Ian Nicholls, AROnline‘s historian-in-residence, tells the Austin-Morris story, and their part in the downfall of the British motor industry.
In 1960 Terry Beckett was Ford of Great Britain’s senior Product Planner. In the 1980s Sir Terence, as he became commented, ‘We were very frustrated from 1959 onwards with the advent of the Mini. This was in view of the fact that historically, since the mid-1930s and the Ford £100 car, we had pre-eminence in that sector of the market by offering the lowest priced car which we coupled with value for money service. I can remember in one month in 1960, the Mini achieved a 19% market penetration. That was just one model.’
Ford decided to buy a Mini, and strip it down to the spot welds. ‘We then determined how much it would cost us to build it. On our cost analysis, which we thought was ahead of theirs, we really didn’t see how the car could be produced in this way to make a profit.’
According to Beckett, Ford calculated that BMC was losing £30 on every Mini it made. He added: ‘I could see ways in which we could take cost out of the Mini without in any way reducing its sales appeal… BMC could have priced it at £30 more, and not lost any sales at all. You can track the decline of BMC from that single product: it took up a huge amount of resources, it sterilised cashflow and it was a pretty disastrous venture.’
So, did BMC really lose on every Mini?
Just to ensure that Ford of Britain had got its sums right, another Mini was taken to the company’s product planning headquarters at Aveley in Essex and stripped down to the last nut and bolt.
‘…and we arrived at the same results we had achieved in the first place,’ added Beckett. According to legend, Ford informed BMC of their findings and were dismissed out of hand.
One of those involved in the strip down of the Mini was a colleague of Terry Beckett’s for a decade, the assistant controller in the Ford Finance Department, a man called John Barber, who since 1955 had been recruiting graduates who were then trained in cost control. The notion that the Mini was sold at a loss has become accepted as fact by many writers. Whether it was really true or not, is open to debate, but the fallout from the Ford cost analysis was to have a major impact on the British owned motor industry over a decade later.
In this detailed article on the Stokes era at Austin-Morris I hope to answer the following question.
Did the Leyland Motor Corporation save BMC from bankruptcy, as many of its executives maintained, or did they speed up its destruction with fatally flawed new models that failed to sell in the expected quantities?
Special acknowledgement must be made to Chris Cowin for his diligent research into the British Leyland archives at Gaydon which provided a vital piece in a complex jigsaw.