British Motor Corporation - Post Mortem

Post Mortem

Following the "merger" with Leyland, the new company's board bore an uncanny resemblance to the senior management team that had hitherto headed up the Leyland half of the partnership, so comments of the management team on the profitability of the former BMC elements need to be viewed with caution. However, following a review of company records undertaken with the support of the new board, author Graham Turner stated that at the time of the merger there were 16 versions of the Mini being produced, yielding an average profit of just £16 per car, while every Morris Minor sold lost the group £9 and every Austin Westminster sold lost £17. This helps to explain why the Westminster and Minor were among the early casualties of the merger, as well as the introduction of the Mini Clubman, capable of being built for less but sold for more than a standard Mini thanks to simplified ("modernised") front panels. Even the UK's best seller, the Austin/Morris 1100 had to be subjected to an emergency cost reduction programme which removed approximately £10 from the cost of each car, applying changes that included the omission of lead sealing from body joints (£2.40 per car), removing provision for optional reversing lamps (£0.10) and "changes in body finish" (£0.75). Rebuilding the Cowley plant to include "new automated body building facilities" saved £2.00 in transport costs per car for bodies that no longer needed to be transported from the corporation's Swindon plant and in the longer term further transport costs were saved by concentrating assembly of the model at a single plant, rather than splitting it between plants at Cowley and Longbridge. Because of the high proportion of auto-production costs represented by fixed costs that needed to be allocated over a planned production volume, and the use in the 1960s of investment appraisal criteria that were ill-suited to accounting for volume fluctuations and the rapidly changing value of the UK currency in the 1960s, the precise figures quoted may be open to challenge, but the new management's diagnosis that BMC's profitability was insufficient to fund support and new model investment to cover its disparate range of brands and models was hard to refute.