The Rover Takeover: Deal casts shadow over Honda link: The Partner

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The Independent Online
ONE OF the questions left unanswered by BMW's purchase of Rover is what happens to the British car maker's link with Honda. Few observers doubt that Rover owes its survival to the collaboration with the Japanese car maker that began 15 years ago.

As to be expected of a minority partner jilted in favour a rich German 'sugar daddy', Honda reacted with ill-disguised anger to the news that Rover has fallen into the clutches of BMW.

A spokesman in Tokyo said that the deal had negated Honda's vision of a long-term relationship with Rover, although he said that Honda had no plans to sell its 20 per cent stake in the business.

Honda was always entitled to abandon its cross-shareholder agreement with Rover if the company came under the ownership of another carmaker. BMW's chairman, Bernd Pischetsrieder, stressed yesterday that it would like to see the relationship continue.

However, the assessment of George Simpson, Rover's chairman, that Honda will organise an 'orderly withdrawal' seems the best that the Geman car maker can hope for.

'Honda always felt that a key to the success of this partnership was Rover's independence,' the spokesman added. Without that independence, it becomes harder to see how the link can survive.

Honda's relationship with Rover dates back to Christmas Day 1979, when the then Austin Rover chairman, Sir Michael Edwardes, signed an agreement to build the Honda Acclaim under contract at Longbridge in Birmingham.

It subsequently blossomed into a full-blooded partnership resulting in the two companies collaborating on the design, development and manufacture of a full range of cars. The Rover 200, 400, 600 and 800 are all products of this collaboration.

Under a wide-ranging pounds 600m model collaboration agreement signed in 1991, the two companies are working on a replacement for the 200 to be developed jointly and badged separately and a new small Metro-class car.

In addition, Rover continues to build Honda Concertos under licence, while Honda supplies Rover with some 70,000 engines a year.

The relationship moved into another gear in 1989 when the two companies announced a cross-shareholder agreement whereby Honda would take a 20 per cent stake in Rover and Rover a 20 per cent holding in the car manufacturing and engine plant being built by Honda at Swindon in Wiltshire.

The 1991 agreement also entailed the pooling of their massive purchasing power by establishing a joint supplier base.

In addition, Honda agreed to train Rover personnel to 'world best standards' and purchase all body panels for its European-built cars from Rover's pressings plant, also in Swindon.

Until then, joint projects had been agreed only on a model-by-model basis. The decision to combine forces to develop virtually all Rover's volume cars for the rest of this decade appeared to take the relationship on to a new plateau.

(Photograph omitted)