Opinion : May 1973 – peak British Leyland?

Chris Cowin looks back at May 1973, the moment when Lord Stokes and the British Leyland management celebrated and reflected upon five years of the merger.

In May 1973, when British Leyland celebrated its fifth birthday with a glittering party at London’s Savoy Hotel, there were plenty of reasons to be optimistic about the future of the Corporation. It had a troubled start, but the future appeared bright – and a dazzling array of new products was adding to the excitement…

Let’s deal with those first: The Morris Marina (launched in 1971) was seen in 1973 as a roaring success – at least as a business venture. For 1973, it was second only to the Ford Cortina in the UK Top Ten sales chart, thus British Leyland’s best-seller. Work on a much improved successor for 1975 was well underway.

The Austin Allegro was on the cusp of being launched when that party at the Savoy was held, and great things were expected of it – as a successor to the BMC 1100/1300, it was forecast to conquer 10% of the domestic market while expanding British Leyland’s sales on the continent beyond the base built by the Mini – replicating that car’s pan-European success in the segment above.

The new models: looking good

Work through the numbers, in the context of booming demand, and that results in a huge number of Allegros and huge boost to British Leyland’s output.

Away from the ‘volume cars’, there was plenty to talk about also. The MGB GT V8 was a newcomer that summer and, with fuel prices still cheap, looked a winner.

At Rover the new 2200 models freshened the admired 2000 saloon with more power and better trim, while a huge new factory was under construction at Solihull for the forthcoming SD1 range which was intended to lift Rover output onto a whole new plane.

At Triumph June 1973 would see the launch of the exciting Triumph Dolomite Sprint while 1974 would see the dedicated TR7 plant at Speke (No.2) start building the new corporate sports car, which was expected to attain new heights in terms of production volumes for a British sporting model.

Meanwhile, at Jaguar the substantially revised Series 2 range was being readied for an autumn launch and would be displayed (including the very beautiful XJC) at the Frankfurt Motor Show in September.

Expansion plans: looking good

Agreement had (at last) been reached with the British Government to allow expansion of Jaguar’s Browns Lane plant at a cost of £60m and, with waiting lists for Jaguars stretching to years, there was little doubt such a bigger factory could be filled.

Not only that, but in the southern hemisphere Leyland Australia was launching the big new Leyland P76 sedan, at the same time as Allegro was being launched in the UK – illustrating the multinational reach of the Corporation.

Again, optimistic volume forecasts saw Leyland P76 lifting Leyland Australia out of the doldrums – it was essentially hoping to ‘build itself out of trouble’. The P76 was also expected to appear in South Africa, another important overseas manufacturing base.

A song for Europe

Spain was also a significant overseas manufacturing base and, in that busy month of May 1973, British Leyland had established (at considerable cost) full control of what became Leyland AUTHI, a move mirroring what happened in Italy a year before to create Leyland Innocenti. This gave British Leyland three wholly-owned car factories in continental Europe (the third being Seneffe in Belgium) with capacity to build 300,000 cars annually.

Moreover, those cars did not need to be clones of the UK range, for while the Spanish were already building the Austin Victoria (an ADO16-based saloon also seen in South Africa as the Austin Apache) – the Italians were gearing up for the introduction of the Innocenti 90/120 in 1974 – neither of the above would ever feature in the UK range…

Against this backdrop of a product-led renewal, Donald Stokes made some headline-grabbing announcements in his speech at that fifth birthday party.

Investment plans: revealed at the Savoy

A capital investment programme of £500 million would see large-scale renewal of the UK manufacturing infrastructure – to include a brand new Austin-Morris factory with capacity for 250,000 cars annually to be built in a development area (Teeside and South Wales were tipped as candidates).

In effect, Triumph would soon be building a new high-volume car in a (newish) plant, Rover would be soon building a new model in a brand new plant, Jaguar was in line for a new car factory and new models, and so was Austin-Morris with that proposed investment. In addition, a new £15 million engine plant was planned for Longbridge to build a new family of aluminium engines.

The Corporation expected to sell 500,000 cars in continental Europe in 1975, doubling the 250,000 of 1971 – with the new Austin Allegro clearly central to meeting that forecast. At considerable expense, British Leyland had bought out and/or rationalised the patchwork of independent distributors it inherited in many export markets, seen as key to unlocking greater sales on the continent of Europe.

The struggles are behind BLMC…

The struggle to introduce Measured Day Working had been won at both Cowley and Longbridge, eliminating in those plants the Piece Work system which was at the root of so many grievances. It was hoped this would usher in a new era of industrial harmony and reduce the incidence of strikes which had prevented British Leyland from meeting demand during 1972. Most disastrously, Jaguar – which had the potential to generate a lot of profit – had been on strike for ten consecutive weeks in 1972, resulting in Jaguar building fewer cars than the previous year despite red-hot demand.

The UK market was still booming, something that had seen a surge in imports as UK manufacturers struggled to meet demand, but many saw the sudden popularity of cars like Datsun as a temporary phenomenon, which would fade away once British Leyland got its act together and new products (Allegro notably) answered the challenge.

Despite losing market share in the UK since 1971 (something that could be blamed on supply constraints) British Leyland was selling everything it could build in early 1973, and selling more cars in the UK than ever before, thanks to the growth of the market.

So even though imported cars had taken 23.5% of 1972 registrations (comparable to West Germany where imports already accounted for 23% of sales in 1969) – this was less of a concern than it would later become.

The downhill slide begins here…

Why? Well, in a nutshell, things started to go wrong almost from the moment Donald Stokes sat down after making his speech at the Savoy that balmy May evening.

The new Allegro on which they had “bet the farm” received a luke-warm welcome when unveiled in late May, which would have set alarm bells ringing, and in June a strike halted production at Longbridge for three weeks.

Reports of design flaws and a safety scare (rear hub bearings) would follow. In Europe’s largest car market of West Germany, the importer refused to take them until quality improved. Production of the Innocenti Regent version in Italy was halted after 18 months, and Seneffe in Belgium found itself building far fewer than once planned, as did Longbridge. The customers weren’t there.

In May 1973 the British Government finally accepted the UK economy was ‘overheating’ with the sucking-in of imports (especially car imports) being a symptom of that, as was the starving of important export markets of product – a sin British Leyland was certainly guilty of.

Chancellor Anthony Barber (forever famous as architect of that Barber boom) began to raise interest rates which had reached 11.5% by July 1973. The property market weakened and new car sales began to flag – although 1973 as a whole with 1,661,000 units retailed was still marginally ahead of 1972.

But boom definitely turned to bust in the autumn following the sudden jump in oil prices sparked by the war in the Middle East. A raft of grim economic statistics lie behind the rapid shift at British Leyland from expansion to crisis management – with 1974 being essentially a year where the Corporation battled (unsuccessfully) to avoid becoming a ‘ward of the state’.

From bad to worse the following year

Austin Allegro 1973

UK car sales slumped dramatically (30%) to 1,268,000 units for 1974. But importers, far from fading away as the German bubble cars had in the early 1960s, held on to their share of a shrunken market. British Leyland’s continental sales failed to expand with the 1975 figure for BLMC being just 150,000, – mostly Minis still.

Optimistic forecasts had been defeated by a European recession and a lack of appealing products.

(The shortfall between the 500,000 forecast, and that outcome, would have been enough to fill Longbridge for the best part of a year – though the plan was to build many of those additional cars in the continental plants).

Expensive petrol saw a slump in sales of bigger, more profitable cars especially and a reversion to the low margin Mini. With European export markets also in recession, it would have been hard for the Allegro (even if better conceived) to make many inroads against the established players in Europe, which were discounting heavily, and Allegro output would always disappoint.

Mini Clubman lineup

Energy shortages provoked by the Miners’ dispute led to the Three-Day Week in early 1974 and British Leyland found itself generating huge quantities of red ink. Inflation soared (towards a peak of 27% in mid-1975) causing huge problems for British Leyland which traditionally only adjusted car prices twice yearly, but was faced with suppliers raising prices much more frequently.

Against that inflationary backdrop, pay-bargaining became even more of an energy-sapping and dispute-ridden nightmare.

From a first half profit of £22.8 million a year before, the first half of the 1973/74 financial year saw a loss of £16.6 million. British Leyland’s car production in the UK slumped from 916,000 in 1972 to 738,000 in 1974, despite adding the new Allegro at the heart of the range. And 1975 was even worse with just 605,000 cars built.

Most of the plans announced with great fanfare in early 1973 would be pruned back or cancelled, as would others behind the scenes such as the Triumph SD2 intended to replace the Triumph Dolomite, and the ADO74 supermini. Plans for a new Austin-Morris plant, new engine plant and the expansion of Browns Lane were also all shelved.

There was a ‘fire sale’ of overseas assets with hasty retreats from manufacturing in Australia and Spain, and the sale of Innocenti in Italy.

In many ways, the company had become a victim of circumstances beyond its control.

Much more detail on the troubled times of British Leyland in Chris’s three books available on Amazon: British Leyland: Chronicle of a car crash, British Leyland: Betting on a Miracle and Export Drive: BMC & British Leyland Cars in Europe and the World.

ADO74

Further reading:

Chris Cowin

36 Comments

  1. They weren’t to know the enormous political and economic upheavals just around the corner but this piece shows an enormous amount of ill-founded optimism from Lord Stokes and team at that time. Interesting to compare the tone of this with the George Turnbull interview of 1971 also on here which paints a possibly more realistic picture of the product planning and manufacturing situation just two years earlier. https://www.aronline.co.uk/cars/morris/marina/archive-1000-days-hard/

  2. Very interesting article and the impact of the oil crisis and broader economic conditions cannot be underestimated nor can the political turmoil of the time.

    However, none of this stops the facts that the Marina’s biggest crime was being a stopgap which was in production too long, the Allegro lacked a hatchback and the company was still not coherent in its future model and branding strategies

    If at this time they had switched to a rebodying the best policy then who knows? What if the Marina was based on the Dolomite? What if the Allegro was a rebodies 1100/1300 or looked more like a mini Princess? What if the ability that got the MGF made with spares lying round and the change found down the back of the sofa was there then?

    To me the biggest question is not how did we lose so much of our car industry but how has so much remained?

    • I’ve often thought the following might have worked:

      Merge Austin and Morris into Austin-Morris which would be BL’s Citroen while Triumph would become BL’s Peugeot. Rover would become BL’s Volvo/Mercedes, while Jaguar would become BL’s Maserati/Porsche. MG would have sole responsibility for sports cars.

      Rebody the 1100 and the Maxi with Princess or SD1 or Aquila type styling (the Pininfarina Citroenesque concepts were nice but would never have sold). Give the 1100 a proper hatchback and rename it the Metro in its Austin Morris guise and the Toledo in its Triumph guise.

      Build the original Marina on the Dolomite platform.

      Release the Innocenti Mini in the UK.

      Then don’t build the actual Princess as a fwd car but put the money into a proper rwd platform that could accommodate a replacement for the Marina (marketed as an Austin-Morris hatchback, eight years before the Sierra), the Dolomite (badged as a Triumph but in its new guise as one of BL’s mass market brands) plus a smaller Rover saloon.

      Share a larger rwd platform that would accommodate an SD1 analogue plus all future Jaguar products.

      The Harris Mann TR7 would be badged as an MG from the start.

      Then hopefully the revenue would be realised to develop analogues of the M cars and release them in the late 70s rather than the early 80s, with better styling

  3. Can’t help thinking that if you weren’t around in the 1970’s then strap in because they’re coming back at a rapid rate of knots.

  4. I was in my teens and 20’s in the seventies and have to say they were some of the happiest days of my life… I was lucky to be in full employment and got to see the world.

  5. Amazing how quickly things went from optimism and boom to massive bust in 1973/4. That happened again in 1989/90 – Torynomics to blame again. At least this time we have been in a downward spiral for some time driven by Brexit and the Pandemic so slightly less of a surprise.

    • I think the situation now is similar to that in 1979/80 as an energy crisis, soaring inflation and a looming recession have been joined by a new Cold War. I can remember in 1980 when the Russians invaded a neighbouring country and fears of a nuclear war reappeared. Also as in 1980, we have a Tory government with a large majorit.

    • Absolute drivel. Thankfully, the Unions were put in their place in the 1980’s as have 99% of those who blame everything on Brexit.

  6. I would say peak British Leyland was reached in the summer of 1971, when the company had 40% of the new car market and could sell everything it made. Thereafter, it was a steady decline as new models like the Allegro failed to catch the public’s imagination, Ford began to dominate the company car market, and private buyers started to look to better imported cars. Bear in mind the number of imported cars doubled in the early seventies as the Japanese invasion gathered pace, and joining the EU meant French, German and Italian cars became cheaper. By 1975 one in three new cars was imported and by 1979 this became over half.

    • There are many ways of looking at these things, – but in terms of car production in Britain – early 1973 was essentially the peak for British Leyland. They built more cars in 1972 (916,000) than 1971 (886,000) – and in early 1973 it looked as if that upward trend would continue (they had just started building a new model expected to single-handedly take 10% of the market after all).
      Market share was down but the impact of that on volume was more than cancelled out by the (over-rapid) expansion of the UK car market – from just 1.07 million in 1970 to 1.28m in ’71 then 1.63m in ’72 & 1.66m in ’73.
      Sorry about all the numbers but that’s a massive market expansion and 32% market share in 1973 resulted in more cars sold in the UK than 40% market share in 1971.
      A major reason market share was down in ’72 & ’73 was because they hadn’t been able to build enough cars – 1972 was a terrible year for strikes and with demand mushrooming to that degree there were waiting lists for everything – even old stagers like the 1800.
      Even with total industrial harmony both internally and at suppliers (who caused many of the stoppages) it would have been nigh impossible for production to have been increased to the required degree.

      The loss of market share was seen (with some justification) as down to supply shortages rather than a lack of demand – they could sell everything they built and could have sold a lot more (especially in export markets which were fatally starved of product in this period as BLMC prioritized the UK market).
      Those supply problems were of course a major reason importers were able to make such inroads, because consumers were given a reason to look elsewhere ….

      Of course in late 1973 (the oil crisis hit in October) car sales were hit and so was British Leyland’s production – so for the year as a whole while UK car sales were still marginally ahead of 1972, British Leyland car production was down on ’72 at 875,000.
      But in the early part of the year all still looked fair and trending upward – If you were looking at the “rolling 12 month” figure for British Leyland’s UK car production I’d wager the 12 months June ’72 to May ’73 would be close to the all-time peak….

      All of that looks largely at car sales in the UK which (there is a tendency to forget) was only half the business and (as mentioned) the export trade was a victim of the “Barber boom” which is what that over rapid expansion of UK car demand was a symptom of ….

  7. I must say that I’ve never seen a better summary of the dramatic change in fortunes that the company (and the UK) faced. I was aware of some of the facts, but not all of them and had never married the ones I was aware of together, properly. What a dreadful shame for so much hope to have dissipated so quickly.

    I’ve been a reader of AROnline for many years (decades) – thank you for a really excellent site to both writers and commenters

  8. Fifty years after peak BL the largest UK-owned car manufacturer is now separate chassis and ash frame enthusiast Morgan. Look around you, that’s fifty years of decline and fall of most UK-owned manufacturing industry, and if we’re honest the rot had set in even by the Wilson ‘white heat of technology’ phase ten years before that. Yet while the rest of the European nations have had to deal with many of the same economic difficulties, energy crises, competition from the far east, the Covid pandemic etc over the same period it seems the UK has fared worse than any of them.
    Fifty years of lack of strategic thinking, of short term profiteering, asset stripping and rampant opportunism has brought us here. And our response to this? Blame everyone else and evict ourselves from our largest and closest market. Brilliant….

    • … The UK car manufacturing sector has had a rough few years, but don’t imagine our European neighbours are faring enormously better.
      In France which not long ago produced 3.5 million cars annually, production in 2021 was only marginally greater than the UK at around 1 million units.
      The three big French brands might be in French ownership and the French are supposedly very patriotic car-buyers.
      But that hasn’t prevented those companies out-sourcing production of almost every smaller/cheaper car to places like Slovenia, Turkey and Spain.
      Every Renault Twingo, Clio, Megane, Captur. Every Peugeot 108, 208, 2008. Every Citroen C1, C3, C4 counts as an import in France. (In that context the decision of Jaguar Land Rover to build a couple of models outside the UK looks like a mere toe in the water).
      Indeed, If there really was an “EU plot” to destroy manufacturing (as some will tell you) then France appears to have been the biggest victim.
      With so many popular cars imported, and inevitably fewer exported, France has a worse trade deficit in cars than the UK …

      The UK industry may be foreign owned but that doesn’t stop it delivering nearly all the economic benefits a British owned industry did – trade impact being one but also tax revenues, employment, work for UK suppliers, R&D spend ….
      One shouldn’t “write it off”, and we didn’t write off (foreign owned) Ford UK, Vauxhall and Chrysler UK as somehow worthless in 1972.

      • @ Chris Cowin, Fiat sources the majority of its cars from Poland and Serbia( ironically where dreadful Fiat based cars were produced in the communist era) and that most German of companies, Mercedes, produces the A class in Hungary and the C class in South Africa. However, this is nothing new as Ford and General Motors internationalised the production of their cars in the seventies to reduce costs and someone thinking their Ford Fiesta was made in Dagenham would look under the bonnet and find their car was made in Spain.

    • Over the last 50 years, UK GDP has out stripped every major European economy with the exception of Germany. We are the 5th biggest economy in the World and strengthening our position. Britain’s influence in the world is shredded post Brexit (see Ukraine) and was fantastic pre Brexit (see Iraq) or is that the wrong way round. We make cars that people want to buy and workers want to make. Thank god we have learnt.

  9. But the sun is out, and we’ve got a long weekend for the Jubilee coming up. And to make us feel great again the criminal clown in Downing Street is distracting us by saying we can go back to using imperial weights and measures. That will really help with labour shortages, food banks and the cost of living crisis. Honestly, you could not make this sh!t up!

    • What a pity we don’t have you in charge, Rusty . Everything would be just lovely!! Do let us know what your prescription is for solving the world’s current problems

  10. Well Christopher I wish I knew! In the meantime your guess is as good as mine.

  11. British Leyland dropped the ball with the Allegro. This was a weird looking car with quirks like the Quartic steering wheel and an underwhelming driving experience that saw buyers look elsewhere. Also quality began to go down the drain, strikes held up production and even cars that could have done very well like the SD1 were bedevilled with reliability issues and poor build quality. It’s np wonder British Leyland’s market share more than halved in the seventies and never recovered, people won’t buy poor quality products.

    • Also – BL were under increasing pressure from Ford, (The Cortina III and IV) Vauxhall (with the Cav MK1 and Chevette) and all the Japanese imports that were gaining in popularity. All of which provided more modern designs, higher equipment levels and lower prices.

  12. Of course if the market hadn’t stagnated in the sixties. The the barber boom level of sales would have been where the market would naturally have been. Having gradually got there, and enabling manufacture red to better plan for nessasary production increases.

    • People were becoming more affluent at the start of the seventies, car ownership levels were rapidly rising, and the company car market was taking off, so a surge in new car sales was inevitable. Barber and Heath rightly saw a boom in new car sales as good for the economy and good for companies like British Leyland. Then joining the EEC was another bonus, as it meant more exports to booming markets in western Europe.

      • Well that’s a quite controversial issue of economic policy Glenn which one can debate.
        I disagree (as may be obvious) and many economists – now the dust has long settled – would say the 1970-74 Heath government gravely misjudged the “dash for growth” of 1972 & 1973.
        The reason successive chancellors had been forced to deflate the economy and suppress demand (including new car demand) during the 1960s was of course the “balance of payments constraint” with anything more than feeble economic growth leading to balance of payments deficits and the attendant “sterling crises”.
        The Heath government (supported by various economic advisors) believed the shift to floating exchange rates in 1972 would free them from that constraint through a “natural correction” effect.
        But that proved terribly misguided.
        Terrible trade deficits ensued and when Barber raised interest rated in May 1973 it was essentially a U-turn and admission there had been too much economic stimulus.
        They had failed to take account of supply side issues and British Leyland is a very good case study of that.
        In January 1972 Donald Stokes warned that if the new car market for the year was 1.45 million cars (as then being forecast) British Leyland would struggle even with production miraculously free from disruption, to supply that demand without exports suffering.
        In the event the March ’72 budget of Barber stimulated demand further by reducing purchase tax – while a wave of industrial trouble prevented British Leyland from building many tens of thousands of vehicles.
        Unsurprisingly the company lost market share in the UK as they simply didn’t have the cars.
        Such over-rapid expansion also had the crazy knock-on effect of forcing British Leyland to cut exports at exactly the time they should have been increasing them to take advantage of imminent EEC entry. This was the time John Barber said they could have sold another 150,000 Minis on the continent, if they had them to sell …
        At the time BLMC was criticized for starving export markets to prioritize the UK – but domestic sales were more profitable (so in the short term they were simply being rational) and there was also a desire to defend market share – UK consumers were increasingly unwilling to wait months for a car and turning to imports.
        At the national level, the high level of domestic demand of 1972 & 1973 didn’t just lead to trade deficits, it also fuelled inflation which took off during that period and would prove a painful struggle to tame.
        One could say that – in a sense – British Leyland were the victim of an economic experiment in that period. They had of course argued for a stronger home market for years but the sudden switch from famine to feast stored up many problems for the future …. In my opinion anyway.

    • Agreed. But it did stagnate. There was no growth at all in UK annual registrations between 1964 and 1970 which were stuck at around 1 million cars. At the end of the day – that’s the root (or certainly one very big root) of all the troubles of BMC – and of British Leyland who associated the legacy of under-investment, dated factories and industrial militancy such a stagnant market produced.

  13. @Rusty Brown-Austin. You’re either living in the past and/or fantasy island. Morgan ceased to be a British, family owned consortium at the start of 2019, about the same time as they switched to bonded aluminium extrusion tubs for a chassis. And yes, we left the EU. Democratically. Which hasn’t effected our manufacturing as you remoaners predicted. Still, can’t be long before your Irish passport arrives can it?

    • Without wishing to descend into Brexit related mud-slinging : ) I’d recommend anybody to check out what’s happened to car manufacturing in the UK since 2016. (The SMMT website is a good place to start). Other factors have been at play obviously (Covid, semi-conductor shortage) – but it’s not pretty. Based on the latest 12 month data – output has halved since 2016.

  14. Chris, do we look at the EEA’s influence in British automotive manufacturing post 2016? Or do we look at it from 1973 onwards? Or if we look at post 2016, do we compare with pre-2016 vote or do do compare with what the remoaners and the project fear campaign predicted? As a author who produces comprehensive work, I’m surprised you focus on production figures post 2016, although you do concede these are unpreceded times. I feel if JLR had decided to keep Disco and Defender production here the outlook would be better.
    As for peak Leyland, they repeatedly shot themselves in the foot regarding production

  15. I don’t think we can compare the situation now with the past although we should learn from it as two of the biggest impacts on the UK car industry are new:
    – The impacts of a pandemic
    – A semi-conductor shortage

    The other big difference is that there has been a lot of political convergence between the main parties and they are not as different as they were in the 70s. We are a fundamentally stable country. Also unions are very different partially due to attitude and partially due to legislation.

    I honestly think the UK can be in a good position if investment is encouraged and manufacturing is encouraged and seen as a force for good (it hasn’t been for decades)

    • You were doing so well until you mentioned stability, when the reality is that the country is probably at it’s least stable for at least 40 years, but if you’re I’m Alright Jack attitude is blinding you to the obvious, at least until the bread & circuses of the cost of living crises come crashing down & the Tory suck-ups might actually find out they have been played for the fools they are.

  16. It should be pointed out that the North East is to become a major producer of batteries for electric vehicles. Nissan is taking on another 1600 workers at its Sunderland plant to produce batteries for its electric cars, but the best news is in Blyth, where a huge new factory will create over 3000 jobs, with hundreds involved in building and fitting out the factory. This should really transform the town, where the after effects of the end of the coal industry are still lingering. Also it proves that the country’s motor industry has a reasonably bright future, even after the closure of Honda in Swindon and the Ford engine plant in Bridgend.

  17. Shhhhhh Glenn. Using such facts allied to optimism will further upset the deluded Ray in his abject misery. Let’s all hope for the worst so he can feel just that bit better.

    • @ Lord Sward, it’s best to be optimistic and also the closure threatened Ellesmere Port factory was given a lifeline to produce an electric Vauxhall van, which should safeguard 2000 jobs. Things are far better in the British motor industry than the years of strikes and constant decline in the seventies and early eighties.

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