Look Out, Jeep! - Land Rover's plans

Automotive Industries, Nov, 2000 by Angus MacKenzie

With Ford behind it and Bob Dover at its helm, Land Rover will soon emerge as a much stronger SUV maker. Its sights are set on the U.S.

Earlier this year, the front page of The Times newspaper featured a large, color photograph showing Britain's elite SAS troops returning from a rescue mission in the troubled African country of Sierra Leone. Dressed in jungle fatigues and wearing their distinctive maroon berets, the soldiers were pictured riding on Land Rover Defenders. "You could not," said a former Ford Motor Co. insider now based at Land Rover, "buy that sort of publicity."

But that's precisely what Ford did, spending $2.8 billion to acquire the famous 4-wheel-drive company from beleaguered BMW Group in July. Ford is believed to have paid six to seven times operating cashflow and 50 percent 1999 turnover for Land Rover -- similar percentages to those the company paid for Volvo early last year. Ford CEO Jac Nasser has described the Volvo deal as "a bargain"; Land Rover looks to be an equally smart buy.

Land Rover not only adds another iconic brand to Ford's bulging product portfolio -- it joins Jaguar, Aston Martin, Volvo and Lincoln as part of former BMW product development chief Wolfgang Reitzle's Premier Automotive Group -- the deal also includes a freshly modernized plant at Solihull, England, a new design and R&D center at nearby Gaydon and two new products ready for launch into the lucrative American SUV market.

Land Rover is a good fit for Ford. In the U.S., it is being positioned as a premium SUV brand above Ford's high-volume trucks, such as Escape and Explorer, and it's distinct from the larger Lincoln Navigator and Blackwood luxury models. Land Rover also gives Ford a stronger presence in the European and Asian SUV sectors, where the company's U.S.-designed vehicles are generally regarded as too large and lacking refinement.

Land Rover is not without its problems, however. Despite record sales, the company is losing money, according to members of Ford's due-diligence team who moved in to scrutinize Land Rover's operations last March. The Solihull plant, which last year produced approximately four times the number of vehicles it did 15 years ago, is still a long ways away from matching the productivity of the best light truck plants in North America and Japan. And quality remains patchy -- although Range Rover owners are among the wealthiest in America, Land Rover Discoveries barely make an average rating in the J.D. Power Initial Quality Study.

What's more, the legacy of Land Rover's partially completed integration with BMW is a complex web of component sharing strategies and supplier agreements, few of which can be easily untangled in the short term. And, like all British-based manufacturers, Land Rover is being badly squeezed by the strength of the pound, particularly against the euro.

When Reitzle telephoned at 11 p.m. on May 26 though, Aston Martin chairman Bob Dover jumped at the chance to take on the challenge. He assumed the position of chairman and chief executive of Land Rover on July 1, the day Ford formally acquired the company. For 55-year-old Dover, a straight-talking mechanical engineer, it was a homecoming of sorts. He'd been Land Rover's director of manufacturing from 1984 to 1987.

"To be honest, I didn't want to leave Aston," says Dover. "But once you're given the opportunity to do something like this, there's no way you can say no. It's such a great brand and such a great challenge."

A New Product Plan

It's simply a matter of optimizing time, money and resources, says Dover, whose plan is to get Land Rover profitable by 2002. "We're fighting on a lot of fronts at the moment," he admits. "The company was running on empty, because when we took over there was essentially no top level management as they had all gone back to BMW"

Land Rover's all new, multi-national senior management team, drawn from all over the Ford world, is concentrating on what Dover calls "the urgent, high leverage kind of stuff." U.K-based suppliers, for example, have been warned to expect changes. At least 75 percent of Land Rover's cost is currently in sterling, and Dover says this will be rapidly reduced. "A lot of our Tier 2 suppliers are already in continental Europe," he says. "And that pattern will increase."

A key priority is to define the product plan for the next generation Discovery and Defender. BMW had intended to build both off a common platform codenamed L50, with the Discovery a unit-body vehicle and the heavy-duty Defender using much the same body architecture and a separate frame underneath to provide the extra load carrying capacity and wheel-base configurations the military and commercial markets demand.

While Dover won't elaborate, it seems Ford has abandoned that approach. "We know what to do," he says. "The question is how to do it in an affordable way that builds the brand."

Dover has big plans for Defender. "It's our product icon, "he says. "We have to be very careful that it is the pinnacle of off-road performance." He wants the next generation Defender to go head to head with Jeep's Wrangler in the North American market. Another priority is winning back fleet contracts with governments and NGOs in the developing world, particularly Africa, where the brand was made legendary in countless safari and adventure movies. Reitzle agrees: "Africa is part of Land Rover's heritage," he says. "We should be there."