Backseat Driver

Is he back or isn’t he? Since Kevin Morley’s name was reassociated with the Rover Car company last week, his denials of involvement have not been altogether convincing. The former marketing chief of Rover, a colourful character by any reckoning, has attempted to distance himself from any direct responsibility.

“I am on the board of Alchemy as a non-executive director,” he says. “I will take a strategic role in the head office, but I will have nothing to do with the day-to-day running of the operation.”

However, those who have worked with Morley question whether he is being entirely candid when he says he is acting only as an “adviser”.

A senior executive who has worked with Morley says: “It is no surprise Morley is distancing himself from the deal. If it becomes obvious that he is closely involved, Morley knows he’ll have the press breathing down his neck because of his past associations with Rover.

“It is also possible that it will be harder to recruit a management team if they feel they will have Morley standing over them,” he adds.

Cardiff Business School professor of motor industry economics Garel Rhys is also sceptical, and believes that the company will have no option but to choose: “people who are associated with success in the car industry.”

Whoever is put in charge (Chris Woodwark, a former chief executive of Rolls-Royce, is thought to be in contention) he or she will face a mammoth task.

Alchemy’s intentions

After finally admitting defeat on the loss-making Rover, BMW is carving up the company. Alchemy has been paid £2bn to take on Rover and MG as the MG Car Company, and Land Rover has been sold to Ford for £2bn.

The deal has been greeted with suspicion, and fuelled a debate over Alchemy’s intentions. More discussion is certain to follow, once a management line-up of the new company is announced this week.

As a man whose name was rarely out of the marketing and advertising press, Morley brought a rare focus to the ad industry by creating a universally hated bête noire. Much gossiped about, he is most remembered for the occasion when he was involved in a punch-up during a pitch for Iceland.

Even if Morley is not named on the new management board, those who know him believe he is likely to interfere with almost every decision taken, particularly on the marketing of the new brand. As Rover’s highly regarded marketing director, Morley was rewarded for his services by being handed the £100m marketing budget when he left the company to set up Kevin Morley Marketing (KMM) in 1992.

Morley’s interests

Morley sold KMM in 1995, and he has since kept himself busy. As well as part-owning luxury hotel, Treasure Beach, in Barbados, he owns an undisclosed stake in three marketing groups: PR agency Leedex, marketing exhibition company TGA Chapmans and branding company M&K.

Morley bought these from the then Birkdale group for £1.6m, where he was formerly chairman. It is unlikely Morley will drop these interests to work solely for MG Car Company.

Although details of Alchemy’s plans have yet to be made public, the company has said the range will be rebranded to trade on the sports car heritage of the MG marque.

The feedback from former Rover insiders is blunt: relaunching as MG could be a good idea, but the Rover and MG marques are very different. The MG is an aluminium-bodied sports car while Rovers are considered conventional and “sleepy”. If Alchemy goes down this route, the cars will need to be completely overhauled.

“MG does not mean a lot to most people. The design and prices are crucial to the new company’s success, as is its marketing,” says Rhys. He adds that Alchemy’s plans to phase out the Rover brand over the next two years will create problems.

“Unless they can repair the Rover brand, it will be difficult to find dealerships willing to sell the car. The public will also be sceptical about buying a car that has a low resale value.

“Alchemy already says it intends to cut the number of cars Longbridge produces from 300,000 to 80,000. It will have limited funds to redesign and produce this series of new models. It will face fierce competition in the meantime: all the global car companies already churn out sports cars in various guises.”

An advertising source with particular knowledge of the car industry says: “It will take time to put out a new model. To survive until then, the best option is to promote Rover cars as cheap and reliable, and to offer good customer service.”

Dealer reluctance

Alchemy will also face difficulties in setting up a dealer network to sell the new MG cars. Over the past 18 months Rover dealers have seen traffic through their showrooms dramatically decrease. As their contracts are with BMW, most will probably see the sell-off as an opportunity to get out of their existing contract and negotiate new ones with other car manufacturers. In the meantime dealers have threatened legal action against BMW.

MG does have a fairly strong brand heritage, but if the new car company uses the marque to help it rise from the ashes of Rover, its future is less than certain. The company would be reliant on consumers who are not only prepared to buy a car from a company with an unproven track record in car manufacturing, but also from one that has committed itself to selling the business in five years’ time. Not exactly encouraging.

THE MARKETING STORY

The fall-out from BMW’s decision to sell Rover and Land Rover has yet to register.

Rover UK marketing director John Sanders is not returning calls, but whether he is kept on or decides to leave of his own accord is a question which must be answered in the next few weeks.

Rover’s £33.5m advertising budget is likely to be slashed by Alchemy. The work produced over the past four months for Rover by M&C Saatchi has concentrated on building the Rover brand under the strapline “Extraordinary Drive”. This is now effectively void.

The new MG Car Company will need promotion, but future advertising will have to be handled with care. M&C says it has not yet received official word from Alchemy, but one Sunday newspaper reports that Bill Muirhead, a partner of M&C, has been given the nod to continue work.

Although BMW is reviewing the business, Zenith Media has the combined media spend of £62m for the group, which includes Land Rover and Rover. It is likely the Land Rover media business will be handed to Ford’s buying agency MindShare, once the deal with Ford goes through at the end of the third quarter.

WCRS, which has recently lost Sega and is experiencing a review of Orange, will struggle to hold on to the creative work for Land Rover once it is in Ford’s hands. Ford has a policy of not allowing its roster of agencies to handle any other car business. WCRS also handles BMW.

With the conspicuous exception of Volvo, which is at AMV.BBDO, most Ford business in the UK is handled by J Walter Thompson and Young & Rubicam. Either agency might anticipate being awarded the Land Rover business.