‘Mini’ Margins Hit British Motor Earnings
British Motor Corporation’s “mini” range has certainly proved a success so far as sales are concerned, but the competitive pricing has bitten deeply into profit margins.
Mr George Harriman, the B.M.C. chairman, now reveals in his statement that the £5m. plus fall in profits to £11-5m. for the year ended July 31 was based on a turnover of £31 m., almost exactly the same level as in the previous year. Last year 60 per cent of the group’s total output was represented by products of under 1,000 c.c. This compares with 57 per cent for the previous year and only 43 per cent five years ago. Clearly this trend, plus the narrow margins, makes it essential to maintain turnover by expanding output.
In the last trading period the output of minis” reached 182,864 units, of which the home market absorbed 125,877. Exports are; however, increasing steadily and in the last three months of the financial year were averaging 1,308 a week.
B.M.C.’s general export performance is impressive. In Europe sales have doubled in the past four years. In Denmark, for example, sales rose by 107 per cent in the past year and in Switzerland by 78 per cent. Not surprisingly, the B.M.C. chairman is fully confident on the export outlook and itching for Britain to join the Common Market.
“It is a sad reflection on political progress”, Mr Harriman says, “that this is the sixth annual statement in which we have only been able to refer to the Common Market in prospect, although . . . we have not let that hinder our preparations.”
For B.M.C. stockholders the most encouraging feature of the latest statement is that the group is more than holding its own share of the market. In the first six months of the year B.M.C. secured 44.6 per cent of the main manufacturers’ home market car registrations, as against 41.2 per cent for the same period last year. Of light commercial vehicles, B.M.C. held slightly less than last year but none the less nearly 50 per cent of the total Competitive strength in the export race is also evident with the group accounting for 32 per cent of cars shipped, 39 per cent of the light commercials, and 16 per cent of the heavier vehicles. If the motor industry is to be the pace setter for national growth, Mr. Harriman feels B.M.C. can be the pacemaker for the industry.