Concluding the story of Rover Group’s US Sterling misadventure. Why did it go so badly wrong?
A total of 14,171 cars found US buyers before the end of 1987, Sterling’s first year on sale in the US. This was a respectable number, if shy of the 20,000 to 23,000 sales that had been forecast by ARCONA. Even before the end of the year, however, reports were emerging about inconsistent build quality and poor reliability. There were many instances of faulty paintwork, poorly assembled interior trim and various electrical problems(1). Moreover, the quality of the dealerships was highly variable, many lacking the expertise(2) to deal effectively with issues that arose on the car.
The US Automobile magazine(3) ran a Sterling for a year and 24,500 miles to see how it would fare in the hands of a typical owner. The car had to be returned to the dealer on nine separate occasions during the year and the list of faults, many of which were recurring, was truly shocking:
- 2,321 miles: Fuel gauge broken, glove box sticking, steering wheel off center, cruise control inaccurate, door moulding adrift, coolant warning light flashing, tires out of balance.
- 3,751 miles: Windshield leaking, fuel gauge working but incorrect.
- 6,544 miles: Sunroof not opening, windshield washers not working.
- 7,006 miles: Dashboard light and passenger seat lumbar support broken, fuel gauge incorrect (2nd time), trunk trim loose.
- 7,609 miles: Driver seat adjustment not working.
- 8,886 miles: Coolant and fuel gauges not working (again), driver seat lumbar and power mirror switch inoperative, brake warning light stuck on, passenger seat belt not retracting, steering wheel off center, grille falling off, fuse box door falling open.
- 15,769 miles: Hood and trunk releases stuck, passenger seat belt not retracting (2nd time), heater button fallen off, passenger lumbar support not working (again), key-in-ignition chime intermittent.
- 17,565 miles: Sunroof not opening (again), coolant gauge faulty (again), fuel gauge faulty (5th time).
- 24,508 miles: Sunroof, coolant gauge, fuel gauge inoperative (3rd, 3rd and 6th time, respectively), ignition key sticking, ashtray sticking.
There were other more minor issues like splits in the walnut trim on the dashboard and centre console, items of interior and exterior plastic trim coming adrift and a faulty radio volume control, “a variety of maladies that nobody had the energy or enthusiasm to tackle” in the words of the reviewer. This was no atypical Friday car(4) either. The list of faults above was widely reported by unfortunate Sterling owners. Some examples did appear to defy the odds and proved to be well built and reliable, but they were very much in the minority.
The mounting volume of anecdotal evidence was confirmed when J.D. Power published its 1987 customer satisfaction survey and the Acura(5) Legend and Sterling sat at opposite extremes in the ranking. Meanwhile, other problems began to appear, including premature body corrosion and the tan leather turning green in reaction to UV light.
There was little ARCONA could do other than plead with Rover for production line quality improvements. Poorly trained and resourced dealers were overwhelmed with the number and variety of faults reported, hence the frequency of return visits for the same fault to be rectified, all exacerbating customer frustration and disaffection.
The gulf in quality and reliability between the Acura Legend and Sterling was reflected in the sales numbers. In 1988, the first full year of sales for both cars, 70,770 Legends found buyers, compared with only 8,901 Sterlings. Ray Ketchledge was unfairly blamed for the underperformance and left ARCONA in May 1988 as Austin Rover took direct control over its US operation.
Norman Braman’s stake in ARCONA was bought out by Austin Rover and the company was wound up in February 1989. Graham Morris was appointed head of a new operation, Sterling Motor Cars, reporting directly to Graham Day, Austin Rover’s Chairman and CEO. Morris attempted to inject new life and enthusiasm into the failing business, in particular the disillusioned and restive dealer network. He promised a major uplift in quality with the heavily revised R17 version of the 800, scheduled for launch in the autumn of 1991. He even revealed to the dealers a design sketch for the 800 coupé, which was not due to arrive before the spring of 1992, almost three years hence.
1989 also saw the introduction of the five-door fastback version of the Sterling, which coincided with an enlargement of the engine to 2.7 litres, the latter to address the rather flaccid power and torque figures of the original. Bringing the fastback version to the US market was a more dubious decision, given the fate of the SD1 a decade earlier.
Quality issues were being addressed and later cars were certainly better (at least, more consistently) built and more reliable, but the damage was done and Sterling’s reputation, like Rover’s before it, was comprehensively shredded.
To compound Sterling’s woes, Toyota launched its luxury division, Lexus, in the same year with the hugely impressive LS400, which was beautifully built and peerlessly reliable, with unprecedented levels of dealer service. While the LS400, with a starting price of $35k, was pitched considerably upmarket of Sterling, a lower priced GS300 model was in the pipeline. This model would compete directly with Sterling and offer Lexus customers similar standards of quality and service to the LS400.
Sterling US sales in 1989 fell to 5,907 and in 1990 to just 4,015. Even the offer during 1990 of a $6k cashback rebate, over 25% of the list price, hadn’t been enough to arrest the decline in sales. George Simpson, Rover Group’s(6) chief executive, announced its withdrawal from the US market on 9th August 1991. Sales in that final year were just 2,745, taking the total over five years on sale to 35,739.
In the month prior to the withdrawal announcement and in one last desperate attempt to boost sales, the company promised that it would give away a ‘British mansion’ to anybody finding a better equipped new car for the (heavily discounted) price of the Sterling. The publicity this generated saw sales in July 1991 jump to 493 cars, an 81% increase on the 273 sold in July 1990.
As late as March 1991, Car Magazine, in a feature on the forthcoming R17 facelift for the Rover 800, had reported that the revamped car would go on sale in the US in March 1992 as a Rover and would be followed three months later by the coupé version that had been developed specifically for that market. This would, of course, never happen.
The remains of Sterling Motor Cars’ business was folded into Range Rover of North America, which took over responsibility for Sterling servicing and spare parts supply(7), which had been guaranteed for five years.
Sterling’s failure in the US market seems extraordinary, given its close relationship with the highly successful Legend. However, there is no real mystery to the story: it was a fatal convergence of poor early build quality and an inadequately trained and resourced dealer network that gave Sterling a disastrous image from which it never recovered.
The longer-term implication of Rover Group’s final retreat from what was then the largest auto market in the world would be profound. The group’s only remaining presence in the US was via Land Rover, and that company would be sold off to Ford by BMW in 2000 when it offloaded its English Patient to the Phoenix Consortium.
With almost no presence beyond the over-supplied and ultra-competitive European market, MG Rover was always going to find it difficult to develop a sustainable stand-alone business. Sterling’s failure was, in hindsight, just one of many painful and self-inflicted wounds that would ultimately destroy the company.
(1) The electronic equipment on the Sterling was supplied by Lucas, a British company with a less than stellar reputation for the quality and reliability of its products, earning it the unfortunate soubriquet Prince of Darkness.
(2) Unlike the single-franchise Honda and Acura dealerships, where technicians and mechanics were highly trained specialists.
(3) From the same stable as Motor Trend magazine, but now defunct in print form.
(4) A soubriquet that used to be applied to cars that appeared to be unusually badly built and unreliable.
(5) The Legend was sold in the US under Honda’s upmarket Acura brand and dealer network.
(6) Austin Rover was renamed Rover Group in 1989.
(7) Many Sterling owners simply had their cars serviced at Acura dealerships instead.