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Watkins Glen Historic Racing. Photo by Steve Hanley. All rights reserved.

Cars

The Rise & Fall Of The British Car Industry

The British car industry is on life support and the prospects for aid from the government are dim, says Bloomberg Hyperdrive.

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When the Second World War ended, lots of American service personnel shipped cars back home from England — MGs, Triumphs, Austin Healeys, Jaguars, even an Aston Martin or two. America went gaga over these small, light, efficient vehicles, which were so different from anything ever seen from a US manufacturer.

Soon, new race tracks were popping up and old ones dusted off all over the US — Lime Rock, Watkins Glen, Bridgehampton, Riverside — and people flocked to see these different kinds of cars compete. There is the apocryphal tale of a fellow racing at the old Watkins Glen road circuit who lost control of his MG TD at the corner leading on the main street. There was a restaurant there where patrons could dine while watching the racers go by just a few feet away.

British Car

Watkins Glen Historic Racing. Photo by Steve Hanley. All rights reserved.

The legend is the driver put his MG into a lurid four-wheel drift, bashed his way through a few hay bales, and came to a stop at the edge of the restaurant seating area. He then promptly ordered a beer and watched the rest of the race from his car. It was clearly a different, less litigious America back then.

For an interesting account of those heady days, I recommend you pick up a copy of The Last Open Road by B.S. Levy. It is a lurid, licentious, and often amusing account of the rise of sportscar racing in post-war America. If you find yourself laughing out loud, don’t say you weren’t warned.

British cars opened America’s eyes to what used to be called “foreign cars” and paved the way for the likes of Volkswagen, Mercedes, BMW, Peugeot, Fiat, and many more to follow in their wake. That in turn was the opening the Japanese car companies needed to take a crack at the US car market. The rest, as they say, is history.

How The Mighty Have Fallen

For a while, the British car companies could do no wrong. Americans snapped up anything built in England, even less worthy brands like Hillman and Austin. The love affair with British cars and British culture may even have created space for the bands like The Beatles, Rolling Stones, The Hollies, and many others to gain notoriety in the colonies.

Then disaster struck. Thanks to ongoing quality issues and a failure to innovate (workers blamed management, management blamed the workers, and they all blamed the government), the British auto industry imploded and the Germans swept in to pick up the pieces. BMW scooped up Rolls Royce and Mini. Volkswagen grabbed Bentley. Ford came along later to buy Jaguar and Land Rover.

When the smoke cleared, there was very little left of the British car industry that wasn’t foreign owned. Toyota saw an opening and jumped in, as did Nissan. What was left was a bunch of old nameplates (MG is now owned by a Chinese company) that no longer are manufactured in the UK by UK workers.

A Downward Trend

Everywhere in the world today, automakers are pouring billions into the transition to electric vehicles, but not in the UK. According to Bloomberg Hyperdrive (email), “The UK is on course to botch the shift away from the combustion engine and end up a carmaking minnow.

“This week, mostly UK-based electric-van startup Arrival announced its CEO and president were stepping down. Last week, the CEO of Britain’s biggest auto manufacturer, Jaguar Land Rover, resigned after making little headway on an all-electric shift announced almost two years ago. And Britishvolt, the company thought to be the country’s best hope for a homegrown EV battery maker, is struggling to stay afloat.

“It’s a bleak picture in stark contrast with the US, where car and battery manufacturers are being wooed with billions of dollars as President Joe Biden challenges China’s dominance of the global EV supply chain. That effort has gotten the attention of German Chancellor Olaf Scholz and French President Emmanuel Macron, who are hatching plans to promote and protect their car companies and suppliers.”

Ordinarily, this is where governments step in to prop up domestic manufacturing and the jobs it is responsible for both in the industry and in the broader economy. For every worker assembling automobiles, there are 6 more who make their living by transporting them, selling them, financing them, repairing them, insuring them, and advertising them. In Germany, more than a third of the country’s economy is reliant directly or indirectly on the auto industry.

But Bloomberg says new Prime Minister Rishi Sunak has less room to open up the wallet and support what’s left of the UK’s auto manufacturing base. Chancellor of the Exchequer Jeremy Hunt last week unveiled a £55 billion ($66.7 billion) set of tax hikes and spending cuts that a free market think tank called a “recipe for managed decline.” Part of the plan includes a provision that would eliminate the current exemption electric vehicles enjoy from paying road taxes. While that may appeal to some voters, it is contrary to the policies in most other countries that encourage people to drive an EV.

The UK’s austerity push adds insult to injury caused by Brexit, which plunged the country into a prolonged period of uncertainty and delayed automotive investment, Bloomberg says. During the 12 months leading up to the 2016 referendum, Britain churned out nearly 1.7 million cars. In the past year, carmakers have produced less than half that, writes Bloomberg’s Stefan Nicola.

“We’re witnessing a slow motion car crash of the UK auto industry,” David Bailey, a business economics professor at the University of Birmingham, tells Nicola. “Britain used to have an industrial strategy but now the government seems to be standing on the sidelines.”

The UK’s struggle to modernize its auto industry threatens thousands of industrial jobs as the transformation redraws the map of where cars are manufactured. BMW last month said it will move production of the electric MINI from Oxford, England, to China. Honda closed its car factory in Swindon last year, leaving Britain with just four mass manufacturers: JLR, Nissan, BMW, and Toyota.

The UK had the second largest auto manufacturing base in the 1950s. Now it is mired in 18th place, behind Canada and Slovakia. ​​​​Local demand isn’t a reason to stick around — companies are on course for their worst year of sales in the market since 1982.

Even more worrisome, according to Bloomberg, is the UK’s lack of a substantive battery supply chain needed to support mass manufacturing of EVs. The country has just one reasonably sized cell plant in operation, which is owned by China’s Envision Group. It has failed to attract investment in additional large scale facilities. The only bright spot in that picture is a decision by Altilium to build a second battery recycling plant in the UK.

Britishvolt had plans for a battery factory in the north of England to provide batteries for millions of electric cars. Despite being backed by mining giant Glencore, it is now looking for funds to keep going beyond early December. It has yet to secure any large scale orders for batteries. Aston Martin and Lotus have signed letters of intent, but neither has made firm commitments, no doubt because they are hedging their bets and waiting to see which way the winds are blowing.

It’s a vicious circle. Carmakers in the UK will be reluctant to build new factories or retool existing ones unless they can source battery cells nearby. Battery manufacturers will be unwilling or unable to invest without predictable customer demand or sizable government aid.

The UK needs to move fast if it wants to reverse the downward spiral it’s on, writes Nicola. Toyota, which makes engines and Corollas in the UK, has not yet started to retool its two local plants for the electric age. Large battery factories have been announced or opened this year from Italy and Spain to Sweden, near the Arctic Circle. Bloomberg reported in May that JLR had been looking to continental Europe for supplies.

“The UK is already behind other regions in the EV shift and is playing catch-up,” says David Bailey. “If all production decisions go in the right direction, output could recover. But that will require a much more collaborative industrial policy approach from the government.” Based on what we have observed about the UK government in the past year, there is little reason to be expect it to do the heavy lifting needed to put the domestic car industry back on track.

 
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Written By

Steve writes about the interface between technology and sustainability from his home in Florida or anywhere else The Force may lead him. He is proud to be "woke" and doesn't really give a damn why the glass broke. He believes passionately in what Socrates said 3000 years ago: "The secret to change is to focus all of your energy not on fighting the old but on building the new."

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