UK Car Production Overtakes France
Twenty years ago, something quite dramatic happened to the UK car industry. Rover was sold to BMW, and the last big indigenous British-owned car company was gone.
It was quite a turnaround from the days when the British car industry dominated the world, second only perhaps to the big three of the US. The shame of it all was made worse by the success enjoyed across the Channel, where French companies Renault and Peugeot Citroen made more than three million cars. At the time of the sale, the media almost as one condemned the move. They bemoaned the lack of national ownership and pointed to the protectionist strategies in place in France, and indeed in Germany, where it was difficult to conceive of a foreign owner for Peugeot Citroen, Renault, BMW or Mercedes.
Now, however, the UK has completed a dramatic turnaround. Last year, the UK made more cars than France did — the first time this has been achieved in decades. The UK produced 1.51 million cars to beat France's 1.46 million, and in doing so reclaimed its position as the third-biggest car manufacturer in Europe. In the lead is Germany, as might be expected, but Spain is perhaps more surprising as the second-largest producer. Manufacturing in the UK is at a six-year high, and a car rolls off a British production line every 20 seconds. Exports have been a particular success, and their value has doubled over the past decade. Just this summer, the UK industry reported its best July exports since it started keeping records in the 1920s.
The contrast between the French and UK car industries, in economic terms, could not be more pronounced. Decades ago, the UK adopted what the French would call a laissez-faire approach to the industry, allowing car companies to succeed or fail and be bought or sold on the open market, just like any other company. The result of this policy was dramatic, and now MINI and Rolls-Royce are owned by BMW, Tata owns Jaguar Land Rover and Bentley is owned by Volkswagen. Even Aston Martin and what is left of MG Rover are foreign-owned.
The French adopted a much more protectionist approach, and both Renault and Peugeot Citroen remain in French hands. The French government has also intervened with financial aid, funding the production of new models and providing financial bailouts when Peugeot Citroen looked to be in danger of folding just last year. The French government also maintains a shareholding in both French car companies and also has a seat on their boards. Despite this considerable expense to the tax payer, the French government is set to continue this policy, and recently the finance minister, Emmanuel Macron, said that the answer to the French industry's woes was to commit to even more state investment. In a bullish statement, he added that the French car industry was well placed to overtake the UK once again.
Retaining French ownership of its car companies is very important to the French government, and this was a key point in negotiations when the Chinese car company Dongfeng Motors took a minority stake in Peugeot Citroen, along with the French government itself, in order to inject additional capital into the company and prevent it from going bust. In contrast, the UK government has no qualms about foreign ownership of UK car companies and the business secretary, Vince Cable, insists that the UK has benefited from this openness and dismisses the fears that it brought.
The UK has also reversed another car industry trend. In comparison to France, where automotive jobs are declining, employment in the UK sector is actually rising. It is an impressive, and some would say unlikely, success story. In 1972, the UK reached its peak car production of 1.92 million, and the industry says it is on track to beat that record in just a couple of years. Vive la difference, as the French would no doubt say.