Sterling Devaluation (Part One)

We recall Rover’s US misadventure with Sterling and ask why it all went so badly wrong for the second time in a decade.

1987 Sterling 825 publicity shot. Image: Motor Authority

The 1981 Project XX joint venture agreement between Honda and Austin Rover to develop a large luxury saloon appeared to open the way for the British company to return to the United States. It was no secret that Honda was designing its version of the car, the Legend, with the US market firmly in mind. The Japanese company wanted to move upmarket, to raise US transaction prices and profitability in case volume import quotas might be imposed by the US government to protect domestic automakers. If the Legend was explicitly designed to appeal to US customers, then why shouldn’t the British version, the Rover 800, do likewise?

The company’s previous attempt to return to the US market was in 1980 with the SD1 3500 model. Eleven hundred federalised versions of the car were shipped to America to test the market. Unfortunately, the conversion to achieve compliance with US regulations horribly disfigured the car. Four round 5¾” headlamps in makeshift looking apertures replaced the slim rectangular originals, while huge black rubber covered 5mph bumpers protruded clumsily from both ends. The V8 engine was strangled with emissions control equipment.

Even if the federalised SD1 had been able to retain the original’s Ferrari Daytona inspired looks uncorrupted, it was not a car that appealed to American motorists. Firstly, its five-door liftback configuration was not what Americans expected or wanted in a luxury car. Secondly, the traditional wood and leather interior that embellished earlier generation Rovers had been replaced with stark modernism.

The initial batch of cars took almost three years to sell(1) and the car quickly became saddled with a reputation for chronic build quality and reliability issues. There would be no more SD1 exports to the US. Rover retreated, nursing significant losses, both financially and reputationally.

Botched: Rover SD1 3500 in US guise. Image: Favcars

In May 1985, with development of the new model well underway and a UK launch anticipated for mid-1986, plans to export it to the US were set in motion. Austin Rover partnered with Norman Braman to lead the sales effort. Based in Miami, Florida, Braman already held US franchises for a number of European marques including Audi, BMW, Lancia, Maserati, Peugeot, Porsche, Rolls-Royce and Saab. His dealerships, which also included a Cadillac franchise, had achieved sales of over $500 million in 1984. Braman was a wealthy and successful businessman who knew the US auto market well, so seemed to be the ideal candidate for the role.

A new company, Austin Rover Cars of North America (ARCONA) was established to handle the import and distribution of the 800. Braman was the 51% majority shareholder and chairman of ARCONA, with Austin Rover holding the remaining 49%. Ray Ketchledge, formerly Corporate Marketing Director of Volkswagen of America, was appointed President of ARCONA.

1987 Sterling 825. Image: bringatrailer.com

The company would initially create a network of 100(2) dealers to sell the new car, mainly located in the Atlantic and Pacific coastal states, where prospective customers were most likely to be located. ARCONA expected the typical customer to be a young(er) sophisticated professional who would tend to favour European imports over domestically produced automobiles. Such was the dealer interest in the new model that ARCONA received over 1,500 requests to attend a conference to promote the franchise held in Chicago in June 1985.

There remained the issue of what to call the new model in the US market. It was agreed that the Rover name had been considerably damaged by the SD1 debacle, so another marque should be used instead. MG was by far the best known of Austin Rover’s marques in the US, but it was associated with small and relatively cheap sports cars, so inappropriate for a large luxury saloon. The company’s other legacy marques, Wolseley and Riley, had virtually no brand recognition in the US.

It was instead decided to create an entirely new marque, one that would emphasise the essential Britishness of the new car (and obfuscate its Honda links). Sterling seemed a highly suitable choice, with connotations of both the country (via the UK currency) and high quality.

Essential Englishness: 1987 Sterling 825. Image: momentcar.com

Visual changes to the European specification model were relatively limited. The front and rear bumpers were extended and reinforced to meet federal impact regulations, adding around 100mm (4”) to the car’s overall length. Side marker lights and a high-level brake light mounted on the rear parcel shelf were added. The single-piece headlamps were changed for two-part units, still custom-made to fill the same space.

Finally, a slightly naff (to British eyes, at least) cod-heraldic shield replaced the Rover badge. This comprised a red cross on a grey background, overlaid with a lion rampant and surmounted by the name, Sterling. The new badge fitted into the same frame as Rover’s Viking longship logo.

The Sterling was launched in January 1987 with a single engine, Honda’s 2.5 litre 90° V6, mated to a five-speed manual or four-speed automatic transmission. In US emissions-compliant form, the engine produced maximum power of just 151bhp (113kW) and torque of 154 lb ft (209Nm). Although sharing the Legend’s suspension layout, the Sterling was set up rather more firmly, to give the car something of a sporting demeanour.

The car was supplied in two trim levels, S and SL, and advertising majored on its traditional British elements such as Connolly hide leather upholstery and burr walnut inlays on the dashboard and door trims. One press advertisement featured a bucolic English landscape oil painting as its background and quoted poetry from William Wordsworth. The tagline accompanying the advertisements was “Sterling, the inevitable British road car”.

Pastoral ideal: 1988 Sterling 825. Image: hemmings.com

The Sterling range was priced from around $19k for a (still well equipped) entry-level S manual to $26k for the top of the range SL automatic. This model featured as standard equipment duo-tone metallic paint, unique cross-spoke alloy wheels, ABS, memory power seats with leather upholstery and an enhanced eight-speaker audio. ARCONA was somewhat wrong-footed by the high demand for the SL model, which would account for 40% of first year sales. Conversely, manual gearbox Sterlings comprised a derisory 3% of sales, making this option virtually redundant within the range.

The network through which Sterling was sold tended to be multi-franchise import dealerships that did not enjoy a Jaguar franchise. While the official publicity emphasised Sterling’s Britishness, dealers were more than happy quietly to promote the cars Japanese underpinnings and the promise of quality and reliability they offered to prospective customers. Unlike the unfortunate SD1, Sterling was just what American buyers expected to find in a British luxury car.

Initial US impressions and reviews of the new model were generally positive. Ironically, the only serious criticism was reserved for the Honda engine. As in the identically powered Legend, it lacked the power and torque needed for a large luxury car. Some road tests reported niggling faults and assembly issues, but these would be remedied before long, it was charitably assumed. If anything, US reviews were more enthusiastic about Sterling than their UK counterparts were about the Rover 800. In particular, they praised the excellent balance of ride and handling, which was a much better compromise than that offered by the more softly sprung Legend.

The story of Sterling’s performance in the US market continues in Part Two shortly.

(1) Not all found buyers, however. It is estimated that around 200 remained unsold when Rover withdrew.

(2) This ultimately grew to 160 franchised dealers.

Author: Daniel O'Callaghan

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

30 thoughts on “Sterling Devaluation (Part One)”

  1. Every day is a schoolday at DTW. Thank you for this insight in the Sterling, Daniel. I had no idea this version of the Rover 800 / Honda Legend existed at all. Looking forward to the next installment.

    1. The list of Euro firms that failed in the US is a long one and only the concentrated nature of the US brandscape stops the compliment being paid the other way. VW struggles to this day. When I lived there I was struck by VW´s reputation for problems and also how seemingly identical cars (ones that easily managed Irish conditions) looked like rubbish when parked up in a US setting. Ford and GM´s strategy was local production and BMW has gone partly down this route though I don´t recall of hand which BMWs are made in the US. Volvo had production in Canada and that wasn´t such a success.

    2. You’re definitely right, Richard. Brands like BMW and Volkswagen have a reputation for quality issues. All the comments I’ve read on American car sites about this topic usually end with: ‘nice car, but I’d never own one out of warranty’.

      I’ve owned BMW’s for 20+ years all out of warranty and no serious issues to report apart from one of the circuit boards on my E46 broke (I can’t recall the exact issue, but it was quite unusual and not that expensive to fix) and the ABS module on my E92 (a known issue, refurbishment was about € 500).

      If I remember correctly BMW started production in the US with the Z3. From someone within a large BMW dealership (whose name I won’t reveal here) the US-made Z3 was so bad that cars sold in the Netherlands were partly taken apart and reassembled before delivery. They also made the E36 and Z4 over there, now it’s only the X3, X4, X5, X6 and X7.

    3. The problem with most failed European brands in the US wasn’t reliability, it was repairability. There were very few dealers outside of major cities and New England, and parts availability was spotty even if you could find a dealer or specialist. Local service garages didn’t have any of the required specialized tools, or even any metric tools until the late 1970s.
      American cars were arguably even less reliable, but they could be fixed anywhere. All you had to do was make your way to the nearest small town service garage, and the proprietor would source a new alternator/radiator/battery/belt, etc. (if they didn’t already have one in stock), and send you on your way.
      Of course it didn’t help when brands abruptly gave-up on North America. Parts supply would evaporate overnight, and you were left with an “orphan.” That’s what happened with Renault. The Alliance/Encore (R9/R11) were quite common until the day that Renault sold-out to Chrysler, and then they were all gone within a couple of years. Even captive-imports (Buick Opels, Plymouth Mitsubishis) were quickly de-supported by Big 3 dealers, leaving their owners stranded.
      That kind of shared experience left a mark in the American psyche. You had to be quite a non-conformist to buy a cheap or mid-range European car. Expensive European cars were a sign of wealth and sophistication, but buying a Fiat Strada instead of a Ford Pinto had negative social connotations.

    4. BMW production in the US of A started with the Z3 and today they make all Z4 and X5 there.
      BMW payed dearly for finding out the differences in qualification levels and working ethos between workers in the US and the home country (it always made me wonder why they didn’t know that in advance).
      To bring up quality of the cars and qualification levels of the workers they temporarily had up to 1,150 workers and instructors/supervisors from their German factories in Spartanburg.
      When the first couple of hundred Z3s arrived in Bremerhaven they set up a facility where the cars were ripped apart and re-assembled to improve quality.

    5. That’s an interesting observation, Bernard, and it makes sense to me. Still, this morning I saw yet again more talk about reliability issues instead of repairability or parts availability. Maybe the two concepts are mixed up by the writers.

    6. Freerk, that makes sense. It’s easy to confuse the two, especially if your car is inoperable.
      American cars built before the mid-1980s were incredibly unreliable. Every long journey came with a good probability that you would be delayed by mechanical issues. The cars themselves only lasted 100,000 miles (160,000 km), but the paint flaked-off well before then, the headliner would droop, and the gas tank would leak. Their saving grace was that you could find a replacement radiator in any small town. No such luck with a Peugeot or Fiat, you were stuck for days.

  2. My lasting impression of Sterling is seeing a thoroughly weathered one somewhere in Los Angeles in the late 90s. In contrast there were 20 year old Mercedes that only looked a bit bleached. The Sterling decomposed in a way I have seldom seen in cars outside a scrap yard. I note Rover gave the car just one engine – the classic error of the new model in a foreign country. It never hurts to have lots of engines available.

    1. Good morning Richard. Coincidentally, the only Sterling I ever recall seeing was in our hotel car park in downtown Los Angeles in 1990. The car can only have been three years old but, like the example you saw, looked pretty rough with flat, faded paintwork and missing pieces of trim. I suppose that if it was typically unreliable and troublesome, the owner had lost any interest in looking after it. Moreover, I imagine it was completely unsaleable second-hand, so the owner was stuck with it.

    2. A certain amount of the tattiness is neglect; a lot of it was Rover´s use of biodegradable materials throughout. I presume Honda knew about US market conditions and you´d think Rover would have used a standard test regime to check the effect of the weathering.

  3. Here’s a typically neglected example of the Sterling:

    One minor detail I didn’t mention in the piece: the Stetling’s bootlid badging was incredibly cheap and nasty looking. Rather than the confident, broad sans-serif style used on the Rover version, they chose a rounded serif typeface that was, I suppose, considered to be more ‘Olde English’ looking. Horrible.

    1. I can reveal that the photo shows a car from the Sterling press fleet just two weeks after the launch. It rained more heavily than Rover expected hence the missing paint.

    1. Good morning Guy. The narrowness of the Sterling relative to that parking space is actually a function of the width restriction placed on the smaller engined JDM Legend, to allow it to get into a lower taxation band. That is why the Rover 800, especially after the R17 facelift, always looked rather narrow for its length.

  4. I think it’s rather odd to have a more comfort-oriented suspension setup in the Honda and a sportier one in the Rover/Sterling. I would have expected exactly the other way round, as Honda for me has a rather sporty connotation (probably shaped ba cars like the CRX or S2000), while the cosy cabin of a Rover asks for likewise suspension.
    But probably American perceptions differ quite a lot in this respect. I assume that the Legend also wasn’t a Honda there, but an Acura.

    Regarding European cars in the US, I have vivid memories of them from a longer stay in Connecticut and NY in 1996. I was astonished by the amount of Peugeots I saw, quite unexpectedly, on the streets. 505s, still a lot of 504s, and even a 604. Apart from the hideous bumpers and headlights, I also recall a generally quite poor overall state of all these cars, almost none of them seemed to be particulary looked after. On the other hand, the 504 still proved its reputation of longevity, as they must have been in the 15 to 25 year age range by then.

    1. Hi Simon. Yes, the Legend was sold as an Acura in the US, the market for which it was primarily designed. Hence, the suspension setup was tuned for what Honda perceived to be American taste for a comfort-orientated ride.

      I don’t know if the Sterling received much (or any) suspension fettling for the US market, so the firmer setup was probably just the same as the European Rover 800.

    2. Hi Simon,
      In 1996, there were still 505 yellow taxis in NYC. They were a curious sight, a minnow swimming in a sea of Caprices and Crown Vics, as well as the occasional Checker, a taxi model that was also on the way out. As a recent grad living in one of the most expensive cities in the world I didn’t have the disposable to take cabs often, but when I did I would let the Chevys and Fords pass me by, waiting(sometimes quite a while) for an available Pug or Marathon. At the time, a wave of Bangladeshi, Nigerian and Russian immigrants were entering the cabbie trade but I was assured of an old school NY driver with a broad Brooklyn or Nuyorican accent by taking the car from France or Michigan.

    3. I’ve been on NYC streets a lot at that time and seen many cabs (without too frequently actually taking one). While I’m not sure if I might have seen one or two Checkers, I definitly would remember any 505 cabs I’ve encountered. Unfortunately, that wasn’t the case.

    4. The 505 cabs were extremely rare. I have no idea how many were in service over the years, but by 1996(5 years or so after PSA had left these shores) they were like hen’s teeth. I imagine that what finally killed them off was the introduction of safety barriers between the front and rear seats. The bulky bulkhead robbed the absolutely enormous American BOF cabs of legroom; I imagine any 505 thus equipped could barely fit a five year old.

    5. Hi Ben. That’s certainly true about the safety bulkheads robbing rear seat legroom. It was almost unbelievable how little space there was in the back of a Caprice or Crown Victoria so equipped. The 505 would have been hopeless.

    6. Thanks Ben! I really think I’ve never seen one of them. With these strange bumpers and rear lights, it has an air of Japanese design in this picture.

    7. Daniel: the Caprice and Fox cars all had rubbish rear legroom, being nearly wider than long inside. By comparison, the 505 is comparatively generously laid out so it might have had more room despite the use of the divider. I am always struck by the way many RWD US cars had such a short gap from the rear seat back to the leading edge of the rear seat despite the huge exterior dimensions. Surely they could have found 40 more cm in the 5000 cm between the nose and tail of the cars. If you look at the huge legroom of a Ford Granada (EU) you can see it´s not even a matter of RWD versus FWD. And peek inside a Peugeot 306 and see how much room the rear passengers´ legs have.

  5. The only way to succeed on the US market is slow but continuous growth, building up a reputation, dealer networks, and service stations. All attempts trying to launch a brand as the next big thing will fail. If the brand name Rover had been tarnished, launching the re-branded marque as the Sterling was nothing but a joke. Like naming a Chevrolet the Celebrity, a car no celebrity would touch even if it was given away. Volkswagen had had a success with the Beetle, but looking at the sales numbers, they had been continually growing for a long time, always selling more every year than the year before. Fringe import brands like Saab or Subaru or Volvo had been doing the same. The English had some success from the fifties onwards selling sports cars in the hundreds of thousands, but that market shifted towards other kind of lifestyle vehicles like Jeeps and vans and trucks during the seventies and onwards. Perhaps Rover would’ve been more successful pivoting towards the Land Rover and Range Rover brands for the US market? I find it absolutely astonishing they didn’t federalize the Range Rover until the late eighties, a car that had been in production for almost twenty years at that time. Range Rover was such a world wide success they couldn’t make more cars than they could sell anyway, so why the hell didn’t they increase production so they could’ve launched it in the early seventies for the US market? Even when they had a total success in their hands they didn’t know what to do with it?

  6. Unusually, I always preferred the bigger bumpers on the Sterling compared with the original 800. I recall that a mid-life face-lift saw the Sterling bumper panels at least fitted to the 800 and it managed to give the Rover a little more presence.

    I read somewhere that one of the BL/ ARG production engineers for Project XX admitted that they knew that many of the parts specific to the Rover and not the Honda were sub-standard due to over-riding cost limitations. One asks oneself, why would they do that knowing that it was just going to create problems further down the line?

  7. I tagged along with my mother in 1987 when she went to a Chrysler/Mitsubishi/Sterling dealer to test drive an 825SL. The car impressed 13 yo me, seeming quite the step up from her rather austere E21. They didn’t have any available in the color and spec she wanted, informing her that due to high demand she’d have to wait at least eight weeks for her preferred choice. She passed and it seems she dodged a bullet.

    As late as 1991, a dealer in Fullerton, CA near my hometown had a “new” Rover SD1 on its lot. The first time I saw it, in 1989, I was so impressed by its looks I drove back around the block to get a closer look. While it was wonderful across three lanes of traffic at 45mph, up close all I could focus on were its diving board bumpers and its bug eye headlamps. Perversely, they gave it pride of place on the front corner of the lot.

  8. We should, with the great benefit of hindsight, ask why the firm didn’t sell the Range Rover in the USA far sooner than March 1987, when official sales commenced. This is more relevant in the case of the SD1, with which it shared an engine.

    Pre-Range, the Rover Company constantly failed to make any headway in the USA, and probably made heavy losses with each attempt. Not altogether surprising as they didn’t make a sports car or two-door ‘personal coupe’, the cars were not cheap, and were underpowered compared with domestic products.

    The P6 was sold in the USA from 1967 to 1971. Despite very positive early reviews in the US motoring media, total Federal-spec production was 8192, broken down as 5209 2000TCs, 940 2000SC automatics, and 2043 of the NADA 3500S. In actual sales, that’s certainly an over-statement as some US Forces purchases never made it to US soil, and a significant number of the final NADA 3500s were sold as distressed merchandise through European Rover dealerships, particularly in Belgium.

  9. Re the Range Rover, British Leyland had other priorities at the time, including dealing with going bust in 1974, the year it pulled out of the American market. Selling cars in America would have been some way down the to-do list when they were clinging on for survival.

    I know it seems a bit chicken and egg – the Range Rover and other cars were worthy of investment to generate revenue, but who would have had the confidence to stump up the cash given the state of the wider company, in the first place?

    1. In the ’70s it may have been good judgement to keep the Range Rover out of the USA. At times it was hard enough to get complete cars out of the factory gates, and towards the end of the decade, the £/$ exchange rate was horrifically unfavourable – killing off the Triumph and MG sports cars under under the Edwardes regime.

      By the early ’80s things had changed; pre-independence Jaguar became seriously profitable despite ageing products. Whatever you might read about the so-called brilliance of John Egan, it was down to favourable exchange rates. BL should have moved to exploit this with the Range Rover, but were tardy and complacent – they could sell every Rangie they had the capacity to make. Even before this, every significant Range Rover improvement was led by third-party modifiers; automatic transmission, five door bodywork, luxury interiors, more powerful engines.

      Perhaps the problem with the Sterling was that it was a ready-made opportunity to achieve Federal compliance without much work on their part. Honda provided a ready-made federalised engine, and had done most of the crash safety work too, although Rover had to sort out their own motorised self-applying seat belts for 1989MY.

      As for what happened next, I wouldn’t want to usurp Daniel’s continuation of the sorry Sterling story.

  10. There you go, Range Rover production lines were busy, so selling it in a big market which could absorb the vast majority of sales wasn´t a priority, I suppose. What´s more, until 1981 the RR didn´t have a luxury version (“In Vogue”) and 5 door body; the regular Range was still a bit austere inside and probably the american market wouldn´t have like it. BL was very sluggish recognising the RR potential as a luxury car (something other companies saw a lot earlier).

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