Rover and Honda agree to build new car

THE GUARDIAN
ROVER AND HONDA AGREE TO BUILD NEW FAMILY CAR
By Andrew Cornelius, Industrial Correspondent

Rover, the state owned vehicles group, yesterday signed a deal with Japanese car manufacturer, Honda, to jointly build a new mid-range car to compete with the Ford Sierra and Vauxhall Cavalier.

The decision to go ahead with the new car, which is codenamed the AR8, is the latest in a series of collaborative ventures between Rover's volume car subsidiary, Austin Rover, and Honda in recent years. Mr Graham Day, Rover's chairman, said; "We are delighted to have completed this new agreement with Honda . It is a measure of the strength of the relationship and the confidence that has built up between Austin Rover and Honda over the years."

The timing of the announcement, just two weeks before Mr Day presents his corporate survival plan for the group to ministers, reinforced speculation that Austin Rover and Honda will eventually form much closer links in volume car manufacture. Austin Rover said that the new car would be ready for production within two or three years. However, vital decisions have yet to be made about whether the AR8 will be built at the Cowley plant in Oxford, which manufactures the existing mid-range Montego and Maestro models, or at the Longbridge plant in Birmingham.

An Austin Rover spokesman said that the final decision would not be taken until the groups long term strategy was agreed.
Mr David Buckle, district secretary of the transport workers union, the TGWU, at Oxford, said that the closer collaboration with Honda meant that Austin Rover would continue to lose its independent design and toolmaking capability and move a step closer to becoming a car assembly operation.

Austin Rover said that the AR8 joint venture was likely to follow the patern established by the joint venture Rover 800 series which was launched earlier this year. Versions of the new car will be manufactured in both the UK and Japan with Austin Rover providing the engine, body engineering and suspension for UK models, and Honda providing the powertrain, which includes the gearbox.

Istel, the computer arm of the Rover car group, is to be privatised through a management buy-out. Mr Giles Shaw, the Industry Minister, confirmed in a written commons answer yesterday that the government had accepted this "preferred route" recommended by the Rover board, writes Peter Large.