Essay : The bottom line

The profitability of car manufacturing in the UK has always been a challenge for carmakers. We explore this age-old problem, examining contemporary figures aided by a healthy dose of hindsight.

Here, regular AROnline Contributors Ian Nicholls and Chris Cowin look at the data on profitability and discuss how Britain’s car industry of the 1960s became, in many ways, a victim of circumstances beyond its control.


The bottom line – why it’s important to keep your eye on it

Stocks of Austin A60 Cambridge cars in the 1960s
Stocks of Austin A60 Cambridge cars in the 1960s

Building cars in Britain had become an increasingly unprofitable business by the late 1960s. An industry that started the post-War era strides ahead of continental competitors (not to mention Japan) found itself on the backfoot. Despite a wave of mergers intended to improve efficiency, profit was increasingly elusive. If you think BMC had problems, take a look at the abysmal profit record of Rootes (later Chrysler UK) and Vauxhall in the late 1960s and early ‘70s, both of them were awash with red ink.

Failure feeds on failure and, as low profits led to cuts in investment, the chances of Britain’s car-makers being able to build their way out of trouble faded. Dreadful industrial relations, sparked in part by the same difficult economic context that saw zero growth in demand for new cars, sealed the fate of the industry. It came close to total collapse in the mid 1970s, with British Leyland and Chrysler UK becoming ‘lame ducks’ supported by the state from 1975, while Ford and Vauxhall hollowed out their UK operations, becoming increasingly reliant on imports from the continent while running down exports.

Production

Which was the best UK-based vehicle manufacturer? Which was the biggest and most profitable?

And which was the most efficient? We start with a general overview of the UK motor industry as a whole, with ‘vehicle production’ including both cars and commercial vehicles.

Though West Germany had overtaken Britain by 1960, UK vehicle production was comparable with France throughout the 1960s. However, France began to comfortably overhaul Britain from 1969, producing some 3,328,000 units in 1972. Of this total, some 1,309,000 French vehicles were exported, around 39%, with most of them going to EEC partner countries.

UK production data of the era reflects as much as anything frequent credit squeezes and tax hikes inflicted on the population by Government Ministers who claimed to have the best interests of the people at heart. Senior Standard-Triumph, British Leyland and Talbot executive George Turnbull later commented:

‘In those days [the motor industry] was just a […] fiscal regulator. If the economy was overheated, put some more Purchase Tax on motor cars… The Government was totally oblivious and if I was ever going to apportion blame for the parlous state that the British motor industry got into, you have got to put it at the door of the Government. I don’t care which complexion or which colour…

‘The reality is that they didn’t handle the industry in a sensitive way. It was the main primer for so many service industries; it was the main employer of labour; it was the biggest manufacturing industry by a mile and they treated it with derision. There’s no other word for it… From virtually full employment, I had to sack 3000 men, which I did with great reluctance. It drove more and more men into militant unions for protection.’

Profitability

The following number crunching exercise examines the fortunes of Britain’s car manufacturers. All profit figures given are pre-tax. We begin with the British Motor Corporation, formed on 31 March 1952, whose financial year ended each 31 July.

(The inflation adjustment expresses the historic unit profit/loss figures in 2018 terms)

The next set of figures are for the British Leyland Motor Corporation and are less precise. The financial year for the Leyland Motor Corporation ended on 30 September, so for the merged BLMC, the 1967/68 figures covered a 14-month period.

Next we come to Ford of Britain. Was Uncle Henry’s UK outpost really more efficient than BMC and later British Leyland? Only the official data, provided to a Parliamentary enquiry in 1975 can really tell us:

In 1969, Ford of Britain exported a record 371,000 vehicles, some 48.34% of its production, an impressive achievement. The 1971 pay strike resulted in reduced exports of 248,000, but this figure was repeated the following year, suggesting a permanent loss of some export markets, and dipped slightly in 1973 to 247,000, a mere 32.95% of production.

Next under the microscope is General Motors’ UK operation: Vauxhall and Bedford:

Vauxhall/Bedford’s best year for exports was 1964 when it sold 154,531 units overseas, 43.7% of production. The nadir was 1972 when this had slumped to 67,410 or 24.51% of production, although this did recover to 73,464 in 1973 and 82,578 in 1974.

Finally, we come to Rootes/Chrysler UK:

What was the problem?

Home market low growth and volatile

In simple terms, the UK car industry found itself with serious over-capacity in the 1960s.  Expecting the market to keep growing strongly (as other European countries did) during the decade, and anticipating EEC entry bringing new export opportunities, the car industry added a huge amount of capacity in the early 1960s – most notably, Halewood (Ford), Linwood (Rootes), Ellesmere Port (Vauxhall) and BMC’s CAB2 at Longbridge.

This gave the industry the ability to produce more than 2.5 million cars per year. But export prospects to the EEC were curtailed by the 1963 veto and (related to that) the UK economy found itself in the doldrums from 1964 with frequent ‘balance of payments crises’ which were countered by deflationary measures including the credit controls detailed below. The result was a static UK car market of only approx. 1 million units annually during 1965-69, with new registrations for 1969 being less than 1964.

That alone goes a long way to explaining poor industry profitability. Greater exports might have allowed the industry to compensate (although export sales tended to be less profitable than home sales) but, as explored below, circumstances didn’t favour exports which were broadly flat through the Sixties until the devaluation of Sterling (in November 1967) fuelled a surge at the end of the decade. As seen on the graph below, the strong growth in car production witnessed during the Fifties gave way to stagnation from 1964 onwards, and decline after 1972.

UK car production (line) including exports (shaded area) 1948-84. Based on manufacturers' allocation for export including CKD kits. Data source: SMMT. Peak production: 1972 (1,921,000 units). Peak exports (in that time period): 1969 (824,000).
UK car production (line) including exports (shaded area) 1948-84. Based on manufacturers’ allocation for export including CKD kits. Data source: SMMT. Peak production: 1972 (1,921,000 units). Peak exports (in that time period): 1969 (824,000)

The ‘export ratio’ (percentage of cars exported) slumped in the 1960s while barriers encountered overseas ensured a high proportion (over 40% in 1968) of those exports were CKD kits, which often had considerably reduced ‘UK content’ compared to cars exported in built-up form, and less profit potential. The export surge of 1968/69 proved short-lived and, despite the over-heated home market of 1972/73 UK car production (as opposed to ‘vehicle production’), never did break through the two million unit barrier.

It never has, although for the record the more recent peak of 2016 saw 1.72 million cars manufactured in the UK of which 1.35 million were exported, by an industry that has largely re-invented itself since the period discussed here.

A chronological list of those damaging credit squeezes and other events

  • 1952: Hire Purchase restricted for the first time
  • 1954: Hire Purchase restrictions abolished
  • 1955:  Hire Purchase raised twice
  • 1956:  Hire Purchase restrictions tightened. Suez war causes fuel shortages
  • 1957:  Hire Purchase restrictions tightened again. The Gold Coast gains independence as Ghana, as do Malaya and Singapore, beginning a period of rapid decolonisation and potential loss of markets for British goods
  • 1958:  Hire Purchase restrictions lifted
  • 1960:  Hire Purchase restrictions returned
  • 1965:  Hire Purchase restrictions tightened
  • 1966:  Hire Purchase restrictions tightened again
  • 1967:  Hire Purchase eased twice and then increased. Sterling is devalued
  • 1968:  Hire Purchase restrictions increased. Import duties begin to fall from 25%
  • 1971:  Hire Purchase restrictions abolished. Ford is strikebound for 9 weeks. Britain withdraws its forces east of Suez, marking the effective end of Empire
  • 1972: UK unemployment figures hit the 1 million mark. The Government responds with a splurge of public spending known to posterity as the ‘Barber Boom’. UK car sales expand by 27.38%, but British car production only increases by 3.32%. With import duties down to 11%, imported cars account for 450,314 sales
  • 1973: Britain joins the Common Market, the OPEC oil producers increase the price of oil sparking an economic slump and  Hire Purchase restrictions return
  • 1974: The ‘Three-Day Week’ at the start of the year lasted over two months and resulted in the UK motor industry working at an unprofitable 60% of capacity

It’s been shown countless times (most notably by Germany) that a strong home market is key to a strong car industry, but the UK car industry was stuck with a weak, zero growth home market. (In 1969 the German car market was twice the size of the UK).  This led to poor profitability across the industry, weak investment storing up problems for the future, a bolstering in the strength of Ford of Germany and Opel relative to their UK counterparts which would have consequences in years to come, and industrial relations problems which the quote (above) from George Turnbull puts into context very well. It was an era that economists called the era of ‘Stop-Go’ and car factories were vacillating between periods of overtime and periods of layoff which were a fertile breeding ground for militancy.

It didn’t help that the ‘Regional Policy’ of the British Government had compelled car manufacturers to build most of that new capacity in far-flung locations in the interests of creating employment. BMC was not spared as, although CAB2 was permitted at Longbridge, a new truck factory was located at Bathgate in Scotland. British Leyland’s umbrella would cover not just that but also plants in South Wales and the Triumph plants on Merseyside which owed their existence to that ‘Regional Policy’…

The Linwood factory outside Glasgow. The plant, and the Hillman Imp it was designed to build, sapped the profits of Rootes. Photo: The Glasgow Chronicles/Guy

These regional plants added to the costs of the industry, while the policy had the by-product of perpetuating inefficient production in older ,outdated factories (like Rover’s Lode Lane plant) in preference to being re-located. The regional plants proved prone to militancy and, with hindsight, the policy largely failed in its aim of creating jobs in the regions, as the ‘parachuting in’ of a huge car plant to an area with no car-making tradition tended to create skill shortages which choked off growth in other firms locally.

So, by the mid-1960s, the UK car industry found itself with too much capacity, scattered inefficiently across the map. They had built for a future which didn’t arrive. (BMC, for example, had assumed the UK economy (and car demand) would grow strongly during the Sixties while the EEC market would absorb many more British cars). Cue poor profitability.

Poor export footprint

There was a belief in Whitehall that restraining domestic demand for new cars would boost exports, by compelling British manufacturers to send more cars overseas, thus helping correct the trade deficits which were the subject of so much concern in the 1960s. But it didn’t work like that, as car industry bosses were at pains to point out. The export success of the German car industry was not gained by constricting home demand, if anything the opposite.

Perverse as it sounds, weak home sales could make exporting harder, because the consequent reduction in production volumes would lead to a loss of scale economies and raise the unit cost of each car built. This, in turn, would force a hike in the price required to break even in export markets, the result being a drop in export volume.

However, perhaps more importantly, exhortations to boost exports were futile if barriers stood in the way of supplying British cars to customers overseas, something that was increasingly true in the 1960s. At the start of the decade, British car bosses (notably BMC’s George Harriman) were quite clear they saw a need to pivot exports to the European market. They could see the Commonwealth slipping away and Europe was intended to substitute.

What happened (in broad terms) was that, as foreseen, the Commonwealth increasingly turned away from British cars, but barriers continued to stand in the way of sales to Europe.  So, exports to Europe were either far less than planned (an example being the redundancy of BMC’s newly-expanded French Dealer Network) or produced little profit as tariffs had to be absorbed (an example being the Ford Cortina, sold essentially ‘at cost’ in EEC markets in the 1960s, which kept Dagenham busy while extra volume pushed down unit costs, but earned little profit directly).

The worsening industrial relations climate can be seen as a symptom of an industry in crisis rather than the cause, but strikes also increasingly hampered the efforts of car makers to boost overseas sales. Quality tended to suffer while supplies were often disrupted. Strikes within the car industry and its suppliers were not the only cause: the 1966 Seamens’ Strike was especially damaging for car exports.

Commonwealth: A diminishing asset

Most ‘Commonwealth’ exports went to the four countries of New Zealand (which remained ‘loyal’ through the 1960s) and Canada, Australia and South Africa (which, in fact, left the Commonwealth in 1960). Although surprisingly few British cars went to countries that appeared ‘red on the map’ before WW2 (when American cars, often Canadian assembled, were favoured) the immediate post-War years saw British cars dominating in many Commonwealth countries and the remaining colonial possessions.

However, Canada introduced restrictions then signed the ‘Auto Pact’ with the USA in 1965 which created a more integrated North American market for cars (which became a lot cheaper in Canada) thus eliminating much of the tariff advantage British cars had enjoyed. Australia and South Africa were keen to develop their own car industries rather than import from the mother country and introduced tariffs and quotas from the 1950s onwards. This resulted in nearly all cars of UK origin in those markets being locally assembled and beyond that locally manufactured, with the value of exports of cars and components from the UK on a downward trend.

Even New Zealand, though operating a tariff regime that favoured car imports from the UK (while encouraging their local assembly from CKD kits), applied quotas which limited volumes. Like the UK, they were concerned about their trade balance.

There were other reversals in the Commonwealth such as the loss of the Rhodesian market after 1965 and import barriers erected by newly-independent nations, the Commonwealth being essentially a diminishing asset for the UK car industry. It was a collection of nations engaged in gently (sometimes not so gently) loosening trading ties with Britain while forging new relationships, not least with Japan.

It’s worth mentioning the Land Rover saved the day to a degree, remaining a strong seller across the Commonwealth (and beyond) into the 1970s, despite (like many British vehicle exports) being plagued with issues like supply shortages caused by strikes and incomplete CKD kits. But as most Land Rovers were classed as commercial vehicles, they were not included in the figures for ‘car exports’ mentioned below.

In 1955, Britain exported 178,000 cars (complete and CKD kits) to the four leading Commonwealth nations listed above. In 1968, despite demand for new cars increasing substantially in all those countries, that figure had declined to 160,000.

A lot of that decline can be traced to the local content of cars built in Australia and South Africa rising beyond the threshold where kits of components still dispatched from the UK no longer counted as car exports. But another important aspect relates to the role Ford of Britain and GM’s Vauxhall played in the global supply plans of those American multinationals.

In the 1950s Ford of Britain had supplied the ‘compact’ four- and six-cylinder sedans to global markets like Australia, while Ford USA had supplied ‘big cars’. But once the USA developed their own ‘compacts’ there was a question mark over that. Very specifically Ford Australia (where the Zephyr Mk1 and Mk2 had been big sellers) decided to replace them in local assembly by the American Falcon in the early 1960s. That was a big blow for Ford UK and the Zephyr Mk3 sold in lower volumes in Australia (it was still available and assembled), but the Zephyr Mk4 was not available at all. In many other markets the Falcon took over and Ford of Britain found export opportunities globally for its (profitable) large car range evaporating, and the same happened for Vauxhall with the Velox/Cresta.

Ford's Zephyr Mk1 and Mk2 were popular in Australia (pictured) in the 1950s and early '60s. But their successor models were squeezed out by Fords of American origin.
Ford’s Zephyr Mk1 and Mk2 were popular in Australia (pictured) in the 1950s and early ’60s. But their successor models were squeezed out by Fords of American origin

The whole point of Ford and General Motors owning a UK subsidiary, which in the 1950s at least could be defined as giving preferential access to Britain’s Commonwealth as well as Britain itself, was fast crumbling. They needed to focus more on Europe (which had been the initial ambition for Ford at least back in the 1920s). But continued trade barriers meant that although sales could be won, there was little profit in it.

USA: Fickle and challenging

In the late 1950s the United States was viewed as a market that could give Britain’s motor industry a strong third pillar of exports alongside the ‘drifting away’ Commonwealth and still-to-be exploited European continent. In 1959, 208,000 British cars (plus 6000 trucks) were exported to the USA. But the following years would bring disappointment as shipments plunged. The US car industry introduced those “compact” cars which were the death-knell for American sales of Zephyr/Zodiac (again) and also Vauxhall’s Victor while forcing BMC, Rootes and Standard-Triumph to become reliant almost totally on sports car sales.

The huge-scale economies of the US car industry drove down prices and made it hard to earn profits outside the sports car market (which was insulated from American competition by the need for European-scale components) and Britain concentrated on that sector, selling around one million sports cars to Americans during 1945-1982. Even unlikely players like Daimler got in on the act (with the SP250) while the Jaguar E-type accounted for the bulk of Brown’s Lane’s US volume in the 1960s (which had not been the plan).

However, attempts to break out beyond this bridgehead met with limited success. Volkswagen, with huge production volumes in Germany, had established an overwhelmingly dominant position in the American small car sector, and there was little profit to be gained in competing with them, though cars like the Austin America tried. Sports cars were a nice little earner (in the 1960s at least) but there were limits to how many America could absorb, especially as the Vietnam War made finance companies reluctant to grant auto-loans to young men eligible for the draft (a huge number) because, if drafted, they were legally entitled to suspend repayments until their (hopeful) return from the battle zone.

British sports cars like the Triumph TR4-A found their niche in North America, but attempts to diversify into other market sectors, such as the Triumph 2000 Sedan, were less successful. Less than 2,000 were sold in the USA.
British sports cars like the Triumph TR4-A found their niche in North America, but attempts to diversify into other market sectors, such as the Triumph 2000 Sedan, were less successful. Less than 2000 were sold in the USA…

From the late-1960s Japanese cars squeezed British models in the American sports and sub-compact fields (as they were soon doing around the world, in many fields). As mentioned above, prevailing prices in the United States were a lot lower than in Britain, leaving little room for profit if competitive pricing was the aim. Three of Britain’s ‘Big Four’ car manufacturers were American-owned by the late-1960s, which had pros and cons in terms of sales to the USA (and Canada). Access to a vast distribution network allowed the Cortina to become a big dollar earner for Britain in the 1960s, but this business was cancelled with the stroke of a Detroit pen in 1970 when Ford USA replaced the Cortina with the domestically-produced Maverick (and Pinto).

Around one third of Hillman Avenger production went to North America in 1971 (where it was sold as the Plymouth Cricket) but, shortly afterwards, Chrysler USA concentrated on Mitsubishi for ‘tied imports’ of small cars. Vauxhall was shut out of the US market after 1962 (in favour of Opel) but ‘given’ Canada which became their biggest export market. However, Canadian exports were halted by GM in 1973, which was a hammer blow to Vauxhall’s hopes of continuing as a full-fledged British-based car manufacturer. (Vauxhalls were sold in Canada both as Vauxhalls and through a second GM channel as Epic (Viva) and Envoy (Victor). From 1970 only the HC Viva was available, sold as ‘Firenza (from GM)’. Unfortunately, engine problems led to a calamitous exit in 1973 which saw plans for both Canadian sales of FE Victor and the development of an HD Viva torpedoed.

There are other stories related to product quality and supply problems (due to strikes) behind those examples, but in general the US-based multinationals turned to their UK subsidiaries in response to short-term pressures and with a view to bolstering North American market share, rather than UK profitability. And it shows in the figures.

The combination of poor productivity, indifferent quality and strikes which became associated with UK production did Britain no favours when Ford, in particular, made sourcing decisions for the 1970s. The Capri (built at Halewood with easy access to the docks) would be sold in North America. But disillusioned with the awful strikes that had disrupted both its UK introduction and the 1970 introduction of Cortina Mk3, Ford sourced all Capris for North America from Ford of Germany. A big loss for Britain it turned out, as Americans bought around 500,000 Capris during the 1970s, comparable in number to all the cars British Leyland sold in the USA during that decade.

Meanwhile, bosses of Britain’s home-owned car industry sometimes seemed mesmerised by the potential of America. ‘Bird in the hand’ markets like New Zealand and Ireland (which combined bought more cars from Britain than the USA in 1970) were neglected as British Leyland in particular devoted huge resources to attempts to ‘make it in the States’. But it proved the graveyard of many ambitions with cars developed around perceived American requirements often failing dramatically (such as the Triumph Stag). By the Seventies the cost of doing business in North America was multiplying in line with emissions and safety regulations, while product recalls and the threat of product liability settlements chipped away further at any profit. Low margins meant a strengthening of Sterling against the US dollar (as occurred from 1978 onwards) which, in turn, led to big losses and a contraction of the business.

European market

The conditions may not have been ideal, but the European continent had become Britain’s biggest export market by far at the end of the 1960s. Britain’s car manufacturers may have been handicapped by exclusion from the EEC, but they adapted to the situation through resort to continental assembly, while the European Free Trade Area (EFTA) markets proved good customers.

Nonetheless the UK industry was less well-placed than that of France, Germany or Italy to benefit from the rapid growth in European car demand of the Sixties, and much more exposed to tariff barriers which ate into the profitability of selling in Europe. Britain’s preferential access to EFTA markets (with 60 million consumers compared to the 200 million of the EEC) was seen as something of a ‘consolation prize’ after rejection by the EEC.

'Incredible: So much car for the price!' The Ford Cortina (Mk1 and Mk2) sold well in EEC markets, but the need to absorb tariffs ensured there was little profit involved, as pricing had to remain competitive. Continental assembly helped a bit: This Dutch Cortina would have been assembled from a CKD kit at Ford's Amsterdam plant.
‘Incredible: So much car for the price!’ The Ford Cortina (Mk1 and Mk2) sold well in EEC markets, but the need to absorb tariffs ensured there was little profit involved, as pricing had to remain competitive. Continental assembly helped a bit: this Dutch Cortina would have been assembled from a CKD kit at Ford’s Amsterdam plant

The tariff barriers associated with exporting to the EEC (which applied in reduced form to CKD kits) when combined with the high value of Sterling made selling ‘volume cars’ in EEC markets difficult. Rather than see this handicap lifted through EEC entry, the British car industry had to contend with it worsening as the Sixties progressed and the complex patchwork of EEC tariffs (internal and external) evolved.

BMC’s front-drive ‘Issigonis cars’ were developed at the dawn of the Sixties with an eye on the European market and were undoubtedly more European in conception than their predecessors. However, the Mini, 1100/1300 and 1800 had to be priced above European rivals within the EEC, and sales volumes were consequently constrained even though profits were marginal. Had BMC ended up with the wrong cars for their export footprint in the 1960s one might ask? Those complex, and not very robust front-drive models weren’t ideal for the Commonwealth or USA. Even BMC Australia, which valiantly adopted all three with some success in the 1960s, hurried to revert to rear-drive designs in the 1970s.

With Britain left on the outside of the EEC, the cloud over future prospects saw BMC for one leave most European sales in the hands of independent distributors who took their cut, reducing the profitability of the business further. Markets with huge potential, notably Germany, received little attention even from Jaguar. That was something which contemporary Mercedes-Benz executives commented on with bemusement…

Like the Mk2 Mini, the Austin 1100 Mk2 arrived at the right time to benefit from the devaluation of sterling (by 14.3% against the US dollar) in November 1967

But devaluation of the pound in late 1967 (exchange rates were fixed in those days) eased the situation, with BMC able to advertise ‘new cars (the Mk2 Mini and 1100) at lower prices’. Ford of Britain was also still a major exporter to Europe in competition with Ford of Germany (Ford called that the ‘two fishing lines approach’) and BMC/BLMC together with Ford were the key drivers of a surge in car exports to Europe.

For 1968 433,000 British cars were exported to all European markets which compared to 200,000 sent to the Commonwealth (all countries) and 110,000 to the USA. However, although strong by the standards of previous years, Britain was still left lagging behind the intra-European export performance of Europe’s three other major car producing nations. All three of them exported more cars within Europe than the UK even in 1968, and the gulf would widen as British car exports (to Europe and the world) contracted in the 1970s.

France, Italy and Germany all imported over 20% of their cars in 1968, mostly from each other, while selling strongly in the three smaller markets of the EEC and in Europe beyond. In very broad terms the hope of British motor industry bosses was to convert this ‘game of three’ into a ‘game of four’. They failed to do so despite the encouraging surge of 1968/69 and continued poor profitability was a consequence. Continued strike disruption was one reason, the overheated domestic market of the early 1970s another.

Britain’s import penetration (still just 8.3% in 1968) was likely to increase irrespective of EEC entry. Britain (which applied a highly protectionist 25% tariff to car imports as late as 1968) was committed to reducing tariffs under the global GATT process, as it indeed did, to 11% by 1972. A strong European export trade could have helped balance the expected rise in imports, but the failure to build one left the industry condemned to low volumes and low profits once the UK market contracted after 1973, with imports both from the EEC and Japan on the rise.

1973 EEC

EEC entry when eventually achieved in 1973 (above) came when the unfavourable circumstances of the 1960s had put Ford of Germany and Opel in a stronger position than their UK counterparts, and the falling of barriers no doubt hastened the consolidation of production for Europe, at the expense of the UK operations (though not necessarily the UK consumer). There’s not a great deal of point in analysing the profitability of Ford of Britain and Vauxhall after 1975, because those figures are distorted more and more by the profitability of retailing (increasingly imported) vehicles in the UK market, which makes comparisons with the 1960s difficult.

Ford of Britain halted most exports of cars to Europe in 1974, but Vauxhall continued to export to the European continent (in diminishing volumes) until 1981, partly through ‘inertia’ as much as anything. By the end, many of the Vauxhall-badged cars sold on the continent (which included even the Carlton and Royale) were manufactured by Opel in any case.

The product range of Chrysler UK was of limited appeal to Europeans by the 1970s and, despite distribution improving through access to the Simca network (as mentioned in the advert below), exports to Europe remained modest, concentrated on Avenger and later the Sunbeam hatchback. Meanwhile, British Leyland failed to repeat the European success of the Mini with larger (and more profitable) models, with exports to Europe lower at the end of the 1970s than the start and still heavily dependent on Mini.

 

‘One of the major benefits of Britain’s entry to the Common Market: the new Sunbeam 1250TC.’   This 1973 French advert for the Avenger (marketed in France as simply the Sunbeam) implies Chrysler were able to price it competitively due to Britain’s EEC entry. It wasn’t quite as simple as that: tariffs on car trade between the UK and EEC (in both directions) were reduced over a five-year transition ending in 1977. In 1973, Chrysler UK would have been ‘absorbing’ the remaining tariff to achieve competitive pricing and that would take a toll on profitability

 

For British Leyland, one can say that, having lobbied long for a level playing field, once they got it, they got slaughtered on the pitch – at least in the 1970s.  All the well-documented issues of deficient products (notably the Allegro) and strikes prevented BL from benefiting from EEC entry, confounding the optimism of the 1975 Ryder Plan which predicted a mushrooming in exports to Europe, as had earlier forecasts made by BLMC. A company that had been among the region’s strongest in the early Sixties when it hoped to gain unrestricted access to Europe had been fatally weakened by the Seventies when it eventually did.

However, once the company got its act together, EEC membership became a definite boon for BL. Without it the Honda partnership would not have made sense. With unfettered access, the Honda Rovers sold very well in the EEC and the export ratio of Austin Rover/Rover cars climbed from a miserable 20% in the early 1980s to more than 40% through the 1990s, keeping Cowley and Longbridge busy.

Conclusion

Any discussion of the profitability of the British car industry in the 1960s and ‘70s has to come with several ‘health warnings’ attached. All four of the companies whose results are quoted at the head of this article were also major players in the commercial vehicle business, which clouds the issue as does the inclusion of other non-automotive businesses (such as BMC’s Prestcold division). Individual years may be distorted by exceptional charges, while two (later three) of the companies concerned were subsidiaries of multinationals which had some ability (through transfer pricing) to shift profit between tax jurisdictions. Why post profit in the high-tax United Kingdom if that can be (legally) avoided?

In the 1970s especially, currency fluctuations had a huge role to play in both flattering and flattening profits. British Leyland would appear to be doing okay during 1976/77 but a weak pound, making exports more profitable, was masking its difficulties. Moreover, just as profitability is influenced by almost everything, so discussion of profitability can lapse into a tour d’horizon of almost everything going on in the motor industry, which isn’t especially helpful. It’s probably worth emphasising that profit was not a ‘nice to have’, to be creamed off for the benefit of shareholders (although some was). It was essential to fund the development of future products and renew plant and machinery. With the exception of Ford (where product development had anyway become pan-European under Ford of Europe by the 1970s) the British car industry was not earning enough profit to secure its future in the late 1960s and into the ’70s.

Academics who have studied the British car industry point to excessive fragmentation with production spread between too many models, both within BMC/BLMC and across the board, having a negative impact on overall profitability. Some see this as a consequence of a protected market, with the British industry attempting to fill every niche of domestic demand and with cost inefficiencies masked due to the effective exclusion of foreign competition. It’s no accident that British Leyland was under huge pressure to prune the model line-up in its early years, with many advisers convinced the more streamlined range of Ford was the model to follow. But there were conflicting pressures. Ford operated under the mantra of ‘making profits, not cars’ which many observers, then and now, would feel inappropriate for Britain’s ‘national champion’ of British Leyland, with all its many marques.

Despite gestures to reduce model proliferation, British Leyland’s Austin-Morris division (for a host of reasons familiar to readers of AROnline) still fielded four largely unrelated medium cars in the 1970s (Allegro, Marina, Maxi, Princess) when international rivals like Peugeot and Volkswagen covered the same ground with two core designs – that was clearly a negative for profitability.

The industry problem

There are macro issues to consider: a wholescale thinning out of the industry could have helped profitability. That was a policy pursued by the Australian Government in the early 1970s in recognition of excess fragmentation of their car industry, and was a factor in Leyland Australia’s retreat from volume manufacturing in 1974. But that was unlikely to happen while the British Government, concerned over employment and the trade balance, intervened to prevent collapse, for a while (from 1975) subsidising two companies (British Leyland and Chrysler UK) which competed with each other.

In prior years Chrysler, like General Motors and Ford to a degree, had preferred to bear the indifferent profitability of its UK arm rather than cede ground to one of its Detroit rivals. With the four major players all having powerful ‘backers’, circumstances didn’t favour the rationalisation that might otherwise have occurred in the context of poor industry profitability.

With the benefit of hindsight, the pieces could have been arranged better in the 1960s. A merged BMC-Rootes (as mooted at one point) could have seen the Rootes rear-drive cars doing battle with Ford and Vauxhall while Austin-Morris concentrated on their front-drive strengths. The Marina and potentially other models would not have been needed. Meanwhile, a separate Triumph/Rover (and Jaguar) combine could have bettered BMW and become an export star. The resulting industry would have had less foreign ownership, and the potential to build fewer individual models in greater overall volume – that really would have been a positive for profitability.

And there are more micro issues: it would be rash to ignore the role of individual products in influencing profitability, and there’s little doubt that, whatever the overall circumstances, profitability at BMC could have been better if the Austin 1800 had been a little better conceived and executed. And the same can be said for Rootes and the Hillman Imp. Both became millstones which dragged their makers down. Jaguar might have made a lot more profit in America if the Mk X had been a hit instead of a flop.

And the UK problem

Another peculiarity of the UK car market was the large fleet sector, growing fast during the period in question. What role did that play in depressing profitability? Everybody had to match the aggressive pricing of fleet champion Ford, usually without the benefit of the huge production volumes which, combined with down-to-a-price engineering, made Cortina (especially) cheap to build.

The whole issue is fiendishly complex, with many moving parts. Suffice to say there were many reasons for the low profit warning light to have been flashing in the 1960s and early ‘70s. But if one had to boil them down, the essential problem was that not enough cars were being built.

Healthy volumes tend to lead to healthy profits, both overall and in the case of individual models such as the Mini where a high breakeven volume can be identified, below which it was generating losses.

With the dreaded ‘balance of payments constraint’ forcing the British Government to curtail domestic demand as the country stumbled from Sterling crisis to Sterling crisis, those volumes were not to be found on the home market in the 1960s, leaving British car bosses to gaze on enviously as their continental rivals saw demand expand strongly. The industry’s attempts to compensate with exports were held back by the barriers British products increasingly faced in export markets. Those were, of course, the very barriers which lay at the root of the ‘balance of payments constraint’ in the first place – it was a vicious circle.

A symptom of poor industry profitability was reduced investment and product renewal, leaving cars like the Viva HC, Marina and Avenger (pictured) hanging on far longer than envisaged when they were launched
Chris Cowin

70 Comments

  1. Thanks Chris. A clearly argued and concise case for what happened to the UK car industry in the later 20th century. I also wonder if there was an effect caused by the hollowing out of British financial markets and the demise of British industry generally. It wasn’t just automobile manufacture that suffered, but motorcycles, cutlery, electronics, and aircraft. The idea of manufacturing anything in the UK seems to have been given up on by people within the UK. Oddly, now it is non-Britisn people that own most of British industry, the UK giants of the past from ICI to Leyland to Raleigh now having disappeared.

  2. Ian, Chris, this article is excellent, and the is the best summary of the financial and export themes I have seen. Thanks for the hard work in putting it all together..

  3. Excellent article and rather sad to read as it catalogues why the British car industry went from being a major success in the 1950s to a failure by the 1970s. However, the years after 1980 do mark a turnaround for the industry and what remained after a big shakeout in the early Eighties became so much more successful.

  4. With the exception on how the mergers should have come about (do not see BMC-Rootes or Leyland with Triumph/Rover/Jaguar working out compared to BMC-Rover and Leyland-Rootes plus Jaguar), what could have been done differently if a large part of the blame for the decline of the British Car Industry was down to the policies of successive post-war UK governments and the UK entry to the EEC being vetoed in 1963?

    Would the UK abandoning or aborting its regional policy from the beginning (apart from maybe limiting it to foreign carmakers earlier on akin to later with the likes of Nissan at Sunderland, or encouraging Chrysler-owned Simca to set up shop in the UK, etc) together with a viable version of Operation ROBOT and successful UK EEC entry in 1963 have helped matters or would more historical points of divergence have been needed to help significantly butterfly away the decline of the British Motor Industry?

    • @ Nate, regional policy had been a major government initiative since the 1930s to reduce unemployment in depressed areas. Near me, British Leyland opened a bus factory in 1970, which created 600 jobs, and was a major employer in Workington for 22 years. At the time, with the coal and steel industries dying and unemployment well above the national average, these jobs were essential. However, the plant’s remote location, rather than any issues with the unions or low productivity, was its undoing.

      • Am not against it per se however as implemented or more specifically imposed by Government (appearing in practice to be little more than a glorified make workers scheme), it had a negative impact on the British Car Industry (and possibly other industries), added unnecessary costs and bad logistics from isolated factories without even mentioning union militancy or low productivity (exceptions notwithstanding).

        Linwood and the Imp come to mind with the 600 mile round trip between it and Ryton, along with the Pomigliano d’Arco plant and the Alfasud in the case of Italy via a similar regional policy scheme.

        Such a policy should have largely been limited to foreign companies (albeit buttressed with inducements) or even start-ups via a more lenient post-war sub-Mini 4-wheeler Kei Car style microcar class (with a similar microcar specific early-60s purchase tax rate cut) that is not restricted to 3-wheelers (with no reverse gear), to allow the Motorcycle and other industries a potentially niche they could diversify into.

  5. Excellent piece of work. I found it strangely nostalgic, because it mentions events, models, news, and personalities from the late 1950s/early 60s which I remember hearing about when I was young, but not old enough to understand what it was all about.

  6. Ford noticed the burgeoning market for company cars and minicabs in the sixties and made the Cortina with this market in mind, a simple rwd saloon with a list of trim levels and engine options. By the early seventies, they’d cornered this market and big fleet sales made big profits, even with a damaging strike in 1971. Obviously private sales for cars like the Escort and Capri helped, but the real earner for Ford was the fleet market where 25% discounts and a competent product meant fleet managers and taxi firms kept coming back to the Cortina. Also private buyers and used buyers seeing so many Cortinas on the road thought there were so many of them, they must be good cars and bought one.

  7. I too join the chorus of praise for this very good article. Speaking in extremely general terms, I would say that the two MAIN reasons for the sad decline of the British car industry were governments indifferent towards business at best, and others hostile at worst, combined with an absence of vision on the part of industry leaders.

    Starting primarily with the Wilson Government in the mid sixties, taxation levels on vehicles, private income, and all other aspects of the economy, started going through the roof. Remember Beatle George’s song Taxman? He was singing about his 95% taxation! (“There’s one for you nineteen for me”).
    As they say, there is only one taxpayer, and when you milk him or her like a cash cow, it stifles the economy and you get a falling house of cards.

    Great industry leaders with a clear understanding of the international market, how to make a profit, what quality control is, and how to command the genuine respect of their workers–men such as Donald Healey, Leonard Lord and Sir William Lyons– were retiring and giving way to others not able to fill their shoes. Isn’t it a pity.

  8. This is a very interesting article with lots of financial data for analysis. However, it doesn’t explain how the markets in Asia and Africa (and South America) were lost to European competitors or even newcomers from Japan,where poor product reliability was compounded by poor marketing.

  9. When I started work in 1972 my company had a small fleet of both Escort & Cortina MKIII Estates. The earlier one’s were basic and didn’t have a very nice dashboard, but the 1974 “facelift” versions improved on this and started to increase the spec.

    I remember Ford called these cars “Added value” as they started to dominate fleet markets and the Hire car business. They also looked more modern (as did Vauxhall) than their BL equivalents. The MKIV continued this trend with opposition coming mainly from the Cavalier or Japanese imports.

    • @ Hilton D, Ford had the market worked out, they catered to someone like a driving instructor who needed a low powered car like an 1100 cc Escort to teach people to drive, to a company director who would be driving, or driven in, a Granada 3000 GXL. Then there was Ford’s success in motorsport that ensured healthy demand for cars like the Escort Mexico.

  10. Some great analysis.

    Unit sales aren’t everything, as the mix of vehicles is important too. If BMC/BL had sold 100k fewer Minis but 100k extra Landcrabs every year, I imagine profitability would have been significantly better. Ditto if more people bought the Wolseley versions rather than the Austin ones.

    Were the EEC tariffs on CKD cars significant? Were the Seneffe made cars all classed as CKD as that was a growing facility through the 70s until the end came rather brutally in 1981

    • What you say regarding product mix is very true – but of course government measures to stifle car demand also were bad for the mix – if “Hire Purchase” terms (as they used to say) were made very restrictive by law (minimum deposit increased / maximum duration of loan period shortened etc.) it was hard to justify a Wolseley 1100 over a Morris 1100 – for example.
      All cars assembled at Seneffe were CKD and classed as “manufactured in the UK and exported in kit form for overseas assembly”. So they counted in the figures for British car exports.
      The same was true for Mechelem/Malines (Triumph Belgium) and most of the cars assembled by Innocenti (it’s a little more blurry as they had higher local content) – but not the cars built in Spain by AUTHI (except for a few early ones).
      Tariffs were set on a national (not EEC) basis until the late sixties so it varied a lot. In the mid sixties Mini CKD kits imported to Italy were subject to a 10% tariff when built up cars were subject to over 30%. When a common EEC external tariff came in it was closer to 20% and for CKD kits 10% (though I’ll need to look up the figure later : ) Update: 22% for cars, 11% for kits.
      The UK incidentally gave no concession for CKD imports which paid the same tariff as complete cars (33% in the fifties declining to 25% by 1968) so there was not much to be gained by foreign companies from assembling in the UK (apart from the saving on duty due to the lower value of the kit compared to a complete car) – but some companies like Citroen (until 1967) still found it worthwhile

      • Thanks. From a modern point of view, these screwdriver plants putting together CKD kits seem really inefficient, but there were everywhere due to tariffs rules. Ireland had several car plants, I hadn’t realised that Renault 4s were made there until the 1980s!

  11. Sadly, adjusting the exchange rate of the £ didn’t have the desired effect, as greedy importers would simply set sales prices from the top down, i. e. so as to be somewhat lower than the competition, rather than calculate the sales prices from cost up. I lived in Switzerland in those days, and the BLMC importer (Emil Frei) was actually sabotaging the desired effect of the low exchange rate.

    • That’s interesting to hear.
      All the same BMC/British Leyland experienced a big sales boost in Switzerland in 1968 – maybe more the result of refreshed models (& overall market growth) than any price cuts. I have the figures (from my book “Export Drive”)
      For 1968 British Leyland had 9.3% of the Swiss market. Their highest share in continental Europe apart from Denmark.
      Switzerland was one of the EFTA countries where British cars did a lot better than in EEC countries, helped by the lack of a domestic industry and in those days, almost no Japanese competition.
      Mini sales jumped 30% to 7,400 cars for 1968 (4% of the total Swiss market) and 1100/1300 sales jumped 56% to 4,500 cars.

      • The sad fact is that car importers in Switzerland have been experts at price gouging, not least thanks to legislation that even in the 21st century puts the interest of cartels above consumer rights. In the seventies, the exchange rate advantage was not passed on to the market but pocketed as additional per-unit profit. I remember the Rover 3500 being about 40% more expensive OTR in Switzerland than in the UK (despite sales tax in Switzerland being almost negligible). Even today, the pre-tax price difference (after dealer discount) between identical cars sold in e.g. Germany and Switzerland can be up to 30%.

    • Here in Germany, BMC/BL cars were indeed getting cheaper over the years. After the UK joined the EEC, the cars were really competitive in price – but that was it. Quality was abysmal in the mid 70s and many people still think of UK products being badly made and unreliable due to this period. Unlike in Switzerland, BMC cars were very much rarities before – they were simply very expensive to start with.

  12. Well researched article with interesting facts presented but I have to disagree with the emphasis. As I see it, most of the problems experienced by the British Motor Industry can be traced back to poor quality of the product, whether in design, manufacture, assembly or after sales support (usually all of the above). Case in point, the F series Victor. At the time this was the most exported British car but the quality problems (well documented on vauxpedia.net) were catastrophic and I’m not just talking about the epic rusting. Poor quality = lack of repeat sales = falling sales = inadequate profits. The same thing can be said about the Firenza in Canada, Marina and Avenger in the US 10+ years later and the Rover 800 / Sterling in the US 10+ years later again. If any of these had had decent quality they would have been successful and sales would have risen along with profits.

    You only have to read US articles (written from an American’s point of view rather than with British rose-tinted spectacles) on British cars to see the extent of the problems e.g. Lucas electricals – joke of the decade.

    • Thanks for that. I agree with what you are saying about product shortcomings – and had hoped that was at least referred to – through for example the mention of product “deficiencies” and a summary of the Firenza debacle.

      In fact the Victor USA story was what I had in mind when writing of how British exports to the USA by the American multinationals tended to suffer from short-term thinking in Detroit.
      As very well documented on Vauxpedia, the development of the 1957 Victor was “accelerated” by GM in Detroit because they were desperate to give their (Pontiac) dealers a small car at a time when imports of small cars were rising fast – essentially as a stop-gap until the domestically produced compacts were ready.
      Development was rushed and to make matters worse the Detroit design staff insisted on adding “tweaks” to the Luton design which would cause problems in service. A notable example being the exhaust pipe exiting through the bumper which was fashionable and a feature shared with some US cars, but caused (even more) corrosion.
      GM bolstered their US market share slightly during 1957-1960, at the cost of trashing Vauxhall’s reputation in that market for ever. And because the deficencies of the Victor were experienced in other markets including the UK, Vauxhall as a company suffered major reputational damage – with an impact on profits.

      But more generally it’s true there was a problem in the UK with the rather amateur approach to product development which (American) academic Timothy Whisler charachterises as the “make do and mend” approach, with the customer playing the role of development engineer too often.

  13. I agree with 406v6, the lamentable quality of some British cars drove buyers away, both at home and abroad. The Rover SD1 had the potential to be a huge success, as European buyers liked the radical styling and the V8 would have been popular in America, but rust, terrible build quality and unreliability drove buyers away and exports nosedived. Remember in 1970, nine out of ten new cars sold in Britain were British, by the end of the decade this was less than half, as buyers lwent elsewhere and Ford and Vauxhall imported better built cars from their continental factories.

  14. I think it was a mixture of government interference (look at the industries the UK government played with – they no longer exist), poor quality of product and bad British management. In 1963 when De Gaulle blocked UK entry into EEC then the British companies should have invested in European factories, especially BMC whose products would have been snapped up, instead we saw BMC increase investment in UK factories! The quality of cars made by Innocenti in the 60s was also reported to be much higher, but did BMC look at other parts of their empire to see what they did better – no!

    • To be fair to BMC, they embarked on a major investment in the EEC with Seneffe which started assembling cars in Belgium in1965 – and expanded the arrangements with Innocenti (which started in 1960) by adding the Mini in 1965 – which soon accounted for most of Innocenti’s volume. They also entered into the arrangement with AUTHI in Spain (not in the EEC then of course) starting in 1966.

      • But Chris these were either ckd operations in case of Seneffe, and licensing operations with Innocenti and Authi. When you look at the expansion of UK plants to try and build 1 million cars a year, where we’re these cars going to be sold too? Without EEC customers this was madness, money should have been spent by setting up their own production facilities in an EEC nation (ie. Making Seneffe a manufacturing plant).

        • I suppose one reason BMC didn’t install a full scale manufacturing operation (as opposed to assembly) within the EEC after the 1963 veto was that EEC entry still appeared to be “around the corner”. The Wilson government made a big second push to join – stopping in 1967 only when it became clear the French would simply exercise their veto again.
          After that an EEC application was Conservative policy and from 1970 the Heath government was actively negotiating to join (and helped by the replacement of De Gaulle by Pompidou, it looked more likely they would succeed – which they did in 1973). So there were 10 years of being “in the waiting room” so to speak.
          Even the French weren’t saying “never” – they were saying “when the time is right”. And by 1973 the UK was a weaker economic power (smaller GDP) than both France & Germany. So the French were no longer so worried about losing influence and removed their objections. (One reason the French economy had become stronger than the British was the growth of their car industry to become bigger than Britain’s of course).

          If a big investment had been made in manufacturing within the EEC during that period it would have risked being rendered redundant very quickly.

          Where there was no other option – in Spain – BMC of course did “take the plunge” via AUTHI which British Leyland then bought out in 1972 becoming a Spanish car manufacturer (briefly).

          Lots of other factors but that’s one ….

  15. Several thousand Allegros were imported into Britain from Seneffe in 1978/79 and there was a plan to move most Allegro production to Seneffe, with Leyland keen to emphasise the cars were assembled from kits made in Britain, but union pressure saw the plan halted and I doubt the government would have been keen to see even more imported cars on the roads. Sadly Seneffe, whose productivity was far higher than Longbridge and had never suffered from strikes, was closed in 1981.

    • Indeed – One aspect of that plan (at least as reported in the press at the time) – that seldom gets mentioned is that Mini assembly would have ceased at Seneffe. So Longbridge would have built all the Minis for Europe including the UK and Seneffe would have built all the Allegros for Europe including the UK (with the possible exception of estates).
      Instead both plants kept on building both models.
      The plan was designed to be “balance of payments neutral”. It would also have simplified the introduction of Metro at Longbridge.
      By that time all tariffs between the UK and rest of the EEC had been phased out and Seneffe was being run more like part of the “home manufacturing footprint” than as an overseas plant.

      There was a question mark over its long-term future as the next generation of cars (Metro/Maestro/Montego) were designed for robotized assembly and enormous investment went into Longbridge and Cowley to permit that. It would have been hugely expensive to duplicate that investment in robotization at Seneffe – and pointless as the UK plants had easily enough capacity.
      I suppose if they had known then what we know now – that the Mini could continue in production for another 20 years – then Seneffe could have had a future beyond 1981 building Minis (instead of Longbridge) until (perhaps) 2000. There was an assumption in the early ’80s Mini would have to be dropped soon due to low demand/regulatory barriers etc.
      But that’s maybe “a question for another day” : )

      • IF the M cars had sold at the levels that BL originally have hoped for, ditto the Rover 800, would Cowley have had enough capacity?

        It does seem that the whole period was one of contraction, with falling sales leading to cuts in capacity. leaving an ARG which was too small to be viable by itself.

        • I think the simple answer is yes – If the “M cars” had met the sales forecasts made for them when being developed – the company would have had enough capacity to build that many cars.
          The Metro plant at Longbridge was announced (when new in 1980) as having capacity to build 6,500 cars a week. That’s in line more or less with the more optimistic forecasts suggesting 350,000 Metros (and derivatives) could be sold annually. In fact annual production never passed the 200,000 barrier.
          After completion of the £210m investment at Cowley to build Maestro and Montego Austin Rover was described as having overall capacity to build 750,000 cars annually. That compares to 450,000 in 1983. In fact they never built more than 500,000 cars in Longbridge/Cowley combined in any year after 1983. That’s not to say pinch-points could not have cropped up in the production of individual models – especially if Maestro or Montego had sold better – or better than expected.
          At the time there was criticizm (notably by the academic and AR advisor Krish Bhaskar) over the investment in Cowley for the LM cars not allowing enough flexibility to switch between variants to react to demand. (He published a hefty report on these issues in 1985).

    • The US tariff on built-up car imports was a lot lower than most other export markets, so there was little incentive to assemble locally (though in the early ’50s Austin came close to opening an assembly plant in Hamilton, Ontario, Canada – to serve North America). And British cars entered Canada with no tariff due to “Commonwealth preference” until 1961 and a small one after that.
      So the “British owned” car industry never really felt the need to open assembly plants in North America. The American owned multinationals of course had plenty of plants in North America already where the products of Ford of Britain, GM-Vauxhall and Chrysler UK could have been assembled if it made sense – but they never did that – direct import being preferred instead.

      • I appreciate that you replied! Very bad choice for the UK car businesses even if there were big financial benefits (tarrifs).

      • Have read Austin under Leonard Lord both in the pre-war and post-war periods was interested in establishing a factory in India based on a £2.5 million investment, only to be put off by other events such as the Royal Indian Navy mutiny, political instability and concerns the left-leaning Nehru would nationalize British interests. Did Lord have a specific site in mind within India to set up a factory?

        Also is it known whether Austin, Morris or another British carmaker came close to establishing a plant in larger markets like Mexico and Brazil instead of Chile, Uruguay or Venezuela?

        Do know in Morris’s case they could have acquired a different French carmaker instead of Leon Bollee Automobiles with potential for an increased presence in Europe. While Austin in better circumstances could have done much more to establish a presence in the US with American Austin later American Bantam to increase capacity (or find a bigger site than Butler, Pennsylvania) to be able to mass produce the Jeep (the prototype was designed by Karl Probst at American Bantam) alongside or in place of Willys-Overland and Ford.

        • Was the licencing to build the Hindustan Ambassador arranged before the formation of BMC? I’ve heard of Morris Minors being assembled in India.

          Certainly Seneffe should have been turned into a full production plant in the long term from what I’ve read of operations there.

          • Nuffield were supplying components to India before the BMC merger. Before the Hindustan car launched in 1957 (based on Morris Oxford III) there was a version based on the old MO Morris Oxford (which looked like a big Morris Minor).

        • In reply to Nate – Austin had identified a site in Madras for a car plant around 1950 (before the BMC merger). But a major factor in that not going ahead (like a lot of projects at that time) was the Korean war. There was a re-armament programme in the UK and Austin had to devote energies to military orders “on top of” regular vehicle production. This required extra investment in Britain.
          Also – car production was not a priority for the government of newly independent India. They didn’t create an environment that favoured investment – as you say.
          As mentioned above Austin came close to opening a car assembly plant in Hamilton, Ontario for the North American market at around the same time (the site had been acquired) – but this was also cancelled partly for the same reason.
          The biggest venture of BMC in South America was the arrangement with Siam Di Tella who built 65,000 BMC derived vehicles in Argentina during 1960-67 (latterly as a subsidiary of IKA). These were (nearly) all derivatives of the ADO9 “Farina” saloons. (that’s a story in itself)

          • Understand, interestingly Studebaker Canada also had a plant in Hamilton, Ontario.

            Without the License Raj, Austin later BMC could have benefited hugely with an increased presence in India beyond Hindustan.

          • Out of interest, is it known why BMC Turkey never sought to move beyond commercial vehicles to production cars given the size of the country with a potential latent demand for cars, was it down to them having little desire on their end or due to politics in the country that prevented them from doing so in favour of the fiberglass-bodied Ford-based Reliant-developed Ogle-styled Anadol cars?

            It seems there was room for BMC Turkey to at least build fiberglass versions of the Mini and ADO16 like in Chile and Venezuela as well as integrate Autocars of Israel into BMC Turkey to assemble the cars (due to the proximity and good relations at the time without Autocars being forced to turn to Marcos Engineering for what became the Mini-based W90/W95).

            At most there was even room for them to further integrate them with Innocenti (plus Lambretta) and Authi to build localized versions of the Innocenti Mini and Authi-badged Austin Apache / Victoria to create a Latin / Mediterranean specific region for BMC/BL, with potential room to expand into Latin America either by way of Siam Di Tella or a new venture in South America. .

          • Fiat, Renault a few other manufacturers seemed to managed to get production established in Turkey alright, maybe BMC thought their wasn’t a big enough market or else it was too saturated by local production.

          • Either that or possibly bureaucracy from the Turkish government was another factory that prevented BMC Turkey from manufacturing locally built Minis, ADO16s, etc.

          • Nate – on your point about Turkey etc. – I suppose it’s worth remembering that there were simply limits to what BMC could do. Financial but also engineering resources, management time etc. etc. BMC in the sixties was more “holding the fort” than “conquering the world” – though they did enter into many potential fruitful ventures such as AUTHI in Spain.
            With regard to the AUTHI built Austin Victoria you mention – it’s not well known that it was exported from Spain to Greece (reflecting one presumes consumer demand in Greece that aligned quite closely with Spain). As far as I know that was the only formal export market for the Spanish-built Victoria (though examples have popped up elsewhere including Mauritius).

          • Chris Cowin – Aware BMC’s problems prevented them establishing car production in other markets, just that it seems to be another area BMC and its Austin/Nuffield precursors were rather lackluster in compared to rivals on the continent.

  16. Very interesting article. As I remember that period there were issues that I don’t think you have given quite enough prominence to. Many UK products were unsuitable for the markets they were selling into. Drivers in Australia needed cars that were (a) robust; (b) reliable; (c) capable of travelling long distances effortlessly. Try driving a long distance in challenging conditions in a typically low-geared UK product of the time. UK service networks were notoriously hopeless. If continental buyers needed a spare part, it often had to be ordered specially from some strike-bound location in the Midlands. You could be waiting for weeks, and people got to hear about that. I’m sure you are correct to suggest that government policy was a problem, but I do feel also that UK manufacturers helped to dig their own graves. Their world-view was too parochial. The kind of car suited to pottering around the Cotswolds was not what you wanted for travelling 500 miles in a day across the Continent, or any other major export market. Try driving across the US in a Morris Minor or even a Hillman Minx.

    In the course of my work I encountered a guy in the Philippines who, earlier in his life, had been involved with a company assembling CKD kits from both Opel and Vauxhall. The Opel kits went together without drama. The Vauxhall kits were often late, or had bits missing, or had some other quality issue. I think that’s a big factor in the story of the British motor industry.

    • @ TimAuger, it also explains why Americanised cars from Ford and Holden started to sell in huge numbers in the second half of the sixties, their large engines, comfort and performance were ideal if you had to drive from Adelaide to Perth.While not the most stylish cars on the road, they were quite dependable and the drier climate in the West meant rust wasn’t an issue. Leyland did try to rectify their falling sales by introducing the P76, but it was too late.

  17. As to the North American market, another killer for the UK (and some EU) made cars was the growth of the Japanese brands starting in the mid-1960’s. Toyota and Nissan (then called Datsun), Mitsubishi via Chrysler, as well as Honda and a terrible attempt by Subaru started significant imports to the NA market with competitive pricing, good value for money, available with Automatic transmissions (although early Japanese AT’s were quite poor) and Air Conditioning, well made mechanically (although with rust issues). Even the UK sports car market was hurt by Nissan’s 1600 & 2000 series models. The Japanese brands were also quicker and better to adopt to the USA’s safety and pollution controls and make cars that were attractive to NA market. The Toyota Corona and Corolla, Nissan 510 (Bluebird) were breakthroughs. Mitsubishi made models like the Colt, for Chrysler that sold well enough. Honda also started in the late 1960’s with the 600 model and good reputations from their motorcycles, and later built from that with the Civic and Accord in the early to mid-1970’s. Subaru found its niche with its AWD cars by the mid-1970’s. By the mid-1970’s but for a few sports cars like Jaguar, MG and Triumph, badly made, poorly adopted to USA/NA pollution standards, ugly bumpers, the UK brands were pretty much gone.

  18. The British car industries problem was being locked out of European markets. Commonwealth and a share of the US car market didn’t compensate for that. It meant that mass market makers like BMC struggled to achieve the volumes to be profitable.

    In hindsight, the only viable strategy was to go up market and not to compete directly with more productive foreign car makers.

    Alas with brexit, what remains of our car industry is probably doomed.

  19. Hire purchase restrictions, tariffs, union militancy, bad management, some awful products, is it any wonder the British car industry started to fall behind its rivals, Even when hire purchase restrictions were eased in the early seventies and EEC tariffs ended in 1973, it was too late as many British cars just weren’t good enough to generate large sales in the EEC and were falling behind at home. The Cortina might have been considered an ideal family car in Britain, but in markets like France it was seen as a conservative rwd car with little appeal to French buyers who loved advanced technology.

    • It was not a surprise that the French and Italians fell in love with FWD – it was so more advanced. Though FWD really only started becoming the norm in the 70s – Renault only started moving to FWD in the 60s (16 compared to a Dauphine?), while Peugeot was later. Citroen had pioneered FWD with the Traction Avant, which paved the way for Issigonis. Italy was more cautious – FIAT really only dipping the toes in the water in the 60s with Autobiancini, and then with the 128 in the early 70s, the mid rangers still being launched as rwd. Lancia were really the protagonists in the 60s, but they were an upmarket brand and Innocenti – which was BMC.

      BMC were ahead of the rest of Europe, the issue was the 1100 and Mini were brilliant but flawed, but the private buyer loved them. Issue in Britain was the private buyer was only part of the market, unlike Europe, and fleet sales were the rest. Ford cornered the fleet sale market with the Cortina, and so instead of looking what Europe wanted, Britain was inward again and the new BL wanted to compete with Ford. Although Harriman was an idiot for most of the half baked things BMC did under his leadership, his comment that BMC were not competing against Ford was probably one of the best things he said. By the time EEC had come around we had Ford men at BL, and the bean counters had made the Allegro worse than the 1100. Vauxhall had self destructed before the EEC had opened up (and were never going to get a slice of the market with Opel already there), and Chrysler UK had already been abandoned, so the UK industry had no chance. If BL had developed a more reliable modern looking replacement with sharp suited styling, and built it properly then maybe they could have still been around today – maybe.

  20. Vauxhall only really survived in the UK by making cars almost identical to Opesl and using superior Opel drivetrains to their slant fours. I doubt the Mark 2 Cavalier would have found many takers if it still used the 1256 from the Chevette and the slant four from the Victor. Instead reviewers raved about the smooth, powerful and economical engines in the car, while rarely pointing out these were imported from Germany. Also by the early eighties half of Vauxhalls were imported and the Novas was about as British as paella.

    • Vauxhall’s situation would have probably been much better had GM initiated an earlier version of the VOH (Vauxhall-Opel-Holden) Interchangeability programme as well as GM’s TASC program, which would have allowed Vauxhall to merge with Opel on its own terms as well as Vauxhall’s issues during the 1970s that accelerated the process.

      Vauxhall had some good ideas such as a smaller version of the V platform with the Cerian proposal during the mk1 Cavalier project, the Slant-Four had its issues though also much potential in forming the basis of a V8 along with diesel Slant-Four / V8 engines (and the possibility of a 90-degree V6).

      On the other hand Vauxhall would have probably benefited from a developed version of the Opel designed (850-1600cc) precursor to the GM Family I engine that found its way in 1.6-litre form in the Brazilian market Chevrolet Chevette, in additional to a late-60s version of the GM 60-degree V6 (in 2.5-3.0+ forms) as an alternative to the Opel CiH Straight-Six.

      Also understand the 1256 engine was essentially a version of the Opel OHV engine that was still used in the Nova in 1.0-1.2 forms until 1993.

      • Bill Mitchell was the man who put forward TASC. He was ahead of his time as a designer but he was hamstrung by the Conservative attitudes of the GM senior management. John De Lorean was another that was also held back. Had he been let run wild Pontiac would have been more advanced.

        GM have gone from being the world’s biggest automotive firm. It’s poor management has led it to sell of most of its foreign outposts except for Asia (even Holden is made there). Opel and Vauxhall should have been brought together made into a chevy / cadillac mix in Europe long ago. Vauxhall was an upmarket brand when they bought it, so they could have easily done this. I think the issue there was that Opel was German and in UK there may have been a rejection due to the wars.

        • TBH Vauxhall aren’t really the big force they were in the eighties and nineties. Some insipid cars like the original Corsa and the Vectra put buyers off and some of their models like the Frontera developed a bad reputation for unreliability. I’d say the period from 1979 when the Astra was launched to 1995. when the Cavalier ended production, was their golden era when every car they launched had rave reviews and big sales. That said, I do like the latest Astra.

          • Our friend pxd his 190e for a frontera back when then came out. A couple of weeks after getting it the engine cut out. Luckily his a mechanic and had a look under the bonnet. Trouble was he couldn’t fix it as the immobiliser had fallen off! They really were badly put together. He asked for his money back an px it for a BMW 3 series, which then blew up its battery! Safe to say this was replaced by going back to Mercedes.

        • In the case of General Motors, there is a question of how feasible it would have been to maintain separate marques around the world and in the US before necessary rationalisation.

          Had VOH/TASC occurred earlier in the 1960s with constituent marques still maintaining their unique engines and exterior styling, etc until say the arrival of the Family II engine in 1982 up to as late as the late 1980s to early / mid 1990s with the Family 0 engine. Would it have not also made sense for GM to rationalise their marque portfolio down to just Chevrolet (formerly Vauxhall, Opel, Holden, Oldsmobile, Pontiac, Buick, GMC, Daewoo, etc), Cadillac and Hummer once brand loyalty has been significantly diminished in the mid 1980s to mid 1990s?

          Such a scenario could have also allowed GM to establish a European branch of Cadillac that is specifically adapted to the UK/European markets and used as a vehicle to further integrate Vauxhall and Opel with European Cadillac ranging from a roughly mk1 Cavalier-sized V-platform derived Cerian (to challenge the BMW 3-Series E21) up to a Opel Diplomat-based Cadillac.

          • Nate – I could spend all day discussing GM brand management in the ’80s & ’90s having spent all of the 90s working for GM Europe’s Zurich HQ where this kind of issue was flying around – But probably shouldn’t : )
            Suffice to say that Cadillac was never going to make it as a convincing premium brand in Europe. Brand awareness as confirmed by much market research was fairly good – but inescapably tainted with an “Elvis Presley” (Vegas period) kind of image. On top of that, Cadillacs of the 90s notably the FWD Seville & Eldorado (which were marketed in Europe) were not really engineered for the autobahn and in the all-important (for premium cars) German market Cadillac’s image for durability was far from good.
            Every ten years or so (American) management would convince themselves a European (re)launch of Cadillac made sense and spend a lot of money trying to make that happen.

            Far better, if GM wanted a premium brand for markets in Europe (& beyond) to acquire one and develop it.
            They tried hard to buy Jaguar in the ’80s (as recounted in John Egan’s book) before being beaten to it by Ford.
            But under Bob Eaton in the late 80s they acquired both Saab and Lotus.
            There were some great plans and schemes for both those marques but (in a nutshell) it’s fair to say Eaton’s vision for those marques was not shared by the top managers who followed him. They tended to focus simply on the short term profitability of those “business units’ rather than the potential of Saab & Lotus (as companies with a great deal of expertise in specific areas to draw on for the benefit of Opel/Vauxhall – and as consumer brands). A lot more could have been “done” with Saab than actually was done, culminating in the brand’s extinction.
            And after some great early initiatives notably the Lotus Omega/Carlton (which acted as a high performance flagship for Opel & Vauxhall) Lotus was hurriedly disposed of.

          • Chris Cowin – Admittingly properly establishing an indigenous European branch of Cadillac would have taken some work had it began in the 1960s though does have some potential (even if it is a long shot), by drawing inspiration from the Cerian proposal’s smaller 100-inch V platform in Vauxpedia’s U-Car part 1 as well as the Curbside Classics article “Automotive Alter-History: 1965 Cadillac Seville – The Car That Beat Back Mercedes and Became A Global Best-Seller” involving the Diplomat.

            Essentially envision the alternate Euro (3-Series to 7-Series like) Cadillacs remaining RWD, while Opel/Vauxhall (later merged and renamed Chevrolet) transition to FWD.

            Not convinced in retrospect Saab could have been successful under GM based on how things ended up beginning with the ditching of the H-derived Saab V8 engine project as well as people generally associating the very challenging segment it was competing in with luxury RWD cars from BMW, Mercedes and Jaguar/etc. Maybe GM could have been a better candidate for acquiring a marque like Maserati from Citroen in the 1970s (along with the unbuilt V6-based 4-litre V8 tested in the experimental Citroen SM V8 prototype) instead of De Tomaso if not make another attempt to also acquire Citroen itself (aside from an earlier pre-war attempt)?

            Despite Colin Chapman’s desire of developing his own engines, a greater GM involvement in Lotus would have probably benefited both Vauxhall and Lotus’s own Slant-Four and V8 engines considering how Lotus used Vauxhall’s engine to accelerate its own engine’s development as well as provided both with a related 90-degree V6 as a UK alternative to the Opel CiH straight-6 and replacement for the old Bedford straight-6.

            Obviously significant changes would have been needed to make this Vauxhall/Lotus engine family reliable and a significant improvement over the real-life engines as well as eventually required similar reworking to be mount in transverse FWD cars as reputedly experienced by Saab who had to redesign their H Slant-Four engine twice for the 9000 and later the 900 NG.

            Though this article is not the right place, there are some aspects of GM’s history that have found a bit perplexing over the years from the Elan M100 allegedly being loosely related to the R platform (if not carrying over quite a bit of componentry beyond the Isuzu engine) or another GM platform to the Swift aka M-Car / Suzuki G engine originally being a parallel project as a possible alternative to the Corsa A/Nova that was sold to Suzuki and some claim the Family 0’s origins stem from the late 70s to early 80s (unless there is likely overlap with the Suzuki G engine on GM developing a 3-cylinder engine during that period).

          • Nate – not sure why you think dumping “Opel” and “Vauxhall” as brands in Europe in favour of “Chevrolet” would ever have been a good idea. (in the period before sale of those units to PSA)
            Of course they spent most of the last 20 years trying to establish Chevrolet as a “value brand” in Europe (with mostly Daewoo built products) sitting below those two marques – with limited success.
            But, before that – in GM’s two biggest European markets of Germany and the UK they had what was perceived as a “domestic brand” in Opel and in Vauxhall. That was a strength it would have been been foolish to throw away in favour of an (expensive) attempt to establish Chevrolet.
            In the UK where in fact in recent years only one model of Vauxhall car was still manufactured (the Astra) – there was a consistent (and one must say successful) effort over many years to portray Vauxhall as the patriotic choice – through actions such as sponsorship of the England (& other UK nations) football teams. Advertising “banged the patriotic drum” (and still does) an example being the recent slogan “Cometh the hour, cometh the van” inspired by the old English proverb (from Sir Walter Scott ?) and accompanied by Union Jack flags. (The van concerned is actually built by PSA in Spain but few people realise that).
            That “Britishness” was (and still is) an asset for Vauxhall in the UK market (to which the brand has been confined since 1981) both in the retail market and in the fleet market where, certainly in the ’70s and ’80s, it was hard to make inroads with cars that were not “British badged”.
            Replacing Vauxhall with Chevrolet would have been hugely damaging to sales at least in the short term. Market research we conducted almost 20 years ago showed brand awareness of Chevrolet was low in most countries – and where consumers did have a perception it was one of gas-guzzlers/land-yachts. Chevrolet (originally a French name) “sounded foreign” to many British ears. Germans linked it to the 70s/80s Camaro which was popular in Germany in certain (rather brash) circles.
            Now of course Chevrolet is better known in the UK, and elsewhere in Europe, but tainted by 20 years of association with cheap Korean cars. Perhaps in Vauxhall’s dark days of the early ’70s when “Vauxhall” was still struggling to shake off associations with rust a name change would have made sense – but not after that.
            It’s worth mentioning that then (and subsequently) there was pressure from some quarters, not always jokingly, to eliminate Vauxhall in favour of Opel – but that was easy to resist largely because of the “buy British” factors mentioned above.

            Meanwhile Opel basked in a similar position of being perceived as “German” in the German market which, again it would have been foolish to throw away.
            On top of that, sales of Opel badged products throughout the rest of the European continent (and some places beyond) have benefited from the “made in Germany” associations of the brand. Again a lot of this is now a form of deception as Opel products sold across the continent have (dependent on model) been built in Spain, the UK, Belgium and Poland as well as Germany. A lot of energy was expended in the ’90s trying to define the “essence of Opel” to emphasize in marketing (like “safety” for Volvo, or “excitement” for Pontiac at that time) but in the end “being German” is the only thing that really sticks. In France for example Opel dealers participate in a “German week” of open days (complete with sauerkraut and brass bands etc.). In the Republic of Ireland you can find adverts for the Opel Astra trumpeting “German quality” (Even though those Astras are likely to have been built at Ellesmere Port in England).
            There are few signs this emphasis on the German heritage of Opel will change under PSA ownership.
            Again, dumping Opel in favour of Chevrolet would have been (at almost any time in history since around 1950) a negative.
            One benefit of dropping Opel and Vauxhall in favour of Chevrolet would have been “tidiness” in that the costs of running two duplicate brands could be avoided. But product design has long since worked to minimise the limited engineering costs of twin badging etc. There are communication costs and admittedly there are instances where consumer confusion occurs due to media spillover between the UK and the rest of Europe (advertising at international football matches for example). But the gains from eliminating such problems a switch to Chevrolet would bring would have always been massively outweighed by the negatives.

            Admittedly (and “on the other hand”) Ford have operated with an ostensibly American brand name across Europe for well over a century – but it would be a mistake to think ‘Chevrolet” could have been imposed in place of the previous indigenous brands of Opel and Vauxhall – and quickly become viewed in the same light as Ford. And an interesting parallel is Chrysler who did move towards the replacement of Hillman, Simca etc. by “Chrysler” in Europe in the ’70s – but that didn’t go especially well …

          • Chris Cowin – Mainly had Ford in mind with regards to not having to deal with the messy issue of separate marques in different markets when it comes to notion of Chevrolet replacing Vauxhall/Opel/Holden in the 1970s-1990s, the experience with Chrysler Europe does offer a counter-example though the latter had a much tougher time trying to integrate two completely different marques in Simca and Rootes compared to Vauxhall and Opel’s more organic process of integration beginning with the Viva HA / Kadett A and the Vauxhall/Opel OHV engine.

            Even though Vauxhall and Opel are associated with domestically built British and German cars respectively in the minds of the buying public, am thinking in terms of diminishing branch loyalty from the 1980s onwards warranting a possible renaming of both prior to both declining further (along with Ford and other mainstream marques) against the rising popularity of premium marques. That is where the likes of European branches of Cadillac and Lincoln being established post-war would enter into the equation as a very risky preemptive response to consumers opting for premium marques at the expanse of mainstream marques.

            Such an approach obviously carries a great deal of risk and comes with significant drawbacks suggesting the cost is more than the potential benefits, yet prior to the sale of GM Europe to PSA would have been considered from my admittingly limited perspective as simply accelerating the inevitable trend of GM rationalizing its marque portfolio down and no longer maintaining the pretense of GM’s mainstream marques being different from each other.

        • The Holden brand is now gone altogether. Somehow GM can’t compete in the AU and NZ markets while 50 other brands can.

          • An interesting bit of GM (and Vauxhall) detail is that – until just one year ago (mid 2019) Holden were marketing a Holden Astra wagon in Australia that was manufactured at Ellesmere Port by Vauxhall. There’s been quite a history of Holden-badged Astras going to Australia from Ellesmere Port over the years, as well as the Opel-badged ones going to Europe.
            That wagon’s been dropped downunder as has the Holden Astra sedan (which was built in South Korea – and similar to the Chevrolet Cruze). But a Holden Astra hatch remains available currently (mid 2020) which is built in Poland (Gliwice) in the Opel plant there.
            But not for much longer it seems. The Polish built Holden Astra hatch and German built Holden Commodore (a rebadged Opel Insignia sedan and wagon) are being phased out as we speak, with remaining stocks being run down.
            They are now both PSA, and not GM products of course.
            All other Holden badged vehicles are also being phased out, and the Holden brand will be dropped in favour of Chevrolet it seems by 2021.

  21. Vauxhall could have remained a dominant partner in GM’s European operations if its cars sold better in the early seventies. Viva aside, the rest of the range was confused and the reputation for rust from the early days of the Victor still put buyers off. Also the FE range had become too big to take on the Cortina, which was its intended target, and the Ventora, intended as a rival to the Granada, was merely a Victor with more equipment and a lethargic straight six and sales were very poor..

  22. Glenn… do you prefer the FD series Ventora to the FE? I know you have written glowing comments on the old FD range of cars particularly the VX4/90. There was also a Ventora Estate but was actually called the Victor 3300.

    • @ Hilton D, the FD Ventora was a faster car and was third in the Vauxhall pecking order, as the Cresta and Viscount, which were a different range of cars, were above it. However, the FE Ventora was a slower car and sold in penny numbers as few people considered it an alternative to a Granada as it shared the same body as the Victor. Also for some reason it was a sluggish car compared to the livelier FD.
      The VX 4/90, though, good in FD form, but in FE form looked just as good and the 2.3 slant four made it a powerful motorway car. However, the market weren’t convinced and continued to buy their two litre Cortinas. O

  23. @ Glenn, I agree with that and of course the FE VX 4/90 had the bigger engine than FD versions, as stated. By the early 70s of course Ford made in-roads in the fleet markets with Cortina’s & Granada’s.

    One of my former colleagues inherited a Ventora FE from her uncle after passing her test – a nice first car!

Add to the debate: leave a comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.