MG Rover Group
MG Rover Group was a British carmaker that existed between 2000 and 2005. It was the last domestically owned mass-production car manufacturer in the British motor industry. The company was formed when BMW sold the car-making and engine manufacturing assets of the original Rover Group to Phoenix Venture Holdings in 2000.
MG Rover went into administration in 2005 and its key assets were purchased by Nanjing Automobile Group, with Nanjing restarting MG sports car and sports saloon production in 2007. During that year Nanjing merged with SAIC Motor. In 2009 the UK subsidiary was renamed MG Motor UK. The MG TF was manufactured at the former MG Rover Longbridge plant and sold in the UK from 2008 to 2010. In 2011 the first all new MG for 16 years was launched in the UK. In 2013 a supermini was added to the line up, this went on to help MG Motor become the fastest growing car manufacturer within the UK in 2014.
The Rover brand, which had been retained by BMW and licensed to MG Rover, was sold to Ford, which had bought Land Rover from BMW in 2000. The rights to the dormant Rover brand were sold by Ford, along with the Jaguar Cars and Land Rover businesses, to Tata Motors in 2008.
MG Rover Group was formally dissolved on 28 May 2023, more than 18 years after it was originally put into administration in April 2005.
History
Establishment
MG Rover was formed from the parts of the former Rover Group volume car production business which BMW sold off in 2000 due to constant losses and a declining market share. BMW had acquired the Rover Group from British Aerospace in 1994 and had since sold the Land Rover business to Ford, and split off the MINI business as a new BMW subsidiary based in Cowley. MG Rover took control of the volume component of the former Rover Group, which in turn had evolved from British Leyland and the British Motor Corporation - formerly Austin and Morris), which by now consisted solely of the Longbridge plant in Birmingham.Of the Rover Group's other major plants; Solihull had already been divested as part of the sale of Land Rover to Ford, whilst the Cowley and Swindon plants were retained by BMW for the production of the new MINI family of vehicles. As part of these changes, all remaining Rover volume production at Cowley, was moved to Longbridge, whilst MG Rover would be allowed to continue manufacturing the original Mini at Longbridge until the new MINI was launched by BMW a year later.
Phoenix Consortium ownership
When BMW sold off its interests, MG Rover was bought for a nominal £10 in May 2000 by a specially assembled group of businessmen known as the Phoenix Consortium. The consortium was headed by ex-Rover Chief Executive John Towers. When Phoenix took over, their first loss for the last eight months of 2000 were reported to be around £400m. By 2004, the company had reduced the losses to around £80m but never made a profit.MG Rover's best year for car sales was their first full year of business, in 2001 – when they sold over 170,000 cars. In 2004 their sales had declined to around 120,000. The company ceased trading on 8 April 2005, with debts of over £1.4 billion, after a proposed alliance with SAIC collapsed.
In relation to this, accounting firm Deloitte was fined £14 million in September 2013 for failing to manage conflicts of interest. Deloitte had acted as corporate finance advisers to firms involved with MG Rover and the Phoenix Consortium, including tax advice while Deloitte audited MG Rover. An independent tribunal refused to grant the right to appeal a finding that Deloitte failed to consider public interest, as of November 2013.
Aborted deal with SAIC
In June 2004, it was learned that Shanghai Automotive Industry Corporation had signed a joint venture partnership to develop new models and technologies with MG Rover. This led to much speculation among the British media suggesting the Chinese company was poised to launch a takeover. Later that year, in November, news broke of an agreement between the two companies to create a joint venture company to produce up to a million cars a year, with the production shared between MG Rover's Longbridge site and locations in China. SAIC were to have a 70% stake in this company in return for a £1 billion investment, with MG Rover owning the remaining 30%. However, this agreement had to be ratified by the Chinese government, specifically its National Development and Reform Commission. The Commission held the opinion that if BMW could not make a success of Rover, then it would be hard for SAIC to do so. On 8 December 2004, Tata of India, which had cooperated over the export of the Tata Indica as the CityRover, threatened to cease its agreement with MG Rover if the SAIC tie-up went ahead, according to the Indian press. Tata claimed the report was inaccurate two days later.In January 2005, it was revealed that British Prime Minister Tony Blair had intervened to support the alliance between MG Rover and SAIC. MG Rover could not give a date on which the agreement would be finalized. In April 2005, it was reported that the partnership deal with SAIC was in trouble because the British Government had decided to withdraw its offer of a £120 million loan to keep the deal going. On 7 April 2005 the company announced that it was suspending production because of component shortages. Later in the day, it was announced by Patricia Hewitt, the Secretary of State for Trade and Industry, that the company was being placed in receivership. Her statement was based on a conversation with MG Rover chairman, John Towers. It was later denied by MG Rover Group, although the company admitted that it had engaged PricewaterhouseCoopers, the accountancy firm, to advise on its current financial situation. In the event, MG Rover placed itself in administration on 8 April 2005, a different status from receivership under British law. On 8 April 2005, British Prime Minister Tony Blair and Gordon Brown, the Chancellor of the Exchequer, and Richard Burden, Labour M.P. for Birmingham Northfield visited Tony Woodley at the offices of the Transport and General Workers' Union in Birmingham and stated that there might be some hope for the future of the company, although not the original deal agreed with SAIC.
On 10 April 2005, MG Rover announced that they had received a £6.5M loan from the British Government. This would cover workers' wages for one week while buy-out proposals were made to SAIC. The same week, SAIC denied it had ever made an offer to buy MG Rover and threatened to sue anyone who attempted to make the 25 and 75 models. SAIC purchased the technical rights to manufacture Rover's 25 and 75 models, and for the Powertrain Ltd business, for £67M. It did not acquire the Rover name, which was still owned by BMW at the time.
Financial ruin and liquidation
On 15 April 2005, it was announced that SAIC had once again rejected pleas to buy out the company. With no other rescue deal in the pipeline, the administrators were not in a position to seek further funding from the government and announced that redundancy notices to Longbridge staff would be issued. As well as the job losses at Longbridge, the months which followed the collapse of MG Rover resulted in many job losses in the supply chain, as well as jobs in MG Rover dealerships, as these businesses either went bankrupt, were faced with having to make job cuts, or in the case of some dealerships switched to different brands. By the end of April 2005, Sir Richard Branson had reportedly expressed an interest in buying the remaining assets of the company for the purpose of reviving the marque in order to enter the hybrid automobile market, and several other parties were also rumoured as wishing to buy the remnants. These included two Russian businessmen, although one of them denied any interest in buying the company's assets. The Iranian state-owned car manufacturer, SAIPA who had worked with MG Rover installing the K series engine in a car for the Iranian market that was based on the old Mazda 121 and Kia Pride, were also rumoured to be potential buyers.SAIC had claimed that it had already acquired intellectual property rights in some Rover products for £67 million in the autumn of 2004, including the Rover 25, the Rover 75 and the Rover Powertrain K-series engine, but the Administrators advised that there was still interest in saving some other parts of the company, including MG, and 13 May 2005 was set as the deadline for bids from potential investors. On 20 May 2005, the Administrators announced that, after considering numerous proposals, they had entered talks with two unnamed "overseas companies" with a view to restarting one or more of the Longbridge production lines. Nevertheless, the following week they informed creditors that they by then expected the company to proceed instead to a creditors' voluntary liquidation, setting the date for a preliminary Creditors' Meeting to be held in Birmingham on 10 June 2005. At that meeting, creditors learned that so little of value was left in the company that there would probably be negligible or even no repayment of its outstanding debt and that, although three bidders were then still negotiating to acquire the company intact as a going concern, the Administrators had instructed their agents to prepare for the piecemeal sale of the very few remaining assets in the event that satisfactory negotiations for the sale of the entire business were not concluded.
On 14 July 2005, it was reported that Magma Holdings, a financial group including former Ford Motor Company and General Motors executives, working in conjunction with SAIC, would be making an offer for the assets of both MG Rover and engine maker Rover Powertrain which, if successful, would see at least some production being restarted at Longbridge, and that talks with the other two interested parties – China's Nanjing Automobile Group and Project Kimber – were still in progress. More than 6,000 workers at MG Rover lost their jobs when the company went into liquidation. As many as 25,000 jobs were reported to have been lost in related supply industries, meaning that the total number of job losses brought on by MG Rover's collapse was somewhere in the region of 30,000.