Ian Nicholls follows up on one of 2016’s most popular essays, adding some fascinating overseas price data and insight to his piece on the failure of BMC in mainland Europe.
These good Europeans certainly enjoyed their Austin 1800
The original article on BMC’s attempts to sell its wares to Europe produced some terrific feedback so, in this second article, I have taken the opportunity to reproduce some of the most constructive contributions for posterity. Uwe from Munich kindly contributed some new car prices extracted from a West German car magazine, Hobby Magazin, mostly from 1965. This gives a terrific counterpoint to the UK-centric idea of historic car pricing.
Car prices in West Germany in 1965
- Opel Admiral (1965): 12,200 DM
- Vauxhall Cresta (1965): 11,485 DM
- Mercedes-Benz 200 (1965): 10,800 DM
- Fiat 2300 6-cyl. (1965): 9990 DM
- BMW 1800 (1965): 9985 DM
- Austin 1800 (1965): 9960 DM
- BMW 1600 four-door (1965): 9485 DM
- Glas 1700 (1965): 8850 DM
- Hillman Super Minx (1962): 8800 DM
- Ford 20M TS 6-cyl. (1965): 8740 DM
- Ford 20M 6-cyl. (1965): 7990 DM
- Morris Oxford (1964): 7825 DM
- Audi (1965): 7690 DM
- Simca 1500 (1965): 7450 DM
- Fiat 1500 (1965): 6990 DM
- Ford 17M 1500 (1965): 6990 DM
- VW 1600 TL (1965): 6690 DM
- Morris 1100 (1965): 6490 DM
- Autobianchi Primula (1965): 6290 DM
- Ford 12 M (1965): 5390 DM
- Opel Kadett (1965, new model): 5175 DM
- Simca 1000 (1965): 4775 DM
Unfortunately, there is no West German Mini price listed, but the first thing that strikes me is that an Austin 1800, the basic version of the ADO17, is nearly as expensive as a BMW 1800, regarded as an upscale car. Also a Morris 1100 ADO16 is more expensive than the front-wheel-drive Autobianchi Primula.
AROnline’s long-standing Deputy Editor, Alexander Boucke, commented: ‘Basically the Morris 1100 MkI and Austin 1800S my parents bought new up to 1970 could easily be classed as luxury cars with prices as seen above. The 1800S was about the same price as a Citroen ID19 or a Opel Commodore 2500… A Vanden Plas 1100 (yes, there was one MkI sold as new in my home town!) was deeply into Mercedes-Benz money and would probably have been sitting near the top of the above list.’
Uwe from Munich then made another great contribution. ‘In the foreword of the British cars’ section of German publication Auto-Modelle – Katalog 1972/73, the author reports that, ‘in 1970 Britain exported 91.000 cars to the EEC (market share: 1,7 per cent) while EEC countries exported 126.000 cars to Britain (market share: 11,6 per cent).
‘In this publication, British cars are obviously listed with new “EEC prices”. Absolutely competitive to models of similar (engine) sizes from France and Germany and real bargains compared to a Volvo 144.’
British car prices in West Germany (1972-73)
- Peugeot 504 (11,450 DM)
- Triumph 2000 Mk II (12,750 DM)
- Mercedes-Benz 200 (13,930 DM)
- Rover 2000 TC (13,990 DM)
- BMW 520 (14,000 DM)
- Saab 99 four-door-saloon (14,110 DM)
- Citroen DS 20 (14,450 DM)
- Volvo 144 E four-door-saloon (16,600 DM)
Rover P6 was well regarded in Europe, and especially in West Germany
Uwe commented: ‘The Rover 2000 was an excellent car, no doubt. It was highly praised in the German motor press for its clever framework construction and the excellent rear axle. Only criticism: a rather small boot and limited room for back seat passengers. But for potential German buyers driving dozens of miles to the next BL dealer to get it serviced or fixed properly was not an attractive option. So they preferred the solid but rather conservative Mercedes 200, even though they had to wait several months for delivery.’
Alexander Boucke added: ‘At that time my father bought another new ADO16 – a MkIII 1300. The (now EEC) price was very competitive, in fact it cost him less than the Morris 1100 MkI, eight years before. But sadly, at this point, the quality was at an all time low, whilst it was quite good on the Morris.
‘When living close to a good dealership, spares supply was actually very good. They needed to stock large amounts of service items back in these days. And everything else came indeed quickly from the central spares depot. In our town we had up to four dealers in the late 1960s into the ’70s, but that was rather luxurious by German standards.’
One thing that annoys me in the ongoing debate on how the British-owned motor industry met its demise, is how many people continue to blame lack of investment without stopping to think why this was so. While I do not dispute that the British-owned motor industry suffered from a chronic lack of investment, it was by and large not a deliberate policy, stemming from a short-term pursuit of avarice.
Advocates of this argument, often with no experience of running a business, seem to think that capital for investment was growing on trees, available out of a tap. This was simply not true, it had to be generated internally and borrowed from banks, who in turn wanted to know how the capital would be spent. That meant a sound business plan based on sales projections.
As related in Part 1, back in 1959, BMC announced its £49 million investment programme to expand production to one million vehicles a year, a target it never reached, the nearest being around 890,000 in the mid-Sixties. With its market reach restricted by Common Market trade tariffs BMC was never going to achieve the 1 million production mark, and the elusive profits needed for renewal were simply not obtainable. In July 1966, BMC held 42 per cent of the UK market – was it realistic to expect more?
Comparisons with the likes of Fiat, Renault and Volkswagen are invidious, for they had access to the larger single market of the EEC, were able to sell more cars, borrow more money and invest more capital. Until 1973, most continental motorists were simply not prepared to pay the higher prices demanded for British-made cars, no matter how innovative, stylish and exciting they were, and the notion that more investment, when it could be obtained, would have solved this problem is nonsense.
How would the British motor industry have fared if Britain had gained early access to the Common Market? We can produce some projections by examining the impressive growth of the major European manufacturers in the 1960s.
First we have some actual production figures
The effects of being locked out of the EEC car market could be seen by 1970. In a decade French car production had increased by 109 per cent, West Germany by 94 per cent and Italy by 189 per cent. In contrast, Britain – dependent on a stagnant domestic market – saw only a 21 per cent increase in production.
What would British production look like had the UK been a member of the Common Market in 1960? If we take the lowest percentage growth, that of West Germany, and apply it to the 1960 UK production total of 1,354,000 we come up with a production projection for 1970 of 2,626,760.
That is probably an unrealistic projection. The UK’s application to join the Common Market was rejected in January 1963. Had Britain been successful, it probably would have been 1965 at the earliest before the UK motor manufacturers could have gained access to the single market.
Britain’s production shrinks
So what were the actual percentage increases in production between 1965 and 1970 by the major European car producing nations? Well, France increased its production by 57.89 per cent, Italy by 64 per cent and West Germany by 77 per cent. In contrast poor old Britain, locked out of the Common Market, saw its car production actually shrink by 4.7 per cent.
If we take the lowest percentage increase, that of France, and apply it to UK production in 1965, we get a projection of 2,718,865 cars for 1970. All this is, of course, conjecture and does not take into account competition between manufacturers, but does indicate how much the British motor industry was falling behind in the dash for growth. Greater volume meant that development costs could be amortised more easily, marketing blunders could be less damaging and, of course, more investment in new plant and machinery.
So how does all this affect BMC and how well would it have had to perform to have avoided being swallowed up by Leyland?
Well, if we take the 1964/65 production figure of 727,592 cars, which does not include commercial vehicles and increase it by 57.89 per cent, to match France’s increase in production from 1965 to 1970, we come up with a projection of BMC producing 1,148,795 cars by 1970.
This projection is not far off BMC’s plans, announced at the time of the merger with Jaguar in July 1966, to increase production to 1.3 million vehicles per year by 1970. Sir George Harriman, the Chairman of BMC, was an advocate of Britain joining the Common Market. BMC also planned to invest £10 million per year in its plants.
Even modest increases in demand might have enabled BMC to have survived. It is not unreasonable to surmise that the company could have sold 300,000 each per annum of the Mini and ADO16 1100/1300 series. They were arguably the most advanced family cars in the world, and only trade tariffs, which made them ludicrously expensive, prevented them from selling more in the Common Market. With the ADO16 achieving 13 per cent to 14 per cent of British car sales, it was probably unrealistic to expect the domestic market to absorb any more.
In 1965, the target of selling 600,000 Mini/ADO16s would have required another 149,973 units, in 1970 even less at 121,781 cars. BMC could possibly have survived on an output of around 880,000 cars per annum. However, the reality is that Leonard Lord’s gamble with the Mini and later with the ADO16 failed.
Would BMC have been in better shape had it continued the Farina formula,
perfectly exemplified in this A40 saloon?
It was a gamble that should, with all things being equal, have catapulted BMC to the forefront of the European motor manufacturers league, except things were not equal and BMC failed to generate the profits so necessary to keep pace with its rivals, and investment inevitably suffered. There will always be those who argue that the high technology route was the wrong one to take, and if BMC had served up a diet of stylish bodies based on A35 and Oxford/Cambridge saloon mechanicals, they might have survived, but again that is conjecture.
By the time of the BMC-Leyland merger occurred, some plants such as Cowley were suffering woefully from under-investment. Cowley in 1968 was said to be still using belt-driven machine tools. When British Leyland was formed, Sir Donald Stokes and his team seemed to switch focus from the larger European market to the domestic scene. The Morris Marina was aimed at the lucrative UK fleet market. The resources for this came from Leyland’s coffers, and whether it was justified is open for debate, for it appears to have taken sales away from the ADO16 range, and did not appreciably increase British Leyland’s total car production.
In defence of the Morris Marina, when the decision to develop the car was taken, Charles De Gaulle was still President of France, and there seemed little prospect of Britain joining the Common Market. The Stokes era at British Leyland demonstrated how investment for investment’s sake could go wrong. Cowley was gutted to make way for the Marina, but much of the new technology installed to produce the car was already regarded as obsolete by the major continental manufacturers.
Moreover, in choosing the ADO67 Allegro to replace the long-serving ADO16 series, Stokes and his team demonstrated how it was possible to squander precious funds for no tangible gain. It has been pointed out by one contributor to AROnline that if British Leyland had kept the ADO16 in production, it probably would have sold just as well as the Allegro, albeit in sales decline over its glory years.
The Stokes-era management was slated for giving too much of British Leyland’s profits away in dividends, but probably it would have made little difference. BLMC had fallen way behind its rivals in the dash for volume and they now had greater resources to develop their models thoroughly before inflicting them on the buying public.
Renault 5: considerably more successful than the Mini
A good example of this is the Renault 5. It might not have been the most space-effeicient small car on the market, but its manufacturer had benefited from the surge in European car sales in the late 1960s and it exploited the demand for compact front-wheel-drive cars that British Leyland could not satisfy at the right price. With an already established large customer base, Renault were able to sell in 13 years as many R5s as the Issigonis Mini sold in 41 years!
That is not to say the Mini was inferior, but that until 1973 it was not available in the Common Market at a price consumers were willing to pay, and by 1973 it was no longer at the cutting edge of small car design. No doubt British Leyland would have liked to combat the new generation of European Supermini’s with the Issigonis 9X or the Roy Haynes-styled Mini Clubman hatchback, but it did not have the resources to put them into production, and the reason for this was because the company could not sell enough cars to earn the required profits. The Renault 5 destroyed the notion that Mini cars meant mini profits.
Many on the Left believed that nationalisation was the only solution to the problems of the British motor industry. When it came to pass in 1975 they were elated. The theory was that the state would be able to invest the capital needed to turn British Leyland into a world player with the added benefit that the employees would be more prepared to remain at their work stations if their company was owned by the state, which was perceived to be nicer than working for powerful private forces. The Ryder Report demanded that, for every £1m provided by the National Enterprise Board, British Leyland’s car manufacturing had to find a further £1.5m out of profits.
We now know that British Leyland ultimately absorbed £2.6 billion of taxpayers’ money, which means that under the Ryder formula, it should have earned at least £3.9 billion in profits.
That was a forlorn hope…