August 22, 1992

ANOTHER CLASSIC UK CAR DRIVES OFF DOWN MEMORY LANE

ERIC ELLIS, LONDON

There was a time when it seemed the sun would never set on the great marques of the British motor industry. Riley, Vanguard, Sunbeam, Wolseley, Healey - these famous cars bestrode not just Empire but were worldwide status symbols long before the 1980s yuppies and phone jockeys came on the scene.

But today many have gone the same way, distant memories as British car makers are swamped by recession, superseded by technology and thrashed by Japanese and European competition. This week another famous name - Jensen - joined those other marques down the road to auto oblivion.

The 66-year-old West Bromwich company, famous for the stylish Intercepter as favoured by debonair types in tweed jackets in the Clark Gable mould, was on Tuesday placed into receivership, another sad victim of the longest and deepest recession since the 1930s.

It was the second time that Jensen had called in the men in grey suits. In 1976 Jensen went into receivership but was rescued by an eccentric millionaire and Jensen fancier. This time, however, it seems there'll be no second chance

Jensen's order books are empty, it has sold just two cars in the past 18 months and it owes $2 million. The parent company, Unicorn Holdings, said it had become too big a drain to be sustained as what had essentially been a whim.

Although the recession is fingered the chief culprit behind its demise, Jensen's cars had also become an expensive anachronism and made little economic sense in the 1990s.

Costing around Pound 100,000 ($270,000), the current model Intercepter is still based on a design that dates to the 1960s.

The mid-1970s oil crisis that inspired mostly Japanese-led fuel-efficient car technologies passed Jensen by. The latest Intercepter is handmade, weighs two tonnes, more than double the average modern car, and boasts a six-litre engine that guzzles a litre of petrol for every 5 kilometres.

If Jensen is continued it will be in a much reduced form, not making cars but providing parts and service for older models. Most of its 20 staff are looking for new jobs. They won't find them at Lotus or Jaguar, or Aston Martin, which made the famous "ejector" car as driven by a youthful James Bond.

In Norfolk, production of the critically acclaimed Lotus Elan ceased in June. The execution order came directly from the head office of General Motors, the giant US car maker that is having problems of its own. With Lotus, GM had a cultural problem that seems to afflict the majors when they buy into the minors.

The Americans, with mentalities geared to mass marketing and production, have found it difficult to come to terms with the refined elitist demands of the tiny Lotus.

GM has pumped Pound 30 million in recent years into new plant at Lotus, hoping to recoup that investment with improved sales.

But again the recession has reared its ugly head and the Pound 25,000 Elan has not taken off.

Buyers have preferred Mazda's keenly marketed, similarly styled MX-5 and Lotus has duly tumbled to a Pound 12.7 million loss before GM cut the Elan off.

The over-capitalisation forced GM to cut loose the Elan after only two years. Lotus will now concentrate on its more expensive, more popular Esprit and its well regarded research and development unit. Two thirds of Lotus's 500 strong work force has been laid off.

There is a similar story at Aston Martin, 75 per cent-owned by Ford since 1987. The 78-year-old marque has not found having a big brother the fairy godmother it hoped for five years ago.

Aston Martin lost Pound 2 million in 1990 in the slack market for luxury cars, and has been forced to lay off a third of its 550 staff.

The group was also rocked last year by the sudden departure of chairman Mr Victor Gauntlett, one of the many management white knights drafted in to help Aston Martin out of the crisis.

But while the market has worsened, Ford is carrying Aston Martin into production of a new cheaper sports car - albeit one still retailing at around Pound 80,000 - that is due for release in 1994.

However, the shock news this week that Ford UK is to scale its mainstream British production lines back to just three days a week has rocked Aston Martin. Industry pundits are predicting a Lotus-type situation evolving.

"I wouldn't be surprised to see it go the same way," said Mr Malcolm Mackay, deputy editor of Britain's Classic Car magazine.

"Ford has got to ask itself how far it can go with this. The signs elsewhere have not been encouraging and there seems little to suggest it will be any different with Aston Martin."

Elsewhere, the Ford-owned Jaguar and the Vickers-owned Rolls-Royce are also feeling the pinch.

Rolls-Royce slumped into big losses, and its parent is in negotiation with foreign car makers such as Germany's BMW about a capital injection or even takeover - a move that would devastate diehard Anglophiles.

After buying Jaguar for Pound 1.5 billion in 1985, Ford is pushing ahead with ambitious plans to market one of the world's most expensive cars, the Pound 350,000, 300km/h Jaguar XJ220. This strategy follows the big losses racked up by Jaguar in its more conventional lines. Jaguar lost Pound 66.2 million for Ford in 1990 and the losses can only have increased with worldwide sales falling from 42,000 in 1990 to 23,000 in 1991.

However, it is not all gloom among elite British manufacturers. Two outfits, Morgan and TVR, are doing very well and their plants are functioning at peak production. The common thread there is that both have retained their independence, stayed small and spurned foreign advances.

"I can't keep up with demand," says TVR's chairman, Mr Peter Wheeler. "I am selling 1,000 cars a year and I think I could sell twice as many. I don't have a secret, just quality and a price that compares favourably to our competitors."

As others were going into receivership, TVR has expanded output by 25 per cent and quadrupled profits to Pound 750,000 last year. It recently launched a new model, the Griffith - a Pound 30,000 two-seater that appeals to Porsche and Ferrari buyers who ordinarily pay double and triple that price.

Moreover the TVR is holding its value, with second-hand Griffiths trading at up to 80 per cent the cost of a new one.

At Morgan, chairman Mr Charles Morgan expects to sell about 500 cars this year from a smallish plant of 130 employees at Malvern, Worcestershire.

He said he had a full waiting list and was meeting delayed orders, particularly from a strong export market in the EC and the US.

"I'm very sad to see some of our competitors go under. To us independence is very important," he said.

Mr Wheeler echoed that view, saying that being relatively small gives his firm and others like Morgan a "flexibility that Detroit can never replicate".

It seems that only now, after losing hundreds of millions of pounds, are the big-talking, cigar-smoking barons across the Atlantic beginning to agree.