LONDON - BMW AG, custodian of one of the purest brands in the automotive universe, is faced with the task of fashioning an identity for Rover, one of the least pure brands in the industry.
Even if BMW is able to sort out the growing list of manufacturing and financial challenges presented by Rover, the brand issue awaits at the end of the day.
What is Rover? The name carries the DNA of many British brands in its corporate past: Austin, Triumph, Riley, Leyland and Mini among them. And that does not include Honda, the brand that has exerted the strongest influence on Rover's line-up in the last decade.
The Rover 75, BMW's first crack at putting its own stamp on the Rover brand, will go into volume production in March and should be widely available in June or July. BMW and Rover officials must wrestle next with what they can do for an encore.
The 75 will arrive in a crowded marketplace, seeking to lure customers trading up from Ford Mondeos or Opel/Vauxhall Vectras, or from Audi A4s or Mercedes C-class sedans.
'BMW is an upmarket brand that wants to build with Rover another brand in the mass market,' but that stakes out territory well outside BMW's own, said Garel Rhys, director of the Centre for Automotive Industry Research at Cardiff University Business School in the UK. 'Where is that territory?' he asked.
Uwe Mahla, BMW spokesman in Munich, said the key to the strategy is to keep both brands and their products clearly distinct and not to follow a platform strategy like the Volkswagen Group applies to its four main brands: VW, Audi, Seat and Skoda. Rover will be positioned at the premium end of whatever segments it enters, he said. The two companies can share components the customer does not necessarily see, like engines, gearboxes and electronics.
Marketing Systems, an Essen, Germany-based automotive marketing research firm, recently conducted a study that showed Rover near the heart of the European market in brand image on a chart using two intersecting axes. The horizontal axis has cars offering good price at one end and high prestige at the other. The vertical axis has emotion and pleasure at the one end and quality and safety at the other. For example, Rover ranks above Renault and Toyota in evoking emotion and pleasure, but below Alfa Romeo. It has more prestige than Fiat, but less than Audi or BMW.
But part of Rover's identity crisis is that it is viewed differently in the UK than elsewhere in Europe.
'In the UK, Rover directly competes with Ford and Vauxhall as a volume national manufacturer,' the study says. 'In other countries it is more in the tradition of sporty British cars (Rover, MG, Jaguar), which benefits the image of Rover. This image is a little too close to that of BMW.'
Rover depends upon the UK for about 55 percent of its sales. Rover's current UK market share is about 9 percent, having fallen from 13 percent in the past five years.
Refining the brand distinctions while maintaining share will be BMW's task with Rover.
'Where Rover goes from here is actually quite exciting as long as the marque hasn't dipped to the point where people say 1/8what is the point of investing in that?' said Gordon Sked of Gordon Sked Design Associates in Royal Leamington Spa, UK. Sked is former design chief at Rover. 'They have a certain pricing structure, and they need a rock solid image to go with it.'
Arthur Maher, director of European forecasting for J.D. Power-LMC Automotive Services in Oxford, UK, asked: 'Is Rover looking to go for volume to achieve the economies of scale to take on the big boys in the middle of the market, or are they going for premium pricing?'
During Rover's last generation of Honda-derived products, the company went the premium price route. That proved a 'total disaster,' said Maher, a former chief economist at Rover. It was disastrous because build quality did not measure up to the prices. Now BMW wants to revive Rover cars as marque with distinctly British values featuring abundant leather, chrome and wood-grain, a luxurious car with genteel elegance. At least that is the plan with the 75.
Nick Argent, spokesman for Rover UK, said the 75 and BMW 3 series would meet the segment challenge together, the BMW taking customers preferring sporting characteristics, and the Rover aimed at customers preferring luxury attributes.
But after the 75, Rover must wait quite a while for further reinforcements. The new Mini is due sometime in 2000, while Rover's all-important lower medium car is not scheduled to arrive until about 2002.
Argent said no decision has been made on several proposals for that vehicle.
Rover must have that to compete with the likes of the 'big boys' like the Astra and Focus, Ford's highly praised newcomer. Rover's entry will have to play in a segment for which premium cachet counts for less than it does in the more rarified territory where the 75 is positioned.
When it comes to competing in the mass market, there are large gaps in Rover's model range arsenal.
The Marketing Systems study also points out that, although Rover is being positioned to compete in some volume segments, it has no plans for an MPV or any light commercial vehicles.
Rover also lacks a serious contender in Europe's huge supermini segment, which is dominated by the likes of the VW Polo and Ford Fiesta.
BMW has repeatedly vowed it will stick by its long-term plan for Rover, enduring whatever short-term pain is necessary.
'That's the danger really,' said Rhys. 'You have so many problems but if you concentrate on the long term, the short term or medium term can turn disastrous. To look to the long term in lieu of the short-to-medium could mean there is no long term.'