Phoenix Follies (Part Two)

Today, we feature the CityRover, a cynical and poorly executed attempt to plug a perceived gap in MG Rover’s model range.

2003 CityRover (c) parkers.co.uk

In 2000, the newly independent MG Rover found itself without a contender in the sub-B city car segment. As the formerly BMW-owned Rover Group, it had continued to field a version of the long-running 1980 Austin Metro, subject of three major facelifts before being renamed Rover 100 in 1994.

Despite its antiquity, it remained popular, at least in the UK, where it was valued for its compact size and nimbleness. A disastrous Euro-NCAP crash test in 1997 however, where the 100 received a uniquely poor one-star rating for adult occupant safety, caused sales to collapse and the model was discontinued the following year.

Rover Group in fact had a putative replacement in the 1995 R3 200 series. This was originally designed to compete in the B-segment, but was instead marketed and priced ambitiously in pursuit of Rover’s stated premium aspirations at the time. Renamed 25 following the launch of the Rover 75 in 1999, prices were reduced in line with rival superminis, but when customers came to trade their Rover 100s, they were mainly switching to other marques instead. The problem was one of size: the 25 was 250 mm (10”) longer in wheelbase and 564 mm (22”) longer overall than the diminutive 100.

This was just one of many pressing problems inherited by the Phoenix Consortium when it purchased Rover from BMW. The only truly modern car in the company’s range was the 75. The Honda-based HH-R 45 was getting long in the tooth and the subject of royalty payments to Honda, which undermined its profitability. A new mid-range model was an absolute priority.

MG Rover did not have the resources to develop both a true 100 replacement and a C-segment model simultaneously, so it instead courted overseas manufacturers with little or no European presence to see if it could buy in a suitable model, to be sold under the Rover name. The company was rebuffed by Chinese automakers, but the Indian Tata Group was more accommodating.

1998 Tata Indica Advertisement (c) Tata Motors

Tata had launched the Indica supermini in December 1998. This was the company’s first home-grown design, although the styling was undertaken by the Italian I.DE.A Institute. Early cars had a number of mechanical issues, but Tata worked conscientiously to correct these and by 2001 the relaunched V2 version was pretty well sorted and had become India’s best selling B-segment hatchback.

The Indica seemed to offer a quick fix for MG Rover’s problem. It was small for a supermini, just 150mm (6”) longer in wheelbase and 284 mm (11”) longer overall than the petite 100, so a much more natural successor than the 25. A deal was agreed whereby the Indica would be Roverised with minor modifications to the front and rear ends (but no metalwork alterations, just different bumper mouldings), altered suspension and steering settings more suited to European roads, and larger 14” wheels to improve its stance. Unfortunately, none of these changes dealt with the remaining two major issues with the Indica, a dreadful gearchange and a cheap, unpleasant interior. This was a major oversight that would rebound badly.

The new model might logically have been called the Rover 15, but MG Rover was aware that it might be seen as undermining Rover’s premium status, given its provenance, rather prosaic underpinnings and, in particular, the low-rent interior. The new car was to be positioned more as a city car than a mainstream supermini, so MG Rover’s marketing team came up with the name CityRover.

The CityRover was launched in the Autumn of 2003. It was not without merit. The interior was remarkably spacious for such a small footprint, a consequence of its tall build. It was smart looking and appeared well built. The suspension and steering changes made for a good compromise between ride and handling. The 1,405cc 85 bhp (63 kW) engine gave the lightweight 1,040 kg (2,290 lbs) car good performance. 0 to 60 mph (97 km/h) took 11.9 seconds, and the top speed was 100 mph (161 km/h). Unfortunately, the poor gearchange made exploiting the performance an unrewarding task. Moreover, the interior was a shock to anyone used to Rover’s usual standards in this area.

Spartan: 2003 CityRover interior (c) honestjohn.co.uk

Inexplicably, MG Rover made exactly the same error in pricing the CityRover as had been made previously with the 200 and 400 models. The base model, badged Solo, started at £6,495, but to get a passenger airbag and anti-lock brakes would cost £8,895 for the top of the range Style trim. That put the CityRover into direct competition with larger and much more sophisticated superminis.

There were already rumours of financial troubles and mismanagement at MG Rover. Stories began to circulate that the company was paying Tata less than £3,000 for each imported CityRover, and MG Rover was accused of profiteering. First year sales were much lower than expected. Just 6,150 were sold in 2004, less than a third of the 20,000 forecast. A £900 price cut for each model in December 2004 made no difference. By this time, MG Rover’s future was the subject of much rumour and speculation. Total CityRover sales were just 9,218 before the company collapsed into bankruptcy in April 2005.

The CityRover is a tale of greed and stupidity. MG Rover had squandered millions on vanity projects such as the Rover 75 / MG ZT rear-wheel-drive V8 and the MG SV sports car. Had a fraction of that been instead invested in a better gearchange and interior for the CityRover, and had it been priced more realistically, then it might have fared considerably better. Of course, it would never alone have saved MG Rover from its inevitable fate.

2003 CityRover (c) rovertorque.co.uk

The time and effort MG Rover had expended on these vanity projects could have been much more productively employed in working to replace its ageing mainstream car range. This would almost certainly have involved forging an alliance with a partner that had strong financial and technical resources, but lacked and significant presence in the European market.

By the time MG Rover began to seek out such a partner, the company was already in dire straits and potential partners recognised the company’s desperation, so sat back and waited for the inevitable, knowing that they could pick up anything worth buying in the subsequent fire-sale. As we now know, that is exactly what happened.

The reality is, however, that MG Rover’s fate was almost certainly preordained five years before its final demise, when the Phoenix consortium foolishly allowed BMW to walk away with the one model that might have given the company a viable future. I am not referring to the R50 Mini, which was a niche product, albeit one cleverly and profitably marketed by BMW. I doubt that MG Rover would have had the skills to promote it so effectively, and it certainly did not have the resources to expand and develop the Mini range as BMW did (with mixed results, admittedly).

The car MG Rover really needed was the R30, a C-segment model that was virtually production-ready when BMW sold out. This would have provided MG Rover with vital hatchback (Rover 35) and saloon (Rover 55) competitors to complement the 75 and allowed the decrepit and marginally profitable 45 to be pensioned off.

BMW allegedly offered to sell the mothballed R30 design to MG Rover in 2001 for £300m but the company decided instead to start again from scratch. Lacking the in-house expertise for this project, it employed the TWR automotive design consultancy to develop a new C-segment model, codenamed RDX60.

TWR progressed with the design, but funds were running low and MG Rover froze development in 20o3. TWR, facing its own financial difficulties, subsequently went into administration and RDX60 would never make production. That was the fatal blow that led to the inevitable collapse of MG Rover two years later.

The above is, of course, just one observer’s interpretation of the events that surrounded the sad demise of the last indigenous British volume car manufacturer. The key players in this drama, BMW and Phoenix, have for different reasons every incentive to maintain their silence but, should further information emerge, DTW will undoubtedly return to investigate further.

Author: Daniel O'Callaghan

Shut-line obsessive...Hates rudeness, loves biscuits.

22 thoughts on “Phoenix Follies (Part Two)”

  1. Good Lord, the CityRover! Many years ago I was given one as a courtesy car when my VW Polo went in for recall work; I cannot remember what for, nor why there were no Volkswagen’s available . Even the service chap looked embarrassed as he handed me the key. A dreadful thing to look at, drive and be seen in. Naturally the Polo was needed for about a week as memory serves which led me to literally parking the CR out of the way to avoid any connection with me. I even feigned illness to avoid trips to the cinema.
    One strong memory was the noise, thrashy and uncouth. Another, getting my own car back. The final one being completely ambivalent to Rovers fate because of this dreadful beast. Perceptions change over the years concerning the company, but not this fowl batch of iron.
    Great articles though, Daniel, thank you

    1. Good morning Andrew and thank you for sharing your experience of driving a CityRover. Given the relatively tiny number that were sold, we’re lucky to have this first-hand account of the car.

  2. From the ourside looking in, the Phoenix 4 look like a mix of incompetence, arrogance and greed. Maybe the overriding factor was actually cynicism, maybe they saw what BMW handed over to them as a pure opportunity to make themselves wealthy. I was suspicious about Towers’s abilities from the moment I read him defending the shockingly poor chassis characteristics of the ‘dog’ Tomcat 200 Coupe in Car, enhanced by his performance in one of the Rover documentaries which were doing the rounds in the ’80’s (When Rover met BMW, if I recall correctly) in which he looked like a small boy compared with Reitzle and Pischetsrieder. Kevin Morley always looked like a dodgy appointment too as MD.

  3. One of those cars again that I know exists, but I have no recollection of ever seeing one. Were these ever sold outside the UK?

    1. Hi Freerk. No, we kept this little gem to ourselves! Joking aside, if it didn’t sell in the UK, where there was still a degree of patriotic bias in its favour amongst the older generation at whom the CityRover was primarily aimed, it would have utterly bombed on the Continent.

  4. The first time I see the CityRover pictures in a mag, I think it was Autocar, I thought “well, now it´s over”. I couldn´t believe MG Rover was so desperate to market that.
    So the Indica was styled by I.DE.A. That explains the similitude with the 1996 Fiat Palio.
    I didn´t know the R30 was so close to production…losing it sealed the fate of the company, undoubtedly.

    1. Hi b234r. Well observed about the Palio! That resemblence had escaped my notice:

  5. Goodness Daniel, you are bringing the tragedy of MG Rover’s final years (and, perhaps more accurately stated, their death-throes) vividly back to life. Please take that as a compliment, as painful as I may find the recollections this dredges up.

    All that wasted time, money and effort on pointless distractions and inadequate bought-in products whilst Project Drive gradually spoiled the one really good, modern range they had. To think that at least some of those resources could have gone into a coupe version of the 75 (Riley-badged or not) and pursuing the highly promising design direction of the TCV concept. I realise that the perilous financial and industrial situation of MG Rover and its Longbridge plant made the chances of success slim from the very start but surely other management (choices) could have made a difference? We enthusiasts can dream…

    I think I’ll go and pat my 75 affectionately on the roof now.

    1. Hi Chris. A good early (pre-facelift and Project Drive) 75 is a nice car and a fitting memorial as to how things might have been if BMW had stayed the course. Hope it’s still going well for you.

  6. I read somewhere that the R30 was later morphed into 1 Series BMW. Given the fact that 1 Series was RWD, and 3 Series based car, I wonder if there’s any truth to those rumours…

    1. Hi Kamil. Yes, there were indeed rumours that the first 1 Series used the body structure of R30 aft of the front bulkhead. Given the need to incorporate a proper RWD transmission tunnel into the former, it sounds slightly implausible to me, even if elements of the R30’s body structure were repurposed.

  7. A great article, and a painful read.

    I didn’t know how close the R30 came to production, but having briefly looked in to it, it seems it was designed to take BMW engines, so I assume there would have been royalty costs (and its £300m cost would have eaten up most of BMW’s £500m dowry, too).

    BMW apparently also offered R30 to Chinese manufacturers, but they didn’t want it, either, so it wasn’t perhaps the bargain it seemed.

    The RDX60 story is another, very complex, oil drum of worms.

    I can recall at the time being both sad and relieved that the Rover saga was over – a company which always seemed to shoot itself in the feet, despite having enormous potential and goodwill.

  8. As already described here, Rover was the undesired add-on that Bernd Pischetsrieder and Wolfgang Reitzle had to agree to after they had originally only been interested in Land Rover (and therein primarily in Range Rover).

    And this one-sided interest obviously never waned after the purchase of the Rover Group. Range Rover received the full attention and corresponding development budgets of Wolfgang Reitzle. With convincing results. The resulted L322 was the much-needed quantum leap that catapulted Range Rover all the way to the top and thus prepared the breeding ground for the brand’s success that still continues today.

    This consequence of action was never the case with Rover. In this case, it was a fatal decision to leave the area of competence of BMW AG, which was exclusively geared to high-quality automobiles, and to enter the competition with Rover against mass manufacturers such as VW, Opel and Ford. It is irrelevant whether it was arrogance or incompetence that the responsible managers did not acknowledge that they were entering a terrain in which completely divergent development, production and sales processes prevailed due to significantly narrower and more volatile margins (this phenomenon also caused Mercedes-Benz managers to fail in their similarly disastrous work at Chrysler).

    By all accounts, Wolfgang Reitzle was never really convinced to hold on to the Rover brand. However, he was obviously never able to persuade Bernd Pischetsrieder with this position. It is said that there was always a concern that the discontinuation of the Rover brand and the resulting closure of the Longbridge plant would have seriously jeopardised BMW’s (hitherto very successful and profitable) position in Great Britain.

    1. Hi Mark. The parallels between BMW / Rover and Daimler / Chrysler are interesting and worth exploring further, thank you. At least Chrysler got the 2004 300C and Crossfire models from the merger, which were based on the (previous generation) W210 E-Class and R170 SLK platforms.

      If BMW had shown similar pragmatism, the Rover 75 could easily and more cheaply have been based on the still competitive 1988 E34 generation 5 Series platform, with a Rover 55 mid-liner based on the 1990 E30 3-Series. Yes, they both would have been RWD, but BMW asserted that customers didn’t care which wheels were driven when they launched the first FWD 1 Series (which could have instead been a Rover 35, had things being going well).

      It’s all academic now, but The 75, good as it was, wasn’t a great deal to show for five years’ joint engineering and design effort on BMW and Rover’s part.

  9. Dear Daniel

    It is indeed a question I have also asked myself countless times to this day: Would Rover have had a chance if they had used existing vehicle architectures from the BMW shelf? In this respect, you really speak from the heart with your observations.

    Needless to say, from today’s point of view, such speculations are purely academic fantasies. However, they are also quite intriguing. The more so as there are certainly aspects that make such hypothetical scenarios seem potentially promising.

    It would then have been logical to re-establish Rover in the premium segment. Which would have been quite feasible in retrospect of the brand’s heritage. In addition, there would have been enough market space next to the clearly driving-oriented positioning of the BMW brand in order not to run the risk of cannibalising each other. Rover as the dignified stylish alternative to a Mercedes-Benz W201 and Jaguar S-Type. It certainly could have worked out that way, because the model policy of both of the latter brands left a lot of room for competent competition at the time.

    Imagine, moreover, that this approach had been underpinned by a design strategy that, instead of relying on retro elements, would have sought to reproduce the timeless elegance that gave the Range Rover Classic and the Rover 3500 that distinctiveness which, in the case of the Range Rover, still characterises its overall appearance today. In the case of the Rover, the same attitude could have been adopted in the design development as in the case of the L322, which very skilfully transported the timelessness of the Range Rover Classic into the present day.

  10. If BMW was really only interested in Range Rover prior to taking over the Rover Group, that leads to the question of whether there was a way in retrospect for BMW and Honda to have come to a deal regarding Rover similar to what was later done between BMW and Volkswagen regarding the division of Rolls-Royce / Bentley?

    1. Hello Bob, I don’t think that BMW were solely interested in getting their hands on Range Rover, but no – Honda were very unhappy indeed about Rover’s sale to BMW and about their own wider treatment by the UK government compared with companies like Nissan. They originally wanted to continue being a partner, not to own the company; they certainly had no motivation to step in and blow a tonne of cash on trying to rescue Rover (again).

    2. Apologies – Bob, re-reading your post, I guess you meant could BMW have taken Range Rover from British Aerospace with Honda having the rest. Still no, I think, as Honda didn’t want to own Rover (and even then Rover on its own wasn’t much of a prize).

  11. I saw an Indica – I mean Cityrover – yesterday. The quality of the interior was absolutely shocking. Given that Rover Group had, since the first Rover 200 series, developed a reputation for nicely trimmed interiors, this really was a desperate step by a clueless management team.

    1. Hi Christopher, and thanks for posting the link. I remember reading extracts from the report back in 2009, including the grift of PVH charging MGR interest on the interest-free loan from BMW! While not quite the ‘Useful Idiot’ that Dominic Chapelle was to Philip Green, the Phoenix Four/Five clearly did not have the competency or a realistic plan to deliver a sustainable future for MGR. Extracting £42 million for their ‘services’ to MGR was outrageous. Did BMW exercise due diligence in agreeing to sell Rover Group to PVH? Probably not, and it (BMW) was lucky MGR survived as long as it did.

      That said, had MGR collapsed sooner, there would have been more of the ‘dowry’ left to pay pensions and redundancy. Technically, the 49-year loan would have been repayable to BMW, but would the company have called it in? It’s all academic now.

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