Two Hearts, One Loser.

The story of the death of Rover.
Part 1. Honda betrayed.

Raking over the past may or may not have any relevance for the future but there are some aspects of the Rover story that have to be told. Everyone knows that Rover was once nationalised and was sold off to British Aerospace by the Thatcher government. It may not have been a great ‘fit’ but at least it conformed to the Thatcher dogma and removed the company from the government’s hands. The buzz amongst the workforce at the time was quite positive with many thinking that all this new aerospace technology could give Rover some competitive advantage with their new models – they were to be disappointed. Many of Rovers best managers were poached into BAe but no expertise flowed the other way.

Although many commentators like to characterise Rover by association with the bad old days of the sixties and seventies, by the time it was off-loaded to BAe it had been through significant changes. Its long association with Honda had brought new manufacturing techniques addressing quality issues and bringing new models and a new approach to working practices. Industrial relations had never been better and the company did not loose one day to industrial action in its last 25 years. Referring to it’s new owner, one very senior Rover executive after spending some time with BAe said, “It reminds me of British Leyland in the seventies”.

However, BAe having helped out Mrs T by taking the company off the government’s hands suddenly discovered that motor manufacture was not part of its core business and touted Rover for sale. Now, at that time Honda still had a 20% stake in the company, Rover also held a 20% stake in Honda UK and, naturally after many successful years of cooperation and collaboration Honda felt that they should be given some consideration and offered to increase their stake. At the same time BMW appeared on the scene. BMW were than seen a quite a small company and felt under threat from the giants of the industry, Mercedes being a nightmare threat for BMW as there was and still is no love lost between the two German companies. Buying Rover doubled the size and capacity of BMW over night. Honda management were furious and rightly felt that their long standing relationship with Rover had been ignored, they were also concerned because it exposed their technology and new products to a competitor. Serious and angry exchanges took place at board level between Rover and Honda.

It may seen strange to some that two, well respected names in the motor industry were squabbling over ownership of Rover but this was at a time when the automotive industry was in a period of significant growth and Rover made a £90 million profit during the year – it was no lame duck, a political football perhaps.

What happened next was quite extraordinary.