Lesson in expansion - from the Japanese

David Benson

LORD STOKES was never in favour of the Harold Wilson inspired merger of British Motor Holdings and Leyland Triumph that formed British Leyland. Once it was achieved, however, he immediately began the job of moulding the sprawling giant into a compact and viable operation. It was a daunting task. No really new model car was in the pipeline and the dealer network was spreadeagled all over the world. There was a multitude of model types.

But after only five years and a ruthless pruning campaign, Lord Stokes was able to announce a £500 million expansion programme. All this was achieved during the biggest bonanza car buying market in history when the Tories eased H.P. and other credit restrictions. Leyland fared well but in. a period of consolidation and rationalisation, it never had the capacity to meet the demand. More buyers turned to imported cars.

British Leyland's gross profits over the last seven years have been a mere £200 million on a revenue of £8,515 million , barely 2-35 per cent pet annum. Of course management made mistakes. But it never had the right kind of Government support. Had Leyland been a Japanese company operating in Japan, the Government would have controlled the import of rival cars until the domestic company could match the demand.

That is how the Japanese built up an almost non-existent motor industry to one that is now second only to America in the world league. In 1965, Japan produced under two million cars, vans and lorries out of a world total of 24 million. In 1974, it produced over 6,500,000 vehicles out of a world total of
34 million.