of the formerRover Group volume car production business which BMW sold off in 2000[4][5] due to constant losses and a declining market share.[6][7] BMW had acquired the Rover Group fromBritish Aerospace in 1994 and had since sold theLand Rover business toFord,[8][9] and split off theMINI business as a new BMW subsidiary based inCowley.[10] MG Rover took control of the volume component of the formerRover Group (itself the remaining rump ofBritish Leyland, which in turn had its roots in the even olderBritish Motor Corporation, formerlyAustin andMorris), which by now consisted solely of theLongbridge plant inBirmingham.
Of the Rover Group's other two major plants;Solihull had already been divested as part of the sale of Land Rover to Ford, whilst theCowley andSwindon plants were retained by BMW for the production of the new MINI family of vehicles. As part of these changes, all remaining Rover volume production at Cowley (essentially now just theRover 75 as the Rover 600/800 ranges had already been discontinued by this point), was moved to Longbridge, whilst MG Rover would be allowed to continue manufacturing the originalMini at Longbridge until the new MINI was launched by BMW a year later.
When BMW sold off its interests, MG Rover was bought for a nominal £10 in May 2000 by a specially assembled group of businessmen known as the Phoenix Consortium.[5] The consortium was headed by ex-Rover Chief ExecutiveJohn Towers. When Phoenix took over, their first loss for the last eight months of 2000 were reported to be around £400m. By 2004, the company had reduced the losses to around £80m but never made a profit.
MG Rover's best year for car sales was their first full year of business, in 2001 – when they sold over 170,000 cars. In 2004 their sales had declined to around 120,000. The company ceased trading on 8 April 2005, with debts of over £1.4 billion, after a proposed alliance withSAIC collapsed.
In relation to this, accounting firmDeloitte was fined £14 million (US$22 million) in September 2013 for failing to manage conflicts of interest. Deloitte had acted as corporate finance advisers to firms involved with MG Rover and the Phoenix Consortium, including tax advice while Deloitte audited MG Rover. An independent tribunal refused to grant the right to appeal a finding that Deloitte failed to consider public interest, as of November 2013.[11]
In June 2004, it was learned thatShanghai Automotive Industry Corporation had signed a joint venture partnership to develop new models and technologies with MG Rover.[12] This led to much speculation among the British media suggesting the Chinese company was poised to launch a takeover.[12] Later that year, in November, news broke of an agreement between the two companies to create a joint venture company to produce up to a million cars a year, with the production shared between MG Rover's Longbridge site and locations in China. SAIC were to have a 70% stake in this company in return for a £1 billion investment, with MG Rover owning the remaining 30%.[13] However, this agreement had to be ratified by the Chinese government, specifically itsNational Development and Reform Commission (NDRC).[13] The Commission held the opinion that if BMW could not make a success of Rover, then it would be hard for SAIC to do so. On 8 December 2004,Tata of India, which had cooperated over the export of theTata Indica as theCityRover, threatened to cease its agreement with MG Rover if the SAIC tie-up went ahead, according to the Indian press. Tata claimed the report was inaccurate two days later.[14]
In January 2005, it was revealed that British Prime MinisterTony Blair had intervened to support the alliance between MG Rover and SAIC.[15] MG Rover could not give a date on which the agreement would be finalized. In April 2005, it was reported that the partnership deal with SAIC was in trouble because the British Government had decided to withdraw its offer of a £120 million loan to keep the deal going.[16] On 7 April 2005 the company announced that it was suspending production because of component shortages. Later in the day, it was announced byPatricia Hewitt, theSecretary of State for Trade and Industry, that the company was being placed in receivership.[17] Her statement was based on a conversation with MG Rover chairman,John Towers. It was later denied by MG Rover Group, although the company admitted that it had engagedPricewaterhouseCoopers, theaccountancy firm, to advise on its current financial situation.[17] In the event, MG Rover placed itself inadministration on 8 April 2005, a different status fromreceivership under British law.[18] On 8 April 2005, British Prime Minister Tony Blair andGordon Brown, theChancellor of the Exchequer, and Richard Burden, Labour M.P. for Birmingham Northfield visited Tony Woodley at the offices of theTransport and General Workers' Union inBirmingham and stated that there might be some hope for the future of the company, although not the original deal agreed with SAIC.[19] In the media, any news about MG Rover was overshadowed by thePope's funeral and the problems of the register officemarriage of the Prince of Wales and his bride.
On 10 April 2005, MG Rover announced that they had received a £6.5M loan from the British Government.[20] This would cover workers' wages for one week while buy-out proposals were made to SAIC. The same week, SAIC denied it had ever made an offer to buy MG Rover and threatened to sue anyone who attempted to make the 25 and 75 models.[21] SAIC purchased the technical rights to manufacture Rover's 25 and 75 models, and for thePowertrain Ltd business, for £67M. It did not acquire the Rover name, which was still owned by BMW at the time.[22]
On 15 April 2005, it was announced that SAIC had once again rejected pleas to buy out the company.[23] With no other rescue deal in the pipeline, the administrators were not in a position to seek further funding from the government and announced that redundancy notices to Longbridge staff (who numbered more than 6,000) would be issued.[24] As well as the job losses at Longbridge, the months which followed the collapse of MG Rover resulted in many job losses in the supply chain, as well as jobs in MG Rover dealerships, as these businesses either went bankrupt, were faced with having to make job cuts, or in the case of some dealerships switched to different brands. By the end of April 2005, SirRichard Branson had reportedly expressed an interest in buying the remaining assets of the company for the purpose of reviving the marque in order to enter the hybrid automobile market, and several other parties were also rumoured as wishing to buy the remnants.[25] These included two Russian businessmen, although one of them denied any interest in buying the company's assets. The Iranian state-owned car manufacturer,SAIPA who had worked with MG Rover installing the K series engine in a car for the Iranian market that was based on the oldMazda 121 andKia Pride, were also rumoured to be potential buyers.
SAIC had claimed that it had already acquiredintellectual property rights in some Rover products for £67 million in the autumn of 2004, including theRover 25, theRover 75 and the Rover PowertrainK-series engine, but the Administrators advised that there was still interest in saving some other parts of the company, including MG, and 13 May 2005 was set as the deadline for bids from potential investors.[26] On 20 May 2005, the Administrators announced that, after considering numerous proposals, they had entered talks with two unnamed "overseas companies" with a view to restarting one or more of the Longbridge production lines. Nevertheless, the following week they informedcreditors that they by then expected the company to proceed instead to a creditors' voluntaryliquidation, setting the date for a preliminary Creditors' Meeting to be held inBirmingham on 10 June 2005. At that meeting, creditors learned that so little of value was left in the company that there would probably be negligible or even no repayment of its outstanding debt and that, although three bidders were then still negotiating to acquire the company intact as a going concern, the Administrators had instructed theiragents to prepare for the piecemeal sale of the very few remainingassets in the event that satisfactory negotiations for the sale of the entire business were not concluded.
On 14 July 2005, it was reported that Magma Holdings, a financial group including formerFord Motor Company andGeneral Motors executives, working in conjunction with SAIC, would be making an offer for the assets of both MG Rover and engine maker Rover Powertrain which, if successful, would see at least some production being restarted at Longbridge, and that talks with the other two interested parties – China'sNanjing Automobile Group and Project Kimber (aconsortium of Birmingham businessmen led byDavid James) – were still in progress. More than 6,000 workers at MG Rover lost their jobs when the company went into liquidation.[27] As many as 25,000 jobs were reported to have been lost in related supply industries, meaning that the total number of job losses brought on by MG Rover's collapse was somewhere in the region of 30,000.[28]
On 18 July, Magma Holdings and SAIC formalized their bid with a reported offer of £60M, with a number of additional conditions. However, that offer was not well received, and on 22 July, the Administrators announced that the principal remaining assets of the group had been sold to the Nanjing Automobile Group for around £53M, with a deposit of around $5M. Nanjing Automobile Group indicating that their preliminary plans involved relocating the Powertrain engine plant to China and splitting car production into Rover lines in China and MG lines in theWest Midlands (though not necessarily at Longbridge), where a UKR&D and technical facility would also be developed. But on 27 August,The Daily Telegraph reported that the balance of around £47M, due on 22 August had not been paid. Citing confidentiality, the Administrators declined to comment.
Because theRover 45 range produced at Longbridge had still had significant Honda content, originating from the companies' legacy partnership with Rover and British Leyland, Honda executives moved quickly to terminate the licensing agreement and removed tooling and assembly equipment for the car from Longbridge. Nanjing Automobile started shipping equipment from Longbridge to China on 15 September and, according to a report inThe Times on Saturday, 17 September, were close to a deal with SAIC under which they would manufacture the Rover 25 and Powertrain engines while SAIC would produce a stretched Rover 75. Nanjing Automobile Group was reported to be in exclusive negotiations with GB Sports Cars, a venture by former Rover managers, to re-establish MG production at Longbridge.
In late October, key ex-workers received letters from Nanjing Automobile Corp offering 10 months' work dismantling plant at Longbridge for reassembly in China while talks with GB Sports Cars continued. However, after announcing that the UK government had not offered any substantial assistance in either grants or loans, Nanjing Automobile was also reported to have begun negotiations with at least two other potential partners, including "a wealthy San Francisco family", and, in early November, Nanjing committed to making every effort "to resume production [at Longbridge] at the beginning of 2007". In August 2008, more than three years after the facility had closed due to MG Rover's bankruptcy, assembly at Longbridge of a lightly revisedMG TFroadster for the European market, from Chinese-builtsemi-knocked-down (SKD) kits, restarted.[29]
SAIC Motor merged with Nanjing Automobile in 2007, whilst nearly three-quarters of the massive Longbridge factory had been demolished and its land sold off - the old South Works is the only part of the plant which has survived. By 2011 MG Motor UK as it is now known started production of the first all new MG in 16 years, the MG6. In 2013 a new super-mini was added to the line up, the MG3. This was launched in summer 2013 and during 2014 helped in making MG Motor the fastest growing vehicle manufacturer within the UK. During the spring of 2015 a new MG6 was launched and plans for a new SUV were unveiled for the following year.
The UK Government commissioned reports into the collapse of the company. TheNational Audit Office reported in March 2006 on the financial support provided to the company. It commended the DTI's contingency planning in 2004, but questioned whether the loan made in April 2005 achieved value for money.[30]
The DTI commissioned accountantsBDO Stoy Hayward to report on the collapse of the company; this took four years to complete at a cost of £14.8 million.[31] The firm issued its report to business ministerPeter Mandelson in July 2009, and it was published on 11 September 2009. The report revealed that five executives took £42m in pay and pensions from the troubled firm as it collapsed. This was possible as Techtronic, the company that held the 427 million pound loan from BMW and was owned by the Phoenix Four, charged MG Rover interest and therefore made a profit.[32][33] The report focused its criticism on thePhoenix Four and chief executive Kevin Howe who oversaw its collapse.
Other findings included evidence of a personal relationship between Nick Stephenson and a consultant who he paid more than £1.6m in the 15-month period up to April 2005.[34] Meanwhile, "Evidence Eliminator" software installed by Mr Beale[who?] deleted documents which were likely to have been relevant to the investigation. The investigators further accused Mr Beale of giving "untruthful" evidence during interviews.[35][36]
Conservative business spokesman Kenneth Clarke said it was right the report criticised the Phoenix Four, whose behaviour was "disgraceful". Lord Mandelson said the Phoenix group had not shown an "ounce of humility" about the firm's demise and they owed an apology to the firm's employees and creditors.
TheSerious Fraud Office declined to mount an investigation into the matter,[37] but Mandelson instructed lawyers to prepare a case to disqualify the key figures atPhoenix from future company directorships.[38] In May 2011, the Phoenix Four were disqualified as acting as company directors for varying lengths of time, totalling 19 years.[39]
The MG Rover range initially consisted of five cars: theMini,Rover 25,Rover 45,Rover 75 andMG F along with car-derived van derivatives of the 25.[40] The Mini was only built under temporary licence during the first five months of MG Rover's existence, and since the 1980s had only been built in limited numbers. After production finished, previous owner BMW regained the rights to use the brand, and did so on an all-new car that was launched in 2001, theMINI.[41]
The Rover 25 and Rover 45 were recently facelifted versions of visibly ageing mid-1990s designs, but production figures had been slightly decreased due to a fall in demand, even though the Rover 25 had been Britain's best-selling car of the month in April 2000.[42] Both cars still had significant Honda content within their design (for example, the 25 still used underpinnings based on the 1989Honda Concerto and the related Series IIRover 200, whilst the 45 was essentially a rebadgedHonda Civic/Domani outfitted with a K-series engine) - a legacy from Rover's one time partnership with Honda, which necessitated paying the Japanese company significant royalties on every car sold which further dented the profitability of those models.
The acclaimed Rover 75 was little over a year old, and after a slow start sales were rising.[43] An estate version was launched following the shift of production fromCowley toLongbridge. The replacement for the MG F, theMG TF sports car was, inevitably, a relatively low-volume product, but it had consistently been the most popular car in its sector since its 1995 launch.
The Rover 25 and Rover 45 endured disappointing sales throughout MG Rover's existence, though theirMG ZR andMG ZS sports variants proved popular from their launch in 2001.[44] The Rover 75 and itsMG ZT sports variant enjoyed more popularity.
The range further expanded in 2003 with the launch of the smallest model, the Indian-builtCityRover, built as part of a venture withTata,[45] and a flagship model, theMG XPower SV, based on theQvale Mangusta. Both cars, however, failed to achieve the sales figures that MG Rover had hoped for.
| Year | European sales | European market share |
| 2000 | 197,940 | 1.32% |
| 2001 | 159,685 | 1.06% |
| 2002 | 142,355 | 0.97% |
| 2003 | 135,227 | 0.94% |
| 2004 | 114,069 | 0.71% |
| 2005 | 46,583 | 0.29% |
| 2006 | 7,783 | 0.05% |
MG Rover made the following vehicles during its lifetime:
| Model | Picture | Years | Class |
|---|---|---|---|
| MG F |  | 1995–2001 | Roadster |
| MG TF |  | 2002–2005 | Roadster |
| MG ZR |  | 2001–2005 | Hot hatch |
| MG ZS |  | 2001–2005 | FF-layoutMid-size/Medium Family |
| MG ZT | _01.jpg) | 2001–2005 | 5-doorExecutive car/Large Family |
| MG XPower SV |  | 2003–2005 | Sports car |
| Rover 25 |  | 1999–2005 | Small FamilyHatchback |
| Rover 45 |  | 1999–2005 | Mid-size/Medium Family |
| Rover 75 |  | 1999–2005 | 5-doorExecutive car/Large Family |
| Rover CityRover | | 2003–2005 | 5-door FamilySupermini |
| Rover Streetwise |  | 2003–2005 | 3/5-doorCrossover |
MG Rover sponsoredAston Villa Football Club from 2002 to 2004, with Villa's home kit advertising Rovers and the away kit advertising MGs. Also, the company had sponsored the popularITV murder drama seriesMidsomer Murders, in which a range of MG Rover cars were presented.
All of the following brands were controlled by MG Rover, and were formerly the property of British Leyland.
TheRover brand was used under licence from BMW, and was sold to Ford following the collapse of MG Rover; it was subsequently bought in 2008 by TATA.[49]
TheMG XPower brand was created by MG Rover for theirmotorsport subsidiary, MG Sport and Racing Ltd. in 2001.[50][better source needed] It was subsequently used for theMG XPower SVsportscar, a higher powered version of the Qvale Mangusta, in 2005. After the demise of MG Rover, assets of MG Sport and Racing relating to the XPower SV were acquired fromPWC, the Administrators, by the newly formedMG Sports and Racing Europe Ltd. However this company's use of the "MG" trademark resulted in a legal dispute withNanjing Automobile (Group) Corporation, which had also acquired assets of the defunct MG Rover Group.[51] This case was won by Nanjing in February 2010.[52]
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