MG Rover: It's over. What went wrong?

Giles Chapman on the history of a car-maker that consistently failed to grab chances of survival

You've got to be tough to do business with industrial China. They won't overpay for anything, and they have the unregulated human resources to do things their own way if they have to. The administrators of MG Rover and Department of Trade and Industry officials found out just how powerful the nascent Chinese car industry can be last week, as their pleading attempts to secure a future for Britain's last volume car-maker hit the wall.

Shanghai Automotive Industry Corporation, backed by the state, is at the forefront of the Chinese mission: to build a sector that doesn't just give Western car-makers a cheap place to build cars, but also establishes a strong indigenous industry where every part of the enterprise rests within Chinese companies.

On 16 December 2000, the handsome ZhongHua saloon gained the distinction of becoming the first passenger car whose intellectual property rights are fully within Chinese control. Despite the fact that the car has never been exported, it was an historic occasion.

We are, you may feel, getting a long way from the agonies of Longbridge's survival. But there is a crucial point here: of the 100-plus Chinese car factories, none has a brand identity that anyone in cash-rich Europe and America would recognise. The Chinese want brands, such as Rover and MG, and they want them fast. The only problem, as the "Phoenix Four" (as MG Rover's directors have been nicknamed) and the DTI discovered, is that they want them without the millstones of a decrepit Birmingham factory and 6,000 pension-hungry workers.

In 2001, this calamitous situation seemed unthinkable. That was when the Rover 75 Tourer was launched - a graceful estate car which has since, against all the odds, been a hit with upper-middle England. Along with its slinky MG version, the ZT-T, this car harked back to the days, last seen in the early 1970s, when executive types from Wilmslow to Wimbledon definitely would be seen dead in something British.

A goodwill swan song it turned out to be, yet the BMW-funded Rover 75 seemed genuinely to be turning things round. Alas, the presence within the Phoenix Four of two Rover dealers seemed set to torpedo this product-led renaissance. Too quickly did the new company, bought for a tenner and renamed MG Rover, resort to building tacky boy racers.

The MG ZR and ZS were sad at their 2001 unveiling, and they're positively pathetic now. An MG ZR buyer would never be likely to turn into a valuable customer with a high socio-economic rating. The truth is that car-makers in Western markets had better be making truly premium products or else the Chinese, and others, are going to put them out of business.

It could have been different. The British Leyland era was awful, but Rover eventually became hitched to a partner with world-class credentials and methods, and nearly made it. Not once, but twice.

In Honda, which agreed to help British Leyland in 1979, the company found a friend that recognised the customer was king. The ultimate result of that pairing was probably the 1993 Rover 600 - or Honda Accord. If Rover had continued to make quirky spin-offs of current Hondas, and the Longbridge staff had forgotten everything the plant had taught them and adopted Honda's methods, the West Midlands would never have looked back.

But that didn't happen, because British Aerospace, which took the remains of British Leyland back into the private sector, sold Rover to BMW in 1994.

BMW has been castigated for not setting to work on a new mid-size Rover saloon, but its long-range product antennae picked up the right signals. The future was in premium products, and they are rarely volume ones these days. The new Mini and the Rover 75 were the sorts of interesting, relatively expensive car that Rover needed to be good at, and they should have been followed up by MPVs, cross-over SUVs, four-door coupés, off-road cabriolets.

Longbridge, sadly, had been immersed in the fruitless business of trying to turn a profit on low-margin cars since the Austin Seven came along in 1922.

What will happen to Longbridge, and what will happen to MG and Rover? Ongoing independence for either the physical assets or the paper ones is now not an option. For the workers, the sad decline of the past four years must have provided ample time to recognise the warning signs and jump ship, no doubt into the service sector.Manufacturing donkey-work isn't for Britain any more - it's for the Chinese.

Which brings us back to those brand names. MG is a good brand. But there's unlikely to be a stampede for them from the world's 10 remaining car-making groups. Don't be surprised, however, if a certain Chinese organisation, among other, expresses a casual, low-priced interest. It's a very tough world, indeed.