Background
In mid-1970s, the British automotive industry was in crisis, marred by frequent strikes and decreasing competitiveness compared to the increasingly successful Japanese automakers. It took its toll on Chrysler UK, which was the name given to the former Rootes Group after its takeover by the USA-based Chrysler Corporation. In particular, the Linwood facility was generating losses due to many reasons, including underutilized capacity.
In 1975, the famous Ryder Report led to the effective nationalization of Chrysler UK's major competitor, British Leyland. Chrysler management decided that the company should therefore also benefit from state aid, and pressed the government for it by threatening to close the UK operations. The government agreed to a state grant reported at GBP 55 Million to fund the development of a small car, to be developed in Chrysler's UK facilities and manufactured in Linwood.
Read more about this topic: Chrysler Sunbeam
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