Car takeover led to high speed change

THE GUARDIAN
By Andrew Cornelius

British Aerospace has wasted no time in reshaping Rover since striking its bargain basement deal to buy the business. In just 20 months BAe has announced it is to close the South Works at Cowley, sold the Llanelli radiator factory in South Wales, dropped the Austin brand name, agreed to sell 20 per cent of Rover Group to Honda, and effectively recouped the entire cost of the takeover through the stock market flotation of the Leyland/DAF business.

At the same time Sir Graham Day, Rover's chairman, who was appointed to get the business out of state hands, is now slowly bowing out. He now shares his time between Rover, which is merely one of many British Aerospace subsidiaries, and Cadbury Schweppes, the drinks and confectionary group, where he has been appointed chairman.

Mr George Simpson, Rover's chief executive, is charged with the hands on control of the group, which despite the changes is still Britain's biggest carmaker, producing about 500,000 vehicles a year and with 14 per cent of the UK market. The company still directly employs 40,000 people and supports a further 121,500 jobs in supplier industries.

However, in European and world terms Rover is a minnow, with only 3.5 per cent of the West European car market, which explains the company's steady strengthening of links with Japan's Honda.

The relationship began a decade ago when Sir Michael Edwardes was chairman of BL, with a series of one-off joint ventures to develop new models. The latest product of this relationship is the newly launched Rover 200 and 400 series to replace the Maestro and Rover 200 models.

During the summer Rover announced that Honda is to take a 20 per cent stake in Rover's vehicle manufacturing operations, including Rover Cars and Land Rover. In return Rover gets a 20 per cent stake in Honda's new car assembly factory to be built at Swindon. The frenetic activity has continued with the launch by Land Rover of a new four wheel drive leisure vehicle, the company's first all new vehicle for 19 years.

Rover has also launched the new K-series, its first completely new engine family, for 11 years, and next year promise a new version of the Metro.