Essay : Did Mini cars mean Mini profits?

It’s been a long-held belief that building small cars was less profitable than large ones. However, as Chris Cowin explains, things are never that straightforward.


Making the Mini pay for British Leyland

There were many flavours of Mini (this is the 1973 range for France). But did they make money?

As sure as night follows day, any discussion about the long-running Mini invariably leads to the comment: ‘It never made money.’ Something supposedly symbolic of amateurism and incompetence within the British Motor Corporation (BMC) and later British Leyland. In this essay, I come to its defence, arguing the ‘big picture’ is the one to look at.

That picture includes the role of Mini production in cross-subsidising other models, its role in attracting first-time buyers, its role in supporting a broad Dealer Network (especially in Europe), and even its role in generating profitable demand for replacement parts. Analysing the profitability of Mini production in isolation is fraught with difficulty, and misses most of those phenomena. Only the company ‘bottom line’ captured them all, and that’s the profit figure that mattered.

Don’t worry, though, this isn’t going to be an extrapolation of financial spreadsheets. It’s important to understand how revenue earned from selling Minis compared to the cost of production but, as outlined in the first paragraph, that’s far from being the end of the story. Let’s start, then, by summarising opinion (and people have been expressing opinions for over sixty years) on the profitability of Mini production calculated in the conventional manner.

As we are always reminded, a ‘strip-down’ analysis of the new Austin Seven/Morris Mini Minor was conducted by Ford shortly after their launch and concluded BMC had to be losing money on their sale. Terence Beckett of Ford of Great Britain quantified that loss at around £30 per car, which in 1960 was equivalent to 6% of the retail price. The complexity of the novel car’s design and its labour intensive assembly would seem to rule out the ‘cheapest car on the market’ pricing BMC had adopted.

Scaling up: the route to profitability

However, economies of scale played an important role in driving down production costs in the car industry, with economists calculating car makers would see a rapid decrease in cost per unit as production ramped up to 200,000 cars annually, followed by a continued, but more gradual, reduction as production increased beyond that. More efficient ‘process flow’, as it was called, was the main reason.

This was clearly understood by those in charge at BMC who always planned for Mini production to substantially exceed 200,000 units per year. However, when Ford conducted its analysis, the Mini (which had a slow start) was still a relatively low-volume car, being sold cheaply. 1960 production volume of just 116,000 cars would more than double by 1963, by which time Mini would be joined by the BMC 1100 (ADO16) in a front-drive ‘family’ that was soon racking up production figures of approx. 500,000 units annually, which even Ford found hard to match. That altered the numbers.

Ford remained sceptical about small cars. When ‘superminis’ like the Fiat 127 appeared a decade later spokesmen claimed the sector could not be profitable (for them), and it was 1976 before Ford’s Fiesta belatedly joined the pack. Ford was almost certainly right: Mini production was losing money for BMC in that early period, but so it should have been one can argue.

Mini: cornerstone of a new market

A brilliant concept: The Austin Seven, together with the Morris Mini Minor, launched in October 1959

Revealingly, BMC described its business in Annual Reports of the early 1960s as divided into several distinct sectors. One was the manufacturing of cars (under the various marques). Another, separate sector, was listed as the manufacture of ‘Austin and Morris Mini-cars’. The Mini was viewed as the foundation-stone of a whole new market segment, lowering the bar to vehicle ownership with a credible British built machine. To expect profits immediately would be short-sighted (as Tesla has demonstrated more recently).

What mattered was establishing a dominant position so future rivals (like the Hillman Imp) could be seen off and high production volumes assured. When you’re trying to establish yourself, you don’t price for short-term profit. The strategy worked. After a subdued start Mini production took off, with most cars going to the home market where the car became a best-seller, helped by the endorsement of celebrities such as Lord Snowdon.

The popular van boosted output and (through avoidance of tax) established an even lower rung on the ‘motorisation’ ladder. BMC Chairman George Harriman was in no doubt that volumes were key to profitability stating in 1963 ‘we now depend more than ever on the economies of scale.’ And so they did, for by that time the scale-sensitive Mini and 1100 together accounted for 73% of BMC’s total car output, with almost 12,000 of the duo being built in some weeks. That would have been a disaster if those cars (or even just the Mini) were losing the company money.

The cream triangle

Instead, BMC’s financial results improved and continued to do so the more front-drive cars that were built. A £21 million profit before tax recorded in 1963/64 was the best for five years and bettered the following year (£23 million in 1964/65) which correlated with an increase in Mini and 1100 output. For the front-drive range (which BMC by then tended to view as a parcel) increased production appeared to translate to higher profit margins per car, and cumulatively.

This ‘sweet spot’ which Harriman described rather charmingly as ‘the cream triangle’ (the best bit of a custard cream biscuit) depended on high volumes being maintained and preferably expanded. As the Sixties progressed, BMC would find that difficult, and that’s when many of their problems began. It’s thus possible to say the company’s woes came from building not enough front-drive cars (including Minis), rather than building too many.

The Mini was undoubtedly conceived with an eye to export opportunities in Europe but, with Britain not joining the EEC (as BMC had anticipated), sales were restrained by tariffs. Of the first million front-drive cars built by BMC (mostly Minis) less than a third were exported and Alec Issigonis could state in 1968 that the Mini was ‘still to be exploited on the continent.’

Limits to growth

Assembly at Seneffe and Innocenti from 1965 helped but the Mini was largely dependent on the UK market in the mid-1960s and, when that stagnated (which it did), Mini production suffered. BMC’s car output (including kits for overseas assembly) fell sharply from 723,000 in their 1964/65 Financial Year to 557,000 in 1966/67 with the Mini and 1100 taking a lot of that hit. The “Mk2” revisions to both took a long time coming, which didn’t help. This fall in volume correlated with a dramatic deterioration in company profitability. Other parts of BMC did well in good years and badly in bad years, so the correlation between output of the front-drive duo and company profitability is blurred, but it undoubtedly existed.

Expanding production volume was not, of course, the only way to improve the profitability of Mini. Another was the addition of higher margin variants, something BMC proved very adept at doing. There were the Super, the Cooper, the Traveller and Countryman and, if that wasn’t enough, the posh little Elf and Hornet. All of these lifted the ‘average transaction price’ as companies (like Ford) called it to levels considerably higher than the price of a basic Mini.

New variants lifted the Mini out of the bargain basement

Even so, the consensus appears to be that ‘in a good year’ (as Donald Stokes would later put it) the Mini, when viewed in isolation, did little better than breakeven. Other figures from the 1960s and ’70s concur, painting a picture of Mini profitability sometimes marginally positive, sometimes marginally negative dependent on factors like production volume and variant mix.

But as British Leyland executive Mark Snowdon pointed out, calculating the profitability of an individual ‘carline’ must take into account corporate overheads not directly linked to the production of the model. Altering the methodology for allocating such overheads can push a car like Mini from profit to loss at the stroke of an Accountant’s pen – that is one reason a ‘big picture’ approach is more meaningful.

British Leyland attempted to take cost out of the Mini (by reverting to rubber cone suspension for example), concentrating UK production on Longbridge and pricing more ambitiously, but the Mini was never viewed as a ‘money spinner’ despite being the car the company was building in the highest volume in the early Seventies.

Cross-subsidisation, BMC style

There’s more to it than that, though. As already mentioned, BMC preferred to treat the front-drive cars as a team, with component sharing between Mini and 1100 supporting that approach. Estimates for the percentage of components shared between those two models vary, with some sources quoting 30%. It depends upon whether you look at the number of shared part numbers, or the value of a completed car accounted for by shared components.

However, it’s indisputable Mini and 1100 shared the A-Series engine (in differing capacities) together with a magnesium alloy sump. Both used Birfield-Rzeppa constant velocity joints to channel power to the front wheels, and much else. Even if it was just through giving BMC’s purchasing agents more leverage, this sharing of components would have let Mini production reduce the unit cost of each 1100 built in parallel.

With the breakeven Mini acting as a helpful flanker, it was the 1100 range that was scoring for BMC in the profit stakes, the two best seen as a team (as former Rugby player Harriman understood). And the ‘cross-subsidisation’ effect did not end there. The A-Series engine, to take the most obvious example, was also found in the Minor, A40, Midget and Sprite (and A35 van).

More economies of scale

Engine production is especially sensitive to economies of scale, with conventional wisdom in the Sixties suggesting the unit cost of each engine block kept on diminishing until 500,000 engines were produced annually.

The Mini allowed BMC to achieve that ‘optimal’ level of output on the A-Series and therefore the production cost of all cars that used it should have fallen. All else being equal, those cars should have been more profitable for BMC, than if Mini had not existed (although ‘cannibalisation’ of Minor and A40 sales volume by the Mini would offset this).

This cross-subsidisation of the production cost of other models in the range continued into the Seventies, with the A-Series appearing in Marina and Allegro.

Catch them young

The Mini was much more than just a car. Nearly everybody, and especially the young, wanted to own a Mini in the 1960s, the decade of which it became an icon. This appeal can be linked, if you wish, to the brilliance of a design which, if subject to tighter cost constraints, could have turned out a lot more dull.

But the upside was a stream of young new customers who, once ‘in the system’ were likely to trade up to another BMC car when the time came. Meanwhile, the growing number of two-car households could source both ‘little and large’ from their Austin or Morris dealership, more satisfactorily than from Ford or Vauxhall, and fleet buyers were offered a spectrum of BMC products that now started lower (as well as finishing higher) than the ranges of those two rivals.

For all these reasons, Dealers were keen on the Mini. Showroom traffic was up, BMC’s once stodgy image enjoyed a fillip, sales of other models benefited by association with Mini and profits somewhere would have benefited – even if those profits were not assigned to the Mini directly.

Mini – The car to be seen in

Export spearhead

The Mini’s appeal was not confined to Britain. Although its European heyday did not come until the Seventies, it proved a hit in Australia in earlier days, the ‘Morris 850’ being the second best-selling car on the market (after Holden) for 1963. BMC Australia concentrated all its car manufacturing on just three models from 1965: the Mini, 1100 and 1800 – some may see that as a recipe for disaster but, in fact, the late Sixties saw BMC Australia enjoy a good run financially and that makes you wonder…

Many other countries around the world saw BMC doing good business with the Mini. But it would be the European continent that took the lion’s share of overseas Minis, the car carving out a market position which could have been a springboard to much greater things.

Devaluation of the pound in late 1967 and gradual erosion of tariff barriers, coupled with a network of three assembly plants on the European continent and a more focused sales approach, helped Mini rise up the best-sellers charts. British Leyland saw sales climb to around 250,000 cars in Europe in 1971 and 1972, the majority being Minis. Many more could have been sold if they were available it was claimed. As it was, UK production surpassed 300,000 Minis in both 1971 and 1972, that figure including the kits sent for assembly in Belgium and Italy.

Export star: Italy was a big market for the Mini thanks to assembly by Innocenti (although the cars pictured are British-built Minis)

British Leyland’s growth ambitions

British Leyland was starting from behind in the continental car market, but had aspirations to gain a position roughly comparable to Fiat, Renault or Volkswagen, with domestic sales as good as doubled by sales to European neighbours. The Mini may not have been earning much profit in Europe, but it had established just such a ratio. And with Mini as the ‘bottom rung on the ladder’, that would have been an encouraging sign for the future.

In contrast to the UK, the 1100/1300 range had never really caught on in Europe outside Belgium, Denmark and the Netherlands. In France, for example, five Minis were sold for each 1100/1300. But its replacement the Allegro, designed specifically as Leyland’s ‘song for Europe’ and granted free market access, was expected to do much better.

The vast pool of Mini owners which existed on the European continent by 1974 might be expected to trade up to an Austin Allegro and, beyond that, to something bigger. It seems a good moment to mention Honda’s experience in the USA, where the initial success of Civic created a pool of happy owners who traded up to an Accord, before becoming older and richer and buying an Acura, with Honda becoming one of the biggest brands on the market.

Europe fails to take notice

That didn’t happen for Leyland in Europe, despite Allegro being enthusiastically promoted as ‘the big Mini’ in France and elsewhere. The market contracted in recessionary 1974/75 which saw Fiat, Renault, Volkswagen and others discounting to maintain volume, the Japanese wanted their share of the pie, and the Allegro wasn’t really up to the job. But that wasn’t the fault of the Mini which had done well to prepare the ground. A task which, if Leyland had succeeded in reaching the sunlit uplands of over 500,000 continental sales annually (which remained the optimistic objective of the 1975 Ryder Report) would have entitled the Mini to a medal – profit or no profit.

The Mini’s European success would pave the way for Allegro to sell in comparable volumes it was hoped. That didn’t happen. Seen here the Italian market Innocenti Regent and Mini

Hang on in there

Rather than underpin the hoped for doubling or tripling of sales on the European continent, the Mini continued in its traditional role as the ‘volume’ model in the range, alongside a fragmented assortment of other cars. In France, for example, around 30,000 cars were sold annually by Leyland in the 1970s, but three quarters were Minis. This heavy dependence on the Mini was bad news for profits. The Mini was ageing by this time, and tended to be ‘priced to sell’.

Although Leyland had established control of importers in many countries (under BMC independent distributors had taken their cut of any profits) the Mini was essentially being sold at cost. As John Barber was on the record as saying (a little cynically), any profit came from the supply of spare parts. But the Mini was giving dealers a ‘base volume’ which allowed them to stay with the franchise and, in turn, gave other more profitable models in the Leyland range a distribution network. You could find a Rover or Triumph fairly easily across Europe because most large towns had a Leyland dealer, supported by the Mini.

Moreover, if the company was planning a new generation of cars to conquest European customers in the 1980s (and it was) there was an important strategic need to keep that distribution network as intact as possible. The Mini helped do that, with many continental Minis being rather different models such as the 1100 Special assembled at Seneffe, and the Innocenti 90/120 hatchbacks also playing a role. (Although Leyland sold Innocenti in 1976, the kits of mechanical components exported to Italy were counted within Leyland’s Mini production. In Italy, Innocenti had its own distribution, but in seven other countries they were sold by BL dealers).

So the Mini was delivering, even if it wasn’t delivering much profit directly. When BL introduced the Metro and Acclaim (which sold well in Europe) in the early Eighties, they still had a Dealer Network across the continent to sell them through.

On the other hand 

By cross-subsidising other models, attracting customers to the franchise and underpinning the Dealer Network, especially in Europe, the Mini was a strong team player. Even if it wasn’t making much money directly, its existence was benefiting the company ‘in the round’. And that suggests one should treat its profitability with more generosity than some unrelated business venture (such as building refrigerators, which BMC/BL also did).

That said, some will make the counter-argument that building the Mini in such huge volumes for all those years represented a huge ‘opportunity cost’ for BMC and later British Leyland. Another design, better costed from the start, could have done everything the Mini did while being less expensive to build (and having lower warranty costs). All the resources tied up in building the Mini could have been put to better, more profitable use (which was an argument Terence Beckett made).

Quite possibly… It’s often said Alec Issigonis learnt a great deal about cost-engineering during the Sixties and, by the end of that decade, proposed the BMC 9X as a Mini replacement. It was a much simpler package, dispensing with subframes and reverting to simple coil springs.

In conclusion

However, if the Mini had been much more austere from the start, would it have sold so well and won so many hearts?  Perhaps the Mini’s secret was also its failing:  it was a quality product, over-engineered and uncompromisingly engineered, of a type Ford (and others) would never have let leave their factories. Buyers of small, cheap cars (especially in the 1960s) still half-expected to find themselves in a vehicle that was ‘tinny’ or a ‘death-trap’. But the Mini was neither of those. It was a robust little brick.

It gave buyers more than they bargained for with interior space of a larger car and handling of a sports model – tremendous value in a unique package, which would keep attracting customers for four decades. In its later years, marketed as a more premium ‘retro’ model in smaller volumes, it was claimed to be profitable and could keep on adding sparkle to the Rover range.

It takes a special kind of car to achieve all that, and the Mini was special, not least because it wasn’t really engineered down to a price. In the modern era, when its become common practice for ‘entry-level’ cars to make little profit, we should think twice before judging the Mini too harshly.

You can’t keep a good car down. Despite recurrent rumours of its demise the Mini kept on attracting customers to showrooms for 40 years. These 1988 cars were built shortly after Graham Day and Rover Group reaffirmed their faith in the model – which they declared profitable
Chris Cowin

49 Comments

  1. I’m looking at what is an error perhaps. “This cross subsidisation of the production cost of other models in the range continued into the seventies, with the A series appearing in Marina and Allegro.” To my knowledge the Marina didn’t have the A series engine. Wasn’t the MGB engine in the Marina? Correct me if I’m mistaken.

    • In the UK, the Morris Marina range featured both the 1.3 A Series engine and 1.8 B Series engine when launched in 1971. In 1978 the B Series was replaced by the 1.7 O Series but the 1.3 A Series continued as the smaller engine option – appearing again (in A+ form) as one of the engines for the Morris Ital of 1980-84 which evolved from Marina.
      A+ engines continued to be used in other Austin Rover products apart from the Mini for long after that. (Metro, Maestro & Montego).

  2. “It gave buyers more than they bargained for with interior space of a larger car and handling of a sports model.” This reminds me of the complaint when Alfa Romeos were seen as rust buckets: not that Alfas were so bad, but “Other makes of car are over engineered”.

  3. The Ford stripdown occurred at a time when they were upgrading their archaic Prefect 100E side valve/3 speed offering to 107E with OHV and 4 speeds.
    And if they had found Mini to be profitable they were hardly likely to say so.
    Whether Mini and 1100 were actually profitable in themselves is still not clear, but we know that while BMC was making money in the early 60s it still needed rescuing at the end of the decade so something doesn’t stack up.

    • The obvious thing that happened later in the sixties was that BMC’s car production plunged (due to economic problems that restricted UK car sales principally). Also Mini and 1100 needed a facelift (which they belatedly got in late 1967).
      In financial 1964/65 BMC built 886,000 vehicles. Two years later, in financial 1966/67 BMH (which combined BMC with Jaguar Group production) only built 694,000 vehicles. A big drop which was felt especially in Mini and 1100 production.

      • This due to the British government trying to control the economy by restricting finance. The restriction on finance restricted the sales, which the rest of Europe was not facing at this time and saw sales in Germany, Italy and France grow, helped by access to the EEC. It was this lack of access which really harmed BMC, because their products were what the market wanted. We knew by early 60s that De Gaulle was going to veto UK’s access to the EEC, BMC should have really invested in continental production instead of investing in more UK plants. It was this insular vision that killed BMC.

  4. Compared to the minimalist 1958 Mini prototype with Minivan grille, is it known how much it cost to further jazz up and spend another few quid on the Mini for production by adding a chrome grille and other embellishments to it?

    What am getting is since people in the past have claimed the Mini 850 and above could have been sold at a higher price and still made a profit, could the Mini have benefited from an even more minimalist sub-£500 (e.g. £496.95) entry-level model as envisioned by Issigonis in the 1958 prototype (below the production Mini 850) that features a detachable Minivan grille (which could easily be swapped later on for a regular Mini grille) and 719-736cc A-Series engines (via 803cc bore and 848cc to 1097cc stroke), being to the latter what the 603cc Renault R3 was to the 747cc Renault R4 as well as the original 633cc Fiat 600 to the later 767cc Fiat 600?

    Additionally could the Mini have been even more profitable had Duncan Stuart and his misused Research Department been tasked on cost cutting the Mini from the outset? He believed they could easily take £20 out of the production cost when approaching Harriman in late-1962 and wonder whether a combination of the former and what was later applied on ADO20 could have further reduced cost and increased profitability, provided of course the work on ADO20 was not derived from earlier work by the Research Department?

    • Apart from rumours of a Mini 750 tax special reputedly intended for the Chilean market, it is fascinating to note a hypothetical entry-level 30-ish hp 719-736cc A-Series Mini would not only be classified as a 4CV car in France* (which also included a 777cc Simca 1000) but also slip under US emissions regulations at the time from 1968 which applied only to engines equal to or larger than 819cc / 50 cubic inches** (resulting in US spec 817cc Fiat 850 Spider / Coupe and 795cc Saab 96, etc).

      * – The existing 850-1275cc Minis were classified as 5CV-7-CV Cars under French Tax Horsepower laws between 1955-1977 based on the following calculator. http://www.citroen-ds-id.com/gen/Gen_CV_Calculator.html

      ** – Which might go some way to explaining why Mini sales fell in the 1967 calendar year.

      Fwiw a 771c mk1 Volkswagen Polo was sold in Sweden and other certain markets from 1976 for a few years due to then new very strict emissions regulations being introduced which did not apply to engines of less than 0.8 L (49 cu in), which a hypothetical Mini 750 would have still been eligible for.

      • Some very interesting points there Nate …. On the American issue – USA sales of the Mini were always modest – by 1967 many (or most) of the Minis sold in the USA were Coopers bought by the sporting fraternity who had read about their Monte Carlo success. It was a niche model not a mass market car. The “ADO16” was a much more appropriate rival for the all-conquering Beetle in the economy car field and BMC/BL concentrated their efforts on that (with the Austin America) rather than attempting to re-engineer Mini to meet the 1968 regulations. They dropped Mini in the USA after 1967 though it continued in Canada (with the 998cc A series) until 1979.

        • How valid is the idea propagated by some the Mini could have achieved similar if not more levels of success had it been priced higher and better costed?

          It is to be expected for Mini sales to be modest in the US with BMC/BL focusing more on ADO16, the latter along with the Allegro is another matter entirely however seem to recall reading the E-Series (as used in the ADO16-based Nomad) being compliant with US emissions standards. Is it known whether any thought was given to producing US spec versions of the Allegro, Maxi and Princess in place of the Austin Marina?

          It is curious though that beyond the Mini 750 tax special for the Chilean market BMC/BL were unable or unwillingly to capitalize on a lower-displacement Mini below the 850 to penetrate further into export markets, thereby allowing it to gain additional sales due to being classified as a 4CV spec car in France as well as being usefully exempt from stringent emissions regulations from the late-1960s due to being below 49-50 cubic inches in various markets including the US.

          • I think there were plans to sell the Princess in North America, especially as the 1798cc B series was already cleared for emissions.

            There is a picture on this site of one being tested Stateside.

          • I see, would have been fascinating to see how it would fare in North America given its size though like the MGB could see it benefiting from an earlier 2-litre B-Series at minimum that even in US emissions (plus the much stricter California) spec would put out roughly 77-91 hp.

            Unfortunate the E-Series was not US emissions compliant despite apparently being designed to meet such standards during its development and being used in Australia to meet similar emissions standards.

            Despite its flaws, always wondered if a US spec Austin Allegro would have fared any better in North America compared to the Austin Marina to better capitalize on the post-1973 oil crisis trend for smaller cars.

          • Nate – They were very sensible (imo) not to try and market Allegro, Maxi and Princess in the North America. Even if they could have been engineered to meet the ever-tightening regulations on safety and emissions the cost of doing so would have been prohibitive. British Leyland were already extremely stretched keeping the sports cars and Jaguar in line with those regulations, which ate up a huge amount of (scarce) engineering resource.
            But at least the sports cars and Jaguar sold into specialized market segments where competition was limited and – when the stars were aligned – British Leyland could make money.
            Allegro, Maxi & Princess would have been competing head-on with domestic compacts/sub-compacts and the Japanese in a market where competition was cut-throat and prevailing price levels much lower than in Europe. The Marina was cheaper to build than the FWD cars, but they didn’t make any money selling that in the USA before they dropped it in ’75.
            If they were going to try and sell saloons in the USA (below Jaguar) much better to put together a “premium” range.
            That’s the thinking that lay behind the federalization of the Rover SD1 3500 (a herculean engineering task which dragged on for years) and lay behind plans (I’ve been reliably informed) to sell the Triumph Dolomite-replacing SD2 in North America. That would have given them two rear-drive “premium” saloons, both sharing a lot of DNA with the (also present) TR7 and TR8.
            But of course the SD2 got cancelled and the SD1 flopped terribly – despite all the efforts put into federalizing it. Which just underlines how the USA was the graveyard of many bold ambitions.
            Another huge downside to doing business in the USA was product liability litigation which could be far more damaging for manufacturers than in Europe or elsewhere. In 1978 fear of such litigation pushed British Leyland into the recall of 182,000 cars they had sold in the USA since 1970 (a good chunk of all the cars they had sold since 1970) to rectify issues with lights, fuel pumps and fuel tank leaks. The huge cost of this exercise would have wiped out a lot of the profit earned from selling those cars in the first place.
            If British Leyland wanted to sell more Maxi, Allegro and Princess (and they did) much more sensible to devote their energies to the European market where there were few “barriers to entry” and all three were already on sale (for a higher price than could have been charged in the USA). The only problem was they weren’t selling many.
            I don’t believe Princess was ever seriously considered for the US market. (Although interestingly, Australia was once told they would get it – and never did). The 1.8 B series was of course scheduled to be dropped from Princess shortly (it occurred in 1978). A lot of extreme hot & cold climate testing was done in North America on cars not intended for that market – and that’s what the test cars were doing I imagine.

          • Understand why they opted not to given the state BL were in, it is admittingly more of a morbid fascination on my end had they made it to the states in the same way some in the US would want the UK/Europe to experience the Chevrolet Vega and Ford Pinto.

            It makes sense SD2 would be been targeted at the North American market given its shared DNA with SD1 and TR7/TR8, though not sure how the David Bache styled car would have been received in North America (compared to the Pininfarina proposal).

            Have also heard some claiming SD2 was at some point to receive a 1.5-litre Slant-Four (or basically half a Stag V8) instead of the 1493cc Standard-Triumph SC engine, with others mentioning a 4-cylinder version of the PE146/PE166. Some involved with the company even bring up a V6 utilizing the “K-Series” name (between its usage for the ADO74 prototype and later production K-Series engines) of as yet indeterminate parentage for ADO77 later TM1.

  5. The Mini was British Leyland’s best selling car in the second half of the seventies and the only one that generated significant export sales. It was even more vital to them when the Allegro failed and probably stopped the company collapsing totally in the late seventies. However, its shortcomings were becoming noticeable by the late seventies and the Mini was woefully outdated compared to its main rival, the Ford Fiesta. Yet its engines and transmission design proved a life saver for the Metro project by reducing the costs of developing the new car, which could have crippled British Leyland if they decided to develop totally new drivetrains for the Metro. Also the A series used in the Mini was a fairly dependable and tuneable unit that would live on until 1999.

  6. Aside from the arguments about Ford standards in costing the Mini, I once worked with a former Rover engineer who told me that the Rover 25 actually cost more to build han the 45; because the 45 was Japanese-designed for low assembly cost; whereas the 25 was partly British designed.

    • There’s probably some truth in that! On the other hand, the R3 was developed solely by Rover Group on a tiny budget using a lot of carryover components, whereas the HHR 400/45/ZS was a Honda design and for each one sold Rover paid royalties to Honda which would have substantially reduced profitability.

    • Well the ultimate low cost design was the Triumph Acclaim, a near identical version of the Honda Ballade. Again vital for British Leyland as they needed a cheap to develop car that was reliable and modern and which was an ideal stopgap for 3 years. Also the Ital update of the Marina that only cost £ 20 million and kept this old stager competitive with a mild facelift and a modernised version of the A series engine that developed excellent economy for the time.
      You have to hand it to Michael Edwardes in 1980/81, when British Leyland was still very short of money, that he could get cars to the market like the Acclaim, Ambassador and Ital with the sort of budget Ford would spend on a new radio and get them to sell.

  7. Fantastic article about the Mini by the way. Something people in the UK usually overlook when talking about the troubles of BL/Rover is that outside of the home market the Mini was often the only success they had, and in many markets the Mini WAS the company, neither BL or Rover ever achieved any lasting success in the mid market or upper segments outside of the UK. When BMW chose to ditch the “mass market” Rover brand and focus on MINI it might have seemed strange to anyone who grew up on a range of homegrown BL products filling every market but to anyone on the continent or around the world it was seen as a return to form.

  8. It’s a complicated matter what makes a car profitable. If a factory has a capacity of 500k cars and you are only making 300k, filling the spare capacity with 200k of extra production, even if that model isn’t profitable by itself, is likely to benefit your bottom line in terms of covering overheads

    Or in a 60s scenario, if you making 350k Minis and ADO16s at say Longbridge, but then manage to add 150k (ha ha) of Landcrabs selling at a good price, you’ll be making a tidy return. The Landcrab might be the profit maker, but it you remove the Mini and ADO16 production, then you’re left with 150k of Landcrabs in a factory designed for 500k cars, resulting in BIG losses…

    It was the failure of the Landcrab which caused BMC’s main problems.

    • It does seem that the Landcrab underperforming should have set off some alarm bells off, especially as it seemed to foreshadow many of British Leyland’s woes.

      • Issigonis liked to design cars that he wanted and ignored market research and fashion. That had its advantages, in that it meant BMC were innovative and could create whole new types of vehicle but it also risked them falling on their arses and making a car no-one wanted.

        The 1800 engine was too big for Farina customers and the car was too expensive. However it couldn’t compete with the 2 litre executives like the Triumph 2000 and Rover P6. Sure it had tons of interior space but buyers in that segment wanted style and performance. That loads of room and an austere interior.

  9. The fundamental problem was inept British management. Their attitude to cost control, was to set the price of the car and vaguely hope that volume would fix the problem if it wasn’t profitable. Now it wasn’t enough for the Mini and the 1100 to make a small profit, they needed to be profitable enough to fund their replacements. It was doubtful that they were.

    The other issue is the Issigonis factor, a brilliant man but not without his flaws. He built cars that he wanted to buy and had little interest in what the buying public wanted. Initially this almost sunk the MIni, it was a disappointing seller when it first launched. You have to remember that in the late 50’s, households rarely had two cars and buyers wanted as much metal for their money, as they could get.

    Neither was the Mini a flawless vehicle at launch. The cars leaked and BMC were hit with warranty claims. Issigonis and his design team were warned about these problems before the vehicle was launched, the warnings were ignored.

    Neither was styling Issigonis’s bag, the 1100 was Britain’s best selling car for years and it was styled by Pininfarina. Issigonis himself had a disdain for car styling and judging by the land crab and the Maxi, the looks of the Mini were a happy accident.

    The left BMC with cars that shared few components, were not well costed and for all their sales success, successful mainly with private buyers. Leaving BMC locked out of fleet sales, which preferred simple RWD Fords. While the European market, which would have love the Mini and the 1100, was difficult for BMC to sell in due to tariffs.

    With hindsight BMC was an accident waiting to happen and sadly we all know what happened to them.

    • BMC had no answer to the Mark 2 Cortina, which satisfied the fleet market’s demand for a rwd saloon with engines of 1300-1600cc that was fairly reliable and covered bases from a poverty De Luxe model to the 1600 E. The ADO16 was too small, the ADO17 too big and too expensive, and the Farina models too elderly and sluggish. When the Marina arrived in 1971 as an rwd Cortina rival, the Cortina had gone up in size and there was the Hillman Hunter snapping at the Mstina’s heels as this had proved itself as a simple, rwd car liked by taxi drivers.

  10. I was taught product costing as a grad working at one of the worlds most successful truck manufacturers – a firm that’s never lost money in a hundred years.

    No disrespect but much of what the author is saying is nonsense. Every product must pay its way and that includes an allocation of overhead and sufficient profit to finance continued product development and eventual replacement. Trying to justify a product on the basis that it “is needed by the dealers” or “provides a stepping stone for the customer” or “is needed. fill the factory and cover our foxed costs” is a surefire ticket to bankruptcy.

    The first thing to understand is that there’s no such thing as a fixed cost. Everything’s variable. If your sales are down 20% then you need to manage your costs down 20%. Including in the executive suite if necessary.
    Second thing is that overheads aren’t allocated to a product they’re driven by it. If mini is complicated with a large parts count then they are driving overhead in purchasing, logistics, QA, accounts payable, warranty departments etc

    What BMC could and should have done is directed their resources in the mid 60s to cost reduction (fewer pressings, simplified assembly) rather than badge engineering, and also tackled some of the overmanning in the plants. If you can only make money in a booming market then you don’t really have a business

    • That’s not totally true about fixed costs. There are some fixed costs based in any business, be it retail to manufacturing. Buildings – be it rent or mortgages, water and business rates are fixed costs in accounting terms. Staffing, Energy and resources are known as variable – though staffing can have an element of fixed costs dependent on how the company works.

      I think what the author was writing is true about BMC – they had no idea on how to actually cost their products hoping economy of scale would prevail in making profits. Remember George Harriman wasted money on grand projects which did not come to fruition, while letting the standard range wither on, listening to Alec and his mantra that fashionable cars don’t sell.

      Your final comment is actually something that is too prevalent in industry or all kinds, and is why many businesses fall by the wayside. Many base their income on the good times, and turn a blind eye when issues are looming. Having worked for one of the biggest energy companies in the world, which did just that when prices were falling for wholesale energy, they ignored it saying it was a blip when all others around were cancelling and renegotiating prices, they ended up going bust in Europe, and eventually falling into the hands of their creditors in the US. And this is just one example – we can all name many more.

    • Nonetheless SD67 – models are often produced at a loss in the car industry, perhaps more so now than in the 1960s. When I worked at GM in the 1990s it was common knowledge that the Chevrolet Cavalier (their cheapest model in the USA) was sold at a loss. But it was felt Chevrolet needed to maintain a presence in that part of the market.
      In 2000 Ron Zarella (GM “brand czar”) went as far as saying that GM (in the USA) made almost no money on cars (as a group) – only on trucks (including SUVs and pick-ups in the US definition). So “maybe we should give up building cars” (which caused a lot of ripples). Perhaps he was right (as GM effectively did go bust in 2009 and had to be rescued). But for all sorts of reasons – they stayed in the car business.

      • I read that GM lost a lot of market share in the 1990s, I can’t remember all the details but the CEO at the time made some poor decisions.

        Supposedly Chrysler were also only making money on pickups when Fiat took over.

  11. I fear that SD67 is wrong about fixed costs . Even part of the manufacturing costs for an engineering project such as a vehicle are fixed . This is particularly true of tooling costs which in practice make up a very large proportion of the costs of vehicle manusfacture – once the money is spent, it is spent and there is no way of reducing that cost – either in total or per unit – if demand for the product falls . Truck manufacture where Sd67 apparently leaned cost accounting is fundamentally different from passenger car manufacture ( as Stokes found out to his cost ) in that the product is crude, the engineering is rudimentary, the tooling costs are much reduced compared with car manufacture – no bodyshells or platforms etc – and demand for the product is driven purely by the economics of the product in use

    • Yes us illiterate truckies – I guess that’s why John Towers and a bloke called Stokes were drafted into car manufacture. Air suspension and mandatory ABS are completely crude engineering…

      Yes I understand the tooling cost of the dies and pressings changes the equation a little. But not as much as you’d think. Selling product at a loss to cover fixed cost is the oldest trapdoor in manufacturing, down which many have fallen.

  12. People shouldn’t be too unfair to Issigonis, he created two cars that were way more advanced than most of their rivals, were huge sellers, and in the case of the Mini lived on for 40 years with only minimal changes to the design, that’s how good it was. Also the ADO 16 was still selling well when it was finally retired in 1974, and for eight years was the country’s best selling car. Even the maligned Maxi was a revolutionary design when it appeared in 1969, a hatchback with a five speed transmission, a decade or more before this format became common.
    I

    • Mini’s only competition at the time were bubble cars or the Fiat 500. It should have been a success. ADO16 was the Mini upscaled and clothed in a pretty Pininfarina body. Again, deservedly successful. The Maxi was a disgracefully inept effort which richly deserved to fail regardless of its supposedly advanced specification. On-paper sophistication is useless when the realisation is as deeply unappealing as the Maxi.

  13. Ok, standhill, we’ve got the message : you don’t like the Maxi. Nor do I . But to describe it as disgracefully inept is ridiculous . The only real thing wrong with it was the gear change .

    • The Maxi was a revolutionary design when it came out, a five door hatchback with a five speed transmission, whose only competition was the Renault 16. It took Vauxhall 12 years to introduce a similar car and Ford 13. I will admit it was underpowered in 1500 form and early cars had a terrible gearchange, but the 1750 HL with twin carb engine and improved gearchange was quite a relaxed long distance cruiser. While not the best looking or best to drive car in its class, at least the Maxi never developed the contempt the Allegro did and was known as an excellent luggage carrier and ideal for families and people with dogs.

    • As a clean sheet opportunity for a new design(yes,yes, the doors,I know) I maintain that it was a disgraceful waste. The all new E-series was gruffly vocal, it had no styling worthy of the term, and it had a whiney in- sump transmission. Renault 16 did it first and better. I’ll be quiet now.

      • Some people have their automotive likes and dislikes, standhill, I’m one of a minority who likes Vauxhall Magnums, while some will see them as merely Vivas with big engines and rusty wings. OTOH I think the Maxi was an innovative car that had a bad start and never really achieved its potential. Also the engines being gruffly vocal puzzles me, I always found Maxis quiet and the fifth gear would make them quieter at 70 mph than most of their rivals.

  14. Doesn’t really matter how ‘advanced’ Maxi might have been because 450,000 sales in 12 years (ARonline) tells us it was a commercial failure. Perspective view, the low-tech Cortina shifted 193,784 units or a staggering 11.3% of the UK market in 1979 alone (according to RAC web figures) despite never having 5 speeds or FWD.

      • Good point. By that reckoning Marina/Ital outsold Maxi and Allegro combined.
        And after the first 2-3 years Marina was not exactly flying out of the showrooms either.
        Hardly surprising the whole enterprise needed rescuing really.

    • The Cortina had the fleet and taxi market sewn up by the late seventies, and this was where the serious money was to be made in the late seventies on family cars. This was a market that liked its cars simple and conservative and with a huge range of models, wnile the Maxi only came in base and HL form until 1979. Most Maxis that were sold would have been to private buyers who wanted the space and were loyal BMC/ Leyland buyers,

      • I have pondered before if the Maxi saloon would have done better in the fleet market, but was told the answer would be no.

        • The fleet market in the 60s and 70s wanted simple rugged rwd. Fwd was seen as fragile, so a Maxi saloon would not have really cut the mustard either. The only thing is that as the company had spent so much developing it, would it have been better to drop the Landcrab, and let the Maxi saloon take its place? You could have then had a more coherent range, especially if the Ad016 been given a similar makeover as the Mini Clubman as was planned. By the time the Maxi was released the Landcrab was 4 years old and not exactly flying off the shelf.

          • I had thought of something similar, as it would rationalise the range & hopefully possibly sort out the issue of the oversupply of E series engines, meaning the Allegro didn’t need to be re-designed to use them.

          • The Allegro may never have happened if the AD016 had been given a makeover and had the improvements that Charlie Griffin planned been put in place to improve the reliability of the car. Maybe the money made in better reliability and less warranty claims could have lead to a new car and engine appearing in the mid 70s

        • To me a Maxi saloon gives you the worst of both worlds. The complicated mechanicals, but losing the USP of the Maxi which was its versatility.

          While Renault didn’t produce a RWD car, it’s notable that they followed the avant garde 16 hatchback, not with a saloon version of the 16, but with a separate more conventional saloon in the 12

          • My Mum had a 12 for many years, it was fairly reliable if unexciting. My Dad reckoned it was better than the Avenger he had at the same time.

            I remember someone wondered if the Triumph 1300/1500 drive train could have been used in a Renault 12 like car made instead developing of the Marina

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