By Clifford Webb
British Leyland are selling the Mini at a loss despite the latest price increase and the fact that after 14 years it is still their top export model. Mr John Barber, BLMC’s deputy chairman and managing director said yesterday: “The Mini is a wonderful car though I think insufficient attention was paid during the design stage to the inherent problems of production costs. Even though we have increased the price it is still not a profitable model.”
He added that because of the profitable replacement parts business generated by Mini sales it was “more in the nature of a break-even operation.”
It also improved prospects for the group’s dealers by providing them with a more complete range of models. Since it was launched in 1959 Sir Alec Issigonis’s pioneering design has introduced standards of roadholding and passenger space for small cars which have been copied by motor manufacturers throughout the world. For the first 10 years of its life it was widely known that the Mini’s complicated and expensive engineering prevented it being sold at a profitable price.
Since then, however, a number of design changes to simplify suspension and transmission-together with substantial price increases, was generally thought to have given the Mini a small profit margin. A new Mini is known to be in course of development at Longbridge, the Austin-Morris headquarters. Reliable sources suggest it will appear in a little over two years time.
In an interview published by the trade journal Motor Indtustry yesterday, Mr Barber said: “We inherited an awful lot of overlapping models. We still have too many models, including a whole range of sports cars, but you cannot chop these off overnight. You have to have a rational replacement plan.”
This reference to the present proliferation of Triumph and MG sports cars lends credence to reports that BLMC are in the final stages of developing a completely rationalized range of sports cars. What is not clear, however, is the name they will carry. Both Triumph and MG have strong followings. Experience has shown that any attempt to resort to “badge engineering” (identical cars carrying different name plates) is a failure. Mr Barber also made it clear that the corporation are still a long way from making a decision on whether or not to go ahead with the construction of the much publicized new integrated car plant to be sited outside their traditional manufacturing areas.
He said: “This would be a very exciting project but no final decisions have yet been taken. We are still looking at all possibilities. This is several years hence. We have been looking at the whole country for possible sites.”
Commenting on the threat posed by the current 30 per cent foreign penetration of the British car market, he says it would be wrong to blame labour disputes entirely for BLMC’s failure to supply.
“There has for one thing been a history of under-investment in our constituent companies in the past. This was one of the reasons for the merger. The eight companies merged into British Leyland were individually unable to afford high investment so naturally they fell behind and when the corporation was formed five years ago we had a tremendous backlog of capital expansion to catch up. We have had to spend most of our money modernizing rather than increasing capacity.”