Sterling Devaluation (Part Two)

Concluding the story of Rover Group’s US Sterling misadventure. Why did it go so badly wrong?

Sterling in hatch and saloon form. Image: Favcars

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.
1987 Sterling 825. Image: motortrend.com

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.

1988 Sterling 825 Interior. Image: sterlingfixer.com

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.

Rarity: 1990 Sterling 827 five-door. Image: hemmings.com

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.

Teaser: Rover 800 Coupé design sketch. Image: aronline.co.uk

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.

Author: Daniel O'Callaghan

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

34 thoughts on “Sterling Devaluation (Part Two)”

  1. Good morning, Daniel. That Automobile long term test car had a lot of issues indeed, especially considering the mileage covered. I wonder what would have been the alternative to the self-inflicted wound. Would a road not taken have led to a different outcome? Of course we will never know.

    1. Good morning Freerk. That’s a very good question. The one thing I haven’t got my head around is just why the Sterling was SO badly built and unreliable. As far as I can recall, the Honda engined Rover 825 and 827 weren’t especially troublesome. Did Rover have a crack team of imbeciles dedicated to Sterling assembly, or was it just that US driving conditions were more arduous and the dealers too poorly trained to sort out faults as they arose? As you say, we’ll never know.

    2. Didn’t they also build Legends at Cowley of which most didn’t pass Honda’s quality checks and had to be used as in-plant transports?

      I remember that in the Seventies companies like Peugeot always started to sell new models on their home market and only after all initial bugs had been ironed out did they start exports. The reasoning was that customers are more inclined to tolerate initial troubles from a domestic maker. Maybe that could have been an approach for Sterling.
      The Sterling story sounds a lot like what broke Alfa’s back. Trying to sell a product needing lots of TLC through sub standard dealers will kill the product and the brand.

    3. That list of faults is jaw-dropping stuff. It’s a little too early for me to actually remember but, as Daniel said, surely the UK/EU market 800s weren’t that bad. So how could almost-identical cars destined for the US market be so terrible? It’s perplexing.

    4. Reading though that list suggests to me that the issue was that perennial British automotive disease – the quality of bought-in components. The 800, like everything ARG was producing at the time was conceived on a budget commensurate with what could be wheedled out of Mrs. Thatcher’s government, usually amid massive reluctance. Enough to build a world class luxury motor car? Maybe a second or third class one. The use of Honda componentry was I seem to recall kept to a minimum – the UK press crowing loudly at the level of ‘local content’ in the Rover side of the XX programme. Clearly, the bits that did work on the 800 were those sourced from Minato.

      I think it’s a cheap shot to blame the workforce by the way. By the mid-80s, they had been thoroughly through the mill and I think (for the most part) would have built better cars if the quality had been designed-in in the first place. It’s often easier to do good work than shoddy work.

      Furthermore, ARG, like most imported carmakers, did not carry out anything like enough on-site proving on US soil, so the somewhat unique usage and environmental factors were not factored in – or were ignored. Another factor was the lack of a sufficient dealer network (which includes spare parts supply) – Roy Horrocks having gifted that to Jaguar at a time when he didn’t think he needed or wanted it. Cracking America is hard. I get the sense that at Longbridge, management thought that it would be easy – after all Jaguar was making hay at the time in the US and with a twenty year old design to boot. ARG simply didn’t understand the US market. Honda did. Their relative fortunes reflect that essential truth.

      It always comes down to a failure of management, in my view.

    5. Hi Eóin. I should say, if it’s not already clear, that my tongue was firmly in my cheek when I made the remark about “crack team of imbeciles”. Red Robbo and his ilk were long gone by the mid-1980’s. If the cars were badly built, then it was more likely because they were not designed to be built consistently and to a high standard. This was another longstanding BL problem, particularly with the Issigonis designs. Poor quality parts is certainly a more plausible explanation.

    6. Indeed Daniel, but I felt that someone unfamiliar with the site might not have noticed the tell-tale bulge in your cheek. Returning to the point, I think that Rover had quite a few problems with the early 800s; possibly a workforce unfamiliar with a new product, a lack of a pilot-build facility to help track workers come to grips with the minutiae of building the car, cheap componentry and poor paint finish. I recall seeing a less than two year old example on a sales lot in Ireland, circa 1988 and being struck by how tired and, well, old it looked.

      Now Ireland, (and the South Coast in particular) is not kind on cars of any stripe, but this was in a very poor state for something barely two years old. 800s were poison to the Irish motor trade, as were all ARG products, which sold in desperately small numbers anyway. By 1988 or so Montegos, Maestros and Metros were decently well wrought, but it wasn’t really until the (first) facelift cars that the 800 came good. I also recall a Car magazine piece from around this time where they canvassed UK fleet bosses on their views of the major car makes. The 800 (and ARG in general) did not come out well. At all.

      I would agree with Dave that Rover were too hasty in getting the 800 federalised. They should have waited until the car was debugged at least. Not that it would have made a huge difference, but perhaps the Sterling would be recalled with less wild derision in the land of the free now.

    7. More time might indeed have helped to improve the Sterling, but the SD1 3500 took four years to cross the Atlantic and was still rubbish when it finally got to the US.

      That said, BL had a long and dishonourable tradition of treating early buyers of new models as crash test dummies while it struggled to iron out the wrinkles.

    8. Sometimes I wonder what happens to european cars while they are in the boat crossing the Atlantic…yes, the first XX produced were far from perfect, but not so terrible like the one that tested Automobile. Likewise, german cars have been considered as “unreliable” in the US for a long time; here, they were a paragon of dependability, at least until a few years ago. Well, I own a BMW E39 and it needs attention every now and then, but it´s a 21 year old car.

      By the way, I found really attractive that red XX fastback with the 16″ Roversport alloys…

    9. I was looking through an old copy of Car today where in an interview with Rover Group’s Graham Day, the car exec attempts to belittle a contemporary report from UK’s ‘Which magazine’, which ranked the 800 “bottom for reliability”. He told Car that “major hire companies” indicated that at worst Rover Group cars performed “no worse than the average”, which was hardly a ringing endorsement. When presented with the US JD Power findings, he cited how well regarded Range Rover was in the American market before shifting blame for the Sterling situation to the US distributor, saying, “we gave someone else 51% of the business. It was a pile-em-high-sell-’em-cheap kind of operation. He damaged the product and didn’t service the dealers. It caused a lot of problems. But he’s gone, and we’re having to go through a major recovery in a market that’s not particularly strong.”

      In another issue of Car, a letter from Raymond A Ketchledge (formerly general manager of ARCONA) was published, responding to a previous ‘In Britain’ piece on the internal strife between him and Day, which had suggested that the moment Ketchledge wrongfooted Day, he was a marked man. Ketchledge stated, “From my wrong-footed birds eye view, it appears that the senior executives (post Musgrove era) would have spent their time more wisely overseeing Sterling vendors and assembly, instead of the fences surrounding their turf.” He went on to say that he viewed being described as a marked man by Graham Day as being a “badge of honour. Many tell me they agree.”

      Like most automotive tales, I suspect this one was good and murky. I would also say that when I first read that Graham Day interview, I considered him to have come across as evasive, insincere and cranky. More than 30 years later, I see no reason to alter that verdict.

    10. Eóin, you mentioned “failure of management”. While you’re absolutely right, the prevailing mantra is “management is always right; management never fails; it is only the workers and the buyers that fail”.

  2. The dashoboard is a pretty nasty jam-up of two different themes: above the horizontal line on which the vents are located it´s curvy; below it´s SD1 and square. In particular the area around the centre vents is a horror.

    1. Note also the warped and ill-fitting glovebox lid, Richard. That would really bug me if I owned the car.

    2. Eóin, I’m getting the feeling that, if someone adapted the facelifted Citroën BX’s dashboard to properly incorporate wood veneers (unlike the ghastly Buffalo thing) and leather, the result would be a lot better.

  3. I may have read it somewhere, but my favorite description of the Sterling brand was “English reliability meets Japanese styling.” Had Rover flipped the two they might have had a hit.

    1. Hi Steve. Apart from the reliability issues, I never thought that much of the 800 / Sterling’s styling, regarding it as rather unsophisticated. The bodyside had too many creases and (hence or otherwise) looked rather flat and insubstantial. The swathe of ribbed plastic across the tail looked a bit cheap and nasty. Only Volvo (and, I suppose, Audi) can make six-light DLO’s look classy on luxury saloons. This LWB 800 prototype with a four-light DLO looks rather more substantial, if oddly proportioned:

    2. I recall reading somewhere that at the time of the 800 launch, someone of note (wish I could remember who) told Roy Axe that “What you have designed is a very nice Nissan”.

      The Axe / Sked idea was to create a new house style for Rover with the 800 design as starting point. It included the putative AR6 Metro replacement, various unrealised Maestro and Montego reworks, and the R8 200/400 series.

      After this Honda and Rover styling seemed to ‘meet half way’ with mediocre results apart from the ‘Synchro’ Rover 600.

    3. Hi Robertas. I remember that remark being quoted previously, and here’s the Nissan they were undoubtedly thinking about, the Bluebird T12:

      The similarity is striking, to the extent that the Bluebird would have made a very plausible ‘Rover 600’ sibling to the 800.

  4. I wonder why the US versions were so duff in terms of quality. Austin Rover could – and did – build good quality cars. Indeed, they built Honda-badged cars successfully. I can understand (though not excuse) certain materials and perhaps even components not standing-up to extreme temperatures. The build quality issues, though, seem strange, as I don’t recall European versions being poor.

    How people view quality can be odd (I don’t doubt early Sterlings were poor, though). The example of the Ford Fiesta / Mazda 121 sticks in my memory – the Mazda was always rated top for quality, despite being identical to the Ford, apart from its badges.

    Incidentally, I came across this list of automotive under-achievers on Wikipedia. I think they’ve missed a few.

    https://en.wikipedia.org/wiki/List_of_automobiles_known_for_negative_reception

    1. Good evening Charles. Regarding perceptions, General Motors had a similarly frustrating experience with its joint-venture with Toyota, launched in 1984, the New United Motorcar Manufacturing Inc. (NUMMI). This was initially established to build both GM and Toyota versions of the Corolla at a new plant in California.

      The GM version of the Corolla was launched as the GEO Prism. It continued in production from 1989 to 2002, encompassing three generations of Corolla. Over this period, the market consistently rated the Corolla higher in terms of quality and reliability than the Prizm, much to Bob Lutz’s puzzlement and annoyance.

    2. Meanwhile those of us with an interest in saving money bought the less-loved Prizm (or the incarnation of the NUMMI-built Chevy Nova that preceded it).

      The same for the Toyota Matrix and the Pontiac Vibe. Deal with some excessive plastic bits on the Vibe and you would save a lot of money over the Matrix because it was the same vehicle underneath the badges.

    3. Hi Daniel, In the spirit of entertainment (Lutz, you say?) perhaps a brief musical interlude could help straighten things out, I’ve also furnished a link.

      Facts are simple and facts are straight
      Facts are lazy and facts are late
      Facts all come with points of view
      Facts don’t do what I want them to
      Facts just twist the truth around
      Facts are living turned inside out
      Facts are getting the best of them
      Facts are nothing on the face of things

      https://www.thetruthaboutcars.com/2011/08/unraveling-the-mystery-of-consumer-reports-brand-spread/

    4. gooddog: “Facts are useful in emergencies.”

      Don’t think you can sneak a Talking Heads reference in here without me noticing…

    5. Steve, did you mean the Toyota Voltz? Note the “V” badge. What is a Pontiac?

  5. gooddog, yes, this vehicle was sold as the Toyota Voltz in Japan as a Toyota version of the Pontiac Version of the Toyota version of the NUMMI-produced vehicle (!). The Wikipedia page for the Vibe goes into good detail about the differences.

    Not sure how to display images so let’s see if this works. It certainly displays when clicked as a link. https://upload.wikimedia.org/wikipedia/commons/thumb/1/1a/2nd_Pontiac_Vibe_2_–_12-26-2009.jpg/640px-2nd_Pontiac_Vibe_2_–_12-26-2009.jpg

  6. Pontiac was another General Motors division that was axed in 2010. The brief for the brand in more recent generations was as the sporty complement to Chevrolet without quite the luxury of Oldsmobile or Buick. In the 21st Century, Pontiac (in the U.S. at least) offered a version of almost every car in the Chevrolet stable except the Corvette — even the more misbegotten efforts like the G3, which was a badge-engineered Chevrolet Aveo (Daewoo Kalos/Gentra).

    Pontiacs were largely differentiated by more vinyl graphics and fussier wheels and taillamp units than their Chevrolet brethren, I suppose in an effort to make them look fancier for the extra dollars you paid. The recent feature here on the Pontiac Firebird does an excellent job of displaying the progression of excess.

    1. Hi Steve. I’ve taken the liberty of embedding the image to which you provided a link directly in your comment above.

      If you wish to embed images in your comments, you need to use a photo hosting app or website such as Imgur. Instructions for how to do this may be found on the Driven to Explain page above if you scroll down to the bottom of the page. The instructions are slightly different for Android tablets and phones, Windows PCs and laptops, and Apple devices. Instructions for each are provided. Hope this is helpful. 🙂

  7. Hi Steve, I was kind of joking… Thanks for playing, please accept these prize pictures of the 2010 Holden Commodore SS V-Series Special Edition Sedan and Ute (Sportwagon not shown).

    1. Hi gooddog. That TTAC piece is very interesting. Having read his book, I had taken Lutz at his word, but it appears that his perception was rather more faulty than the perceptions he was complaining about!

      Thanks also for the verse. Very witty!

    2. It is no coincidence this special edition was released in 2010, after the demise of Pontiac, ie they had to do something with the stocks of the Pontiac front fascia and bonnet!

  8. Daniel, thank you! First article on which I’ve commented; now that I know how, future contributions will have embedded images when they add value.

    gooddog, I rather like that Holden sedan! In my opinion it looks like the Pontiac should have.

    1. Steve, actually it did. The G8 was imported to North America from Australia, though Holdens are RHD, so not exactly the same.

  9. Very late to this party (it’s too hot outside to continue digging out the pond so I’m playing catch-up) – a very slight tweak to the grille and that Holden would make a far better-looking BMW than the contemporary real thing…..

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