Rebuilding Rover

In an exclusive interview, Nick Stephenson, deputy chairman and head of design and engineering at Rover, tells David Fowler of his plans to beef up the brand by giving its products a sharper edge

Nick Stephenson is clearly delighted to be back. It is just four weeks since the Phoenix consortium’s bid to take over Rover Cars went through, to the immense relief of the workforce.

Less than two years ago the then Rover design director was launching the Rover 75 at the Birmingham Motor Show. It should have been a crowning moment in his career. But the new era that the launch of the 75 should have ushered in soon turned sour: the same day BMW’s chairman, Bernd Pischetsrieder, warned a press conference of impending calamity at Longbridge if the productivity gap was not closed.

After that, it seemed nothing could go right for Rover or its German parent, as Rover car sales plummeted, losses rocketed and directors at both companies were shown the door.

Stephenson left Rover in a boardroom clearout last year, 17 years after joining Austin Rover as a vehicle planning manager, and joined race car maker Lola as non-executive director.

But when BMW’s plan to sell Rover to Alchemy Partners was revealed earlier this year and rumours began to spread of a possible rival bid headed by ex-Rover chief executive John Towers, it seemed a safe bet that Stephenson would be involved. And so it proved.

As deputy chairman in the new group (he was acting joint chief executive with Towers until yesterday, when Kevin Howe took up the role) he’s enthusiastic about the huge task of rebuilding Rover.

He played a pivotal role in developing the current Rover range and now has effectively got a free hand to follow his instincts and add, as he puts it, `zest and excitement’ to it.

The strategy for Rover, as outlined by Towers, is first to cut costs and get cashflow onto a sustainable basis; in the medium term to develop new models on existing platforms; and in the longer term, to find a partner to share development costs of all-new platforms.

In this latest phase of Rover’s history one thing is certain: Stephenson will have to develop any new models on a shoestring.

How will you develop a whole range of new models at low cost?

The starting point is the cars that we already have and I think there is an enormous amount of life within these products yet.

What are we going to do with them? For a start we’re going to reposition the range and we’re going to stop any nonsense about the word `premium’ – which we think is a word that the buying public never understood.

In the short-term there will be limited editions. In the medium-term, we believe that MG derivatives of saloons are absolutely true to the MG heritage and we believe that a much more extensive MG range alongside a Rover range makes absolute sense.

We’ve got the Rover values of comfort and a relaxing experience, but we’re equally aware we’ve got to add a sharp edge, and that will be done by MG. We’ll add zest, more youthfulness – the MG brand itself brings a lot of that, but the cars themselves will be totally credible, so they’re not going to be bland, badged versions of Rover saloons, they will be genuine MGs.

With the 75 there was a sense that BMW went too far to make sure it wouldn’t be seen as a competitor to the 3-series…

There was an element of that, and it was not the wrong strategy for the group at the time, but now we’re a separate company we’re going to bring a lot more excitement to the 75 range.

In addition, I believe that MG itself needs toughening up and requires a little more of a cutting edge. As I expand the brand I want to bring even more excitement. I can already see how we could bring some of Lola’s expertise and skill to maybe a top-of-the-line MG in each derivative, and maybe some of their dynamic expertise could be brought into a tough version of an MG influenced by race car technology – I think that would be a really exciting proposition.

How soon will we start to see the new MG saloons?

I’ve set myself some challenges – within 12 months.

Long-term we will then be in the business of new vehicles – and the smaller platforms, 25 and 45, will be the first in our sights. Those are the ones where we see cooperative ventures of some description being the best way forward for us.

We’re entirely realistic about the costs of our business, but for a small company, which is what we now are, we believe these costs can be contained. Our experience of working with partners, leveraging the many capable suppliers in the industry – which by the way is how the original MGF was done – is how we see ourselves moving forward.

If you give a supplier such as Mayflower its head and say `here’s a design, do the work, and we trust you to produce quality’, then you find the costs are much smaller than if all the time you have a company trying to dance to the dictates of a large organisation.

When will we see the Rover 75 estate?

One of the big issues for us is moving Rover 75 production from Oxford to Longbridge. One of the decisions yet to be made is just when the right time to make that move is. Our view at the moment is we will probably go for it sooner rather than later. If we do, it wouldn’t make sense to put the estate car into production and then immediately stop it and move it.

Are there plans for a 75 coupe?

I’m not going to pretend we’ve got anything on the books at the moment because we haven’t.

BMW invested a lot of time and training on achieving quality in 75 production. Will you be able to reproduce that at Longbridge with a different workforce?

High quality is hard won. We’ve inherited a company with very high quality standards and sure as hell we’re not going to let them slip. But a great many of the Longbridge workforce have actually worked on the 75 – as we started to ramp 75 up there was a shortage of labour at Cowley.

The second point I should make is that the standard of the cars being produced at Longbridge is equal to that of the 75, so we’re confident the Longbridge workforce can produce good quality products. Obviously training is key: we’re committed to and will carry out all the necessary training.

How will you fill the gap in the range caused by the absence of a small car?

We were extremely keen and negotiated very hard to get the new Mini for at least our UK dealers, so we were sad not to be able to negotiate that. We think, though, with our current range our dealers are not at risk because they haven’t had a small car since the Rover 100 was discontinued.

It could be that another manufacturer has a small car that it might want to have a sales franchise to help promote; equally there might be something that we could customise to make into a Rover or an MG or one of our other brands. It’s very early days yet; we would still like to see a small car, and we know of ways we could get to one.

In a proposed partnership with a larger car maker, what would it stand to gain from the deal?

We’re not going to pretend to a large manufacturer that we would be trading with them on equal terms. As a small organisation you run yourselves in a different manner, and that is one of the ways we’ll get rid of unnecessary overheads, so we can’t have it both ways.

Having said that, we can still offer a substantial chunk of quite attractive volume to a partner. In essence, since volume is king on platforms then we believe we’ve got something to put on the table.

Sharing development costs can make it a very attractive proposition financially to a partner, even though our chunk of volume in the finished picture might look relatively small. We’ve always made it clear that, despite being a small car company, we want to continue to be a complete car company and therefore will retain considerable development potential and expertise.

Have you made any approaches to potential long-term partners yet?

No. Let’s be very clear about that. Our priority is to establish ourselves and our business and make sure it’s running in the way we want it, and we’re aware the other serious players will be watching us closely. When they see that we are not going to disappear overnight we are confident that we can have proper and meaningful talks with them.

There has been a lot of speculation about whether we’ve talked to Honda. Well, all I have spoken to them about is the ongoing supply agreements on the Rover 45 and the PG1 gearbox.

You’re inheriting a share of Rover Group engineers: what parts of the organisation will they come from?

This is quite complex, because not only were Rover and Land Rover a single integrated entity, but also that company was highly integrated with BMW. So separating out the individual elements is complex.

I’m pleased to say that all the companies involved – Land Rover, Rover Cars and BMW – are addressing the task in a totally businesslike and non-confrontational manner, looking for the best outcome for each of the companies involved.

Each new organisation is identifying its needs, and those individuals have been given the option to apply for up to three roles in the new organisations. We will then have as equitable as possible a process of putting them into positions, – hopefully the ones they wanted for themselves – but equally matching the needs of the business.

Will you have to source more parts outside the UK as BMW planned to do?

BMW had moved relatively extensively and we are inheriting a supplier profile that we are entirely happy with right from day one.

But equally, we have to drive sharp commercial bargains to remain competitive. Many of our suppliers are already engaged on getting costs down by improving their processes and manufacturing, and we’re very keen to pursue that approach as well as the more radical approach of physically moving the supply base.

You can make those step-by-step process improvements far more quickly than you can re-source a major component. Other than minor parts, changing the sourcing of vehicle components is quite a long-winded process. But we will be looking for continued support from suppliers. This is a must for us to survive and for many of them it’s a must for them to survive.

What is the situation regarding your option to buy the Longbridge powertrain operation?

We’ve got the K-series family, the L-series diesel which is coming out of Land Rover and hence Ford, and then we have the BMW diesels. We think we’ve been able to negotiate very competitive supply contracts for those engines. But fundamentally we are very keen on being able to retain a core of our own powertrain manufacture.

Would you like to keep the K-series in production at Longbridge when BMW moves engine production to the new Hams Hall plant?

Yes.

Would Rover be in a better position today if BMW had never come on the scene and the collaboration with Honda had continued?

My position has always been very clear on that, and as someone who’s had a long history with Rover I think the company could have survived as a single entity.

I certainly don’t sit in the camp that just sits and blames BMW. I think it’s entirely wrong to lay blame. I’m very keen to just look to the future.

Why, in the end, was Land Rover worth e3bn while Rover was worth only £10?

One message is that not only do you have to have great products, but you also have to have great brands. Land Rover has both. I would say Rover has great products but the brand still needs some work.

Rover has also suffered by being the name on the door of the company. Quite a lot of damage was done by some of the noise in the system and the arguments that took place over Rover Group. And a lot of that has stuck to Rover Cars.

That’s behind us now. It is a fresh start. And I think, with that noise out of the way, there’s every chance we can rebuild strong and powerful brands. We’re confident that we can once again get great brands alongside our great products. We’ve always been confident about the products.

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