Tough budget will hit BLMC

Mr John Barber, managing director of British Leyland, gave a warning today that a tough budget could reduce the United Kingdom car market this year to below one million units for the first time since 1962.

Speaking from the Leyland stand at the Geneva Motor Show, he said that a policy of cutting home consumption-by, for instance, an increase in value added tax or car tax, would be short-sighted and do nothing to help the balance of payments. The industry needed a sound home base to maintain its exports.

The fuel situation and petrol price rises had already cut demand for cars and, even if the budget did not bring in further restrictions, domestic sales were likely to be only 1.1 million compared with 1.7 million in 1973. Mr Barber predicted that with return to the five-day week, Leyland would continue to hold nearly 40 per cent of the British market and he did not see imports rising much above their present 22 per cent.

On exports prospects he said: "The whole European car market is down significantly an last year and things are going to be tougher for everybody. But I still think we shall sell all the cars we can make."

Leyland intended to go ahead with its £500m expansion programme and Mr Barber did not foresee a switch to smaller cars. "But we have got to make our cars more economic. In the next five to 10 years there will be quite dramatic improvements in fuel consumption on cars like the Marina and the Allegro, even if performance has to be sacrificed."

The Allegro, launched by Leyland as a "car for Europe", begins its attack on continental markets this week. It goes on sale first in Switzerland, Belgium and Holland and will have been introduced in all main European countries by the autumn.