BLMC goes flat out for Spanish market

THE GUARDIAN
By John Coyne

Undoubtedly the fastest growing car market in Europe is in Spain, and in spite of a ban on car imports into Spain the newly merged British Leyland Motor is making a determined attempt to capture a bigger slice of this market Only 17 months ago BMC went into partnership with the wholly Spanish owned AUTHI (Automoviles de Turismo Hispano Ingleses SA) and has already captured 5 per cent of the market. By next year it hopes to have 10 per cent Moreover, the overall market is growing at a terrific pace, in spite of the squeeze that followed devaluation last November. Official Government estimates put the likely growth at 10 per cent a year, which bearing in mind the low starting point looks a reasonably based forecast.

Under licence from BMC, AUTHI assemble Morris and MG 1100s in a brand new factory at Pamplona, modelled on BMC's Longbridge plant. Spanish law requires a 70 per cent Spanish content initially on cars, rising to 90 per cent within three years, so BMC rely mainly on royalty payments for their profits, though they will also continue to do the body pressings. Pricewise the 1100 is not competitive with the other models on the Spanish market, but the man behind AUTHI, a Spanish aristocrat named El Marquis de Haidobra, has cleverly been selling the 1100 as a prestige car.

The interior trim and general finish of the models is far superior to the British version, and power assisted brakes are fitted as standard equipment. The MG marque sells at nearly £1,100 and the Morris at £950, but sales have been booming, nevertheless, with the MG being most popular.

Later this year the Pamplona factory will start turning out Minis again at the prestige end of the market ; the engines will be the 1275cc version initially later extending down to the 998cc version. With these new models AUTHI hopes to turn out 25,000 units this year, which would give it about 10 per cent of the market and with overall sales growing so fast, and the BMC range capturing a bigger slice of this growing market there are ambitious plans for future annual output Some 40,000 units are predicted for next year and 180,000 units being voiced as possible output In future years. Even on 25,000 units I would reckon that BMC's profits from royalty fees and body pressings would top the £500,000 mark.

The Leyland side of the British Leyland Motor has adopted a more widely spread approach at the heavy end of the motor vehicle market. Its profits come from direct exports of parts, an equity stake in the manufacturing firm, and royalty fees. Leyland has a £4 millions investment – representing 25 per cent of the equity in Pegaso, the biggest heavy vehicle manufacturer in Spain. In the market s in which it is interested Pegaso claims a 44 per cent overall penetration, and at the very heavy end of the range this penetration reaches nearly 80 per cent.

In addition to a 7 per cent dividend on the 25 per cent equity stake, which will probably be bumped up when the board meet later this month to consider the 1967 payment – Leyland collect royalty fees on various models, and as a result of its connections exports £1 million worth of parts to Spain. Thanks to the Leyland designs, Pegaso has been continuously achieving higher and higher penetration of its markets and with this particular end of the motor market estimated to be growing at 8 per cent a year prospects are obviously good.

But in addition to the high hopes for the Spanish markets there are some optimistic forecasts of a growing export trade with the Spanish speaking countries in South America and surprisingly, also with the East European block. It all adds up to a fairly bright picture on the overseas side for the newly formed British Leyland Motor Corporation, which already has over £300 millions worth of overseas sales.