Archive : £49m expansion By BMC

A three-year plan for the expenditure of nearly £50m. which will raise the British Motor Corporation’s production potential to one million vehicles a year is announced today by the chairman of the corporation, Sir Leonard Lord.

In his statement circulated to shareholders with the annual report, Sir Leonard Lord says that the planned output of 4,000 of the B.M.C. ” baby ” cars a week has already become insufficient. They were taking steps immediately to double this output to 8,000 a week, including an. additional range of light commercial vehicles, which it is expected to announce in January.

“Currently we are produoing at the rate of 750,000 vehicles per annum”, says Sir Leonard Lord.

“When extra facilities become progressively available in 18 months to two years, the magical figure of one million units a year will be within our reach. This cannot be done in the existing factories and it will mean new sites, new buildings, and a fresh approach to the problems of production and automation.”

B.M.C.’S Output Running At 750,000 Vehicles A Year
Finance, Industry, and Commerce
By Our City Editor

The British motor industry is clearly in another expansionary phase. Ford, having recently completed a £75m. development programme, now plans another to cost between £45m. and £50m. Vauxhall is having discussions on expansion with the Board of Trade, and Rootes has recently announced its intention of spending £10m.

Now the British Motor Corporation, the largest United Kingdom motor group, states that over the next three years it will spend £49m. on capital account, £10m. more than the total spent by the group in the past five years, while Standard- Triumph is to devote some £6m. this year to increasing its capacity.

New Issue Unlikely
The chairman of B.M.C., Sir Leonard Lord, expects capital expenditure to be £15m. this year, to rise to £20m. in the year after and then to fall back to £14m. Large as this expenditure is, it is thought that raising fresh capital will be unnecessary, since existing resources-the balance- sheet shows liquid funds of almost £27m.- and rising profits over the next two years will together provide sufficient finance. Sir Leonard’s view appears amply justified. Even in 1958-59 when output fell by 4 per cent to 486,000 vehicles, as a result of the introduction of no fewer than eight new models, the ” cash flow ” of the group was some £7,500,000.

And now B.M.C. is better placed; the cost of launching new models is out of the way, the new small cars, whose development cost £10m., have been so well received that the output of them is to be raised from 4,000 to 8,000 a week, and for the first time the group’s vehicles are all B.M.C. models, designed for group manufacture, and so making production economies possible. These facts by themselves show that the prospects are good. but they are further supported by the rapidly rising trend of output.

In the three months August-October B.M.C. turned out 147,000 vehicles- against 486,000 in the whole of 1958-59- and output is now running at an annual rate of 750,000 units,, while within 18 months to two years the group will have the capacity to make one million vehicles a year. Sir Leonard-as the expansion programme implies-is optimistic about demand, both at home and oversea, and says that home demand has never been stronger and at the year-end the group’s home order book was three times as large as a year earlier.

Standard-Triumph’s Progress
The two significant items in the Standard-Triumph report are the large cash holding and the substantial expansion programme which is in train. The group now has some £14m. in cash and plans to spend £6m. this year on the new assembly plant and other developments. It is also intended to extend the pressing and body assembly capacity beyond its present 180,000 units a year. In the past the output of this group has been held back by a shortage of trimmed and painted bodies. But this will cease to be the case by the end of the year as a result of the purchase of the Coventry factory of Fisher and Ludlow,, the acquisition of Mulliners, and the new paint and trim plant at Canley. As the preliminary statement showed, output is expanding faster than was expected at the time when the tractor assets of the group were sold.

In 1958-59 output, including tractors, averaged 650 units a day. Car production alone is now around 600 a day, should be 650 by the end of the year, and when the new facilities are available next spring should climb to 735 a day, so that total output in 1959-60 should not be far below that of the previous year.

Keith Adams

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