We analyse the novel dynamics arising in a nonlinear rotor dynamic system by investigating the discontinuity-induced bifurcations corresponding to collisions with the rotor housing (touchdown bearing surface interactions). The simplified Föppl/Jeffcott rotor with clearance and mass unbalance is modelled by a two degree of freedom impact–friction oscillator, as appropriate for a rigid rotor levitated by magnetic bearings. Two types of motion observed in experiments are of interest in this paper: no contact and repeated instantaneous contact. We study how these are affected by damping and stiffness present in the system using analytical and numerical piecewise-smooth dynamical systems methods. By studying the impact map, we show that these types of motion arise at a novel non-smooth Hopf-type bifurcation from a boundary equilibrium bifurcation point for certain parameter values. A local analysis of this bifurcation point allows us a complete understanding of this behaviour in a general setting. The analysis identifies criteria for the existence of such smooth and non-smooth bifurcations, which is an essential step towards achieving reliable and robust controllers that can take compensating action.