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Writer's pictureMarco Schito
Apr 30, 20228 min read

Rise and Demise of the British Automotive Industry

The British automotive industry has historically hinged on two pillars: non-discrimination in negotiations between government and business in the sector, and a bias towards attracting inward foreign investment rather than supporting and sustaining existing production sites (Coffey & Thornley, 2020). These two characteristics have been present since its very inception and have prevented the rise of a strong, state-backed motor manufacturer like Fiat in Italy or Renault in France. This short essay addresses the history of the British automotive industry from a business and governmental perspective, with particular attention to the watershed years of the 1970s and 1980s, which heralded the demise of domestic carmakers.


The first British-built vehicle appeared on the isle in the late 1800s due to imported German engines and to a French design that had already been superseded on the continent by the time it arrived in Britain (Adeney, 1988). Nonetheless, this big novelty – the car – swept the nation into a frenzy, with a huge number of motor companies springing up between 1901 and 1905. Numerous historic brands such as Austin, Morris, Rolls Royce, and Rover were established at the dawn of the last century. A few years later, in 1909, Ford established its first plant near London, inaugurating a long history of foreign investment in the automotive industry. Ford was followed by General Motors (GM) acquiring Vauxhall in 1925, Chrysler taking over the Rootes Group in 1967, and then the wave of Japanese investment in the 1980s. Today, Japanese brands constitute a considerable industrial force in the country, amounting to around 17% of the market share in the United Kingdom, compared to 11% of Ford (CCFA, 2017).


According to Adeney (1988), it was estimated that as many as 221 companies dove into the new business in the early 1900s, but by the beginning of the Great War almost 200 of them had gone to the wall. Still, between 1932 and 1955 the British automotive industry was the biggest in the world and second only to the United States in terms of output (Wood, 2010). Church (1995: 21) calculates that by 1936 the car production in Britain hovered around 375,000 units, while its most direct competitor, Germany, did not even reach 300,000, with France and Italy lagging far behind with 175,000 and less than 50,000 respectively.




Figure 2: Homegrown (2017, May 26th). A Maharaja's Rolls Royce in 1907 [Photograph].

Like in several other countries, the industry output was boosted by the Second World War, during which government involvement ‘seeped through almost every one of [the industry’s] arteries’ (Adeney, 1988: 179). However, post-war industrial reconversion meant that heavy-handed rationalisation was needed. This implied a two-pronged strategy: steering industrial production towards civilian production, and reducing the degree of fragmentation that characterised the British motor industry, which could lead to inefficient outputs (Church, 1995: 90).


The main tool of rationalisation in Britain was mergers and acquisitions (M&A). Between 1952 and 1968 the number of manufacturers decreased from nine in 1947 to seven in 1960 to four in 1968. Of these, three were American companies (Ford, Chrysler and GM), and only one was a domestic producer, British Leyland Motor Corporation, or BLMC (see Dunnett, 1980: 20). BLMC was the British response to the likes of Fiat, Volkswagen and Renault. Yet, this experiment also failed spectacularly, and by 2005, with the demise of MG Rover, sold to the Chinese SAIC, the death of a national British industry had finally come. To understand how Britain got to this point, it is necessary to detail the hard times of the 1970s and 1980s, which signalled the beginning of the end for the local manufacturers starting with BLMC.


BLMC was created in 1968, following the merger between the British Motor Company and the British Motor Holdings. Leyland was by then the only national mass manufacturer in the country, facing off competition from the American ‘big three’: Ford, Chrysler and GM. Despite the merger, BLMC’s profits were not satisfactory for a company with a turnover of over £1bn, and by the early 1970s it was becoming clear that it would not survive without government intervention (Carver et al., 2015, 30-1). The 1973 crisis only sped up the inevitable, and between 1974 and 1982, the British government committed to investing over £1,400 million in BLMC (Bhaskar, 1984). Yet, already in 1979, as Margaret Thatcher came to power, her Secretary of State for Industry, Sir Keith Joseph, admitted that the chances of success of BLMC were ‘less than 50/50’ and that a break-up of the company was inevitable. In the long run, he conceded, the best hope to keep the plants alive was to dispose of BLMC to other manufacturers and that ‘the sooner it is done, the better’ (The National Archives 1979). John Hoskyns, policy advisor to Margaret Thatcher, had an even bleaker view. On the chances of survival of BLMC, he wrote that ‘we [the Prime Minister's office] regard them as nearly zero’ (The National Archives 1979).



Figure 2: 1968 Carstyling (n.d.). Pininfarina BLMC 1100 [Photograph].

Nevertheless, public support (both economic and political) to BLMC continued throughout the first Thatcher tenure. Any attempts at divestment were met with reluctance both from the government (for fear of political retaliation, given also the violent workers’ strikes of the early 1980s) and from potential acquirers, who could not see an easy way out of the crisis of the British motor industry. By the mid-1980s and after several attempts by the government to divest its shares of the company, more than £2bn were spent on BLMC, without it being any better off (Bhaskar 1984; Wilks 1988; Wren 1996).


Another emblematic case that signalled a disenchantment with a national motor industry was the Chrysler UK bailout of 1975. As for BLMC, its origins can be ascribed to the 1973 oil crisis, which forced the parent company to re-assess its UK operations. The British government chose to support the firm through a series of streamlining adjustments to the company’s operations in the country. Taking over Chrysler UK would be too expensive because of the concomitant BLMC crisis. Likewise, doing nothing would create far more redundancies than what was politically acceptable (The National Archives 1975). As Wilks (1988: 163) notes, it was also important that the eventual policy solution included help for the Linwood factory near Glasgow, as Labour was concerned about the rise of the National Scottish Party. There were fears that a different option would have severe political repercussions and that a new general election would be called (Donnelly et al. 2017: 66).


The main implication of the decision to support Chrysler UK was that it forced the government to divide its attention and expenditures in the sector between the two companies. What this meant, in practice, was that the British government could not pursue a coherent industrial strategy based on the support of a clear winner – or ‘champion’ as they are called in the literature – such as Fiat in Italy, Renault in France, and Volkswagen in Germany.


Figure 3: Scalemates (n. d.). The DeLorean car from Back to the Future [Photograph].

However, the last nail in the coffin that pushed British politicians to become disillusioned with public investment in the sector came with one of the biggest failures in the European motor industry: DeLorean. DeLorean is most renowned as the car from Back to the Future, but it also represents a page of shame and short-sightedness of the British industrial policy.


In 1978, the American entrepreneur John DeLorean asked for over £50 million in government support to build a factory in Belfast, which was promptly given since the local government saw this investment as an opportunity to improve the dire unemployment condition in the city (cited in Hansard, 1985). The disastrous affair ended in 1982, when John DeLorean was arrested in America for trafficking cocaine (see Forbes, 2011). By then, DeLorean had received £77 million in public funds, and lost most of it, with no tangible return for the British industry.


Since the second half of the 1980s, the keywords for the British motor industry shifted from ‘rescue’ and ‘domestic champion’ to ‘internationalisation’ and ‘privatisation'. Internalisation came particularly in the guise of Japanese investors (Nissan, Toyota, Honda, see Pardi, 2017) who needed a gateway entrance to Europe. Britain represented a far easier market than the continent, which had strong protectionist tendencies in the industry due to their favoured ‘national champions’ (Dancet & Rosenstock, 1995).


Figure 4: SkyNews (2021, August 19th). Sir Sean Connery posing with the Aston Martin DB5 in 1964 [Photograph].

Alongside internalisation came privatisation: the last vestiges of the British tradition were sold out to foreign companies. Jaguar was bought by Ford in 1989, and then by the Indian carmaker Tata in 2008. Rover was first sold in 1988 to British Aerospace in an attempt to retain its domestic nature, but the company soon failed, and the German firm BMW swept in in 1994 (BMW later also acquired Rolls Royce). In 2000, it was sold back to the British Phoenix Consortium. Rover was subsequently split into two. The Land Rover brand was bought by Ford, and then by Tata in 2008, together with Jaguar. MG Rover continued the British experiment only until 2005, when the company went into administration and was bought out by the Chinese firm SAIC (Carver et al., 2015).


Thus ended the history of domestic British producers in the motor industry – not with a bang, but with a long, agonising whimper. And with it died what for decades had been the heart of this sector, the West Midlands. According to Donnelly et al. (2017), in the 1970s this region accounted for around 60% of total car production; by 2008, this share had plummeted to 18%. Today the situation is much rosier than it was twenty years ago, with the Tory government committing to renovating the industry to the tune of a few billion pounds (see HMG, 2017; Coffey & Thornley, 2020). Yet, one would be hard-pressed to recognise in today’s Britain-produced vehicles the characteristic features that have distinguished British cars in the 20th century – the sleekness of the Jaguar coupés, the roundedness of the Austin Morris city cars, or the elegance of the Rover saloons.


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1 Comment

Guest
Feb 28, 2023

Just read this. A few interesting points but glosses over many things. By the way DeLorean was acquitted of all charges what ever you think of him.

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Marco Schito

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