LONDON -- The UK has a healthy automotive industry because Margaret Thatcher bailed out British Leyland, once the country's biggest car company, and allowed Japanese automakers to establish their first European factories in the country, a leading academic said.
Despite her hatred of supporting state-owned industries, Thatcher, who died on Monday at age 87, recognized that struggling British Leyland was too big to fail, said Garel Rhys, retired director of the Centre for Automotive Industry Research at Cardiff Business School.
Thatcher provided British Leyland with 2.9 billion pounds ($4.4 billion) of taxpayer money from 1979 to 1988, Rhys said.
This support saved brands such as Jaguar, Land Rover and Mini from extinction. The marques, once owned by British Leyland, are now thriving under foreign owners. "Thatcher's administration created the bedrock for the present British motoring industry with the money it spent on British Leyland," Rhys told Automotive News Europe.
British Leyland was created in 1968 to consolidate the bulk of the UK's automotive industry. The automaker employed 167,000 people in 1977. But labor unrest and poor management in the 1970s led its brands, including Austin, Rover and Triumph, to rapidly lose sales to better-built rivals.
British Leyland's UK market share fell to 15 percent in 1980 from about 40 percent at its height.
New models such as the Austin Metro subcompact in 1980, the Honda-developed Triumph Acclaim compact sedan in 1981, and the Austin Maestro compact in 1983 failed to attract enough buyers.
Thatcher wanted to break up British Leyland by selling off some of its divisions but she ran into stiff opposition. General Motors tried to buy Land Rover and British Leyland's truck-making division in 1985. The outcry from parliament and the press was huge. "GM retreated because they were being rubbished," Rhys said.
British Leyland sold off its bus, truck and military vehicles but kept the well-known car brands. Thatcher recognized that the troubled automaker was too important to the economy of Britain's industrial heartland of the West Midlands where it was based, to be allowed to collapse. She had misgivings. "On any rational commercial judgement, there were no good reasons for continuing to fund British Leyland," Thatcher wrote in her autobiography published in 1993.
Although the automaker ultimately failed, the UK's current automotive industry owes its existence to Thatcher's support, Rhys said. "Jaguar Land Rover came out of the rescue. Mini was saved, along with Leyland Daf trucks and component firms such as Unipart," he said.
Plan B: Japan
Rhys said the government's Plan B for British automotive manufacturing was to entice Japanese automakers Nissan, Honda and Toyota to open car plants in the UK. "These companies are now at the heart of the British motor industry," he said. Last year, the companies accounted for the bulk of the 1.46 million cars built in Britain, an 8 percent rise on the year before and not far behind Spain at 1.54 million and France at 1.68 million.
British Leyland was renamed Rover Group in 1985. It later became MG Rover, which went into administration in 2005. MG Rover is now owned by Shanghai Automotive Industry Corp., which builds the MG6 mid-sized car from kits supplied from China at British Leyland's former headquarters in Longbridge, near Birmingham.
Ultimately it was the UK car industry's consolidation and unwieldy size that saved it, Rhys said. "A free market philosophy was applied to the country's manufacturers except in the case of British Leyland. It was seen as a special case."
