The AR6 could have been the car that saved British Leyland. All it would have taken was £400m of taxpayers' money. Keith Adams reports

At first glance, the anonymous silver/ grey supermini we've come to view at the Heritage Motor Centre in Gaydon, Warwickshire looks generically modern – the pert little car looks "right", and it's difficult to believe that it was created in the middle of a maelstrom; a potential bestseller that was killed before it ever saw the light of day.

They say there's nothing like a little bit of pressure to put things into sharp perspective, and in the early Eighties, BL had the weight of the nation's expectations on it. Finally, it needed to deliver its long promised recovery after years in the post-Allegro Red-Robbo dominated doldrums.

The initial signs hadn't been good for the "product-related recovery", though – the Metro had a reputation for unreliability, and the Maestro/Montego twins were unloved by all. What Austin-Rover needed was something to sex up its range. That car was coming, though there was just the small matter of £400m of taxpayers' money to get it up and running.

From the end of 1982, Austin-Rover designers at the new Roy Axe design studios in Canley, near Coventry, had been beavering away on the styling of a Metro replacement, codenamed AR6.

The plan was to use the K-Series engine, which was under development, sitting on conventionally sprung suspension, and to feature a massive, airy interior. As a British answer to the Fiat Uno and Peugeot 205, the AR6 certainly ticked all the right boxes – on paper at least.

However, the AR6 programme coincided with a radical upheaval in BL's fortunes. In the early Eighties, the company was still miles off making any kind of serious profit, and as Margaret Thatcher's government remained the majority shareholder, it was Westminster that was calling the shots as far as funding was concerned.

A titanic struggle between the then Secretary of State for Trade and Industry, Norman Tebbitt, and BL's chairman, Ray Horrocks, erupted over financing future model plans. Around £250m was released to develop the K-Series engine, but a further injection of funds to get the AR6 into production would have to wait for an upturn in the company's fortunes.

In the end, that never came, and neither did the money. The government's will to continue funding BL evaporated, and plans to sell the troubled company were quickly cobbled together. AR6 was put on life support – and cash-strapped product planners responded by retaining the Metro, and extending links with Honda for all of its upcoming models.

Ford made a bid for Austin-Rover at the beginning of 1986, but Thatcher vetoed the sale to the Americans at the last moment, still smarting from the after-effects of the Westland crisis. That left no alternative but to slash all spending and prepare the company either for flotation or to be sold to a UK bidder.

That, tragically, sealed the fate of the AR6 once and for all – and despite cheerily optimistic internal product planning documents that spoke of a 1988 launch date, describing it as an aluminium-bodied 100mpg supermini to beat all comers, the bitter truth was that the project was nowhere near advanced enough to carry through to production.

The tantalisingly fuzzy scoop images of the AR6 published in the press in 1986 were, in fact, taken on the eve of its death. And, after that, the car disappeared completely from view – the assumption being that it had been destroyed in the turmoil of the Rover (*ée BL) sale to British Aerospace in 1988.

However, it was donated to the British Motor Heritage Trust, and remained buried, unseen by outsiders, until a recent re-shuffle of the museum's exhibits.

Roy Axe, the design director who oversaw the styling of the AR6, was shocked to discover that it still existed. "It's amazing to see it again," he says. "That car started life in our design studio as a simple mock-up of how one of our superminis could look in the future, given some decent funding. Once it had done its thing of impressing visitors to the studios, we passed it to BL Technology, who then turned it into a mobile test bed."

Sitting in the weather-worn prototype today, it's clear that the AR6 did meet its design and marketing-led brief: it's incredibly airy inside, and has room and a driving position that the Metro could only dream of.

The Metro was Austin-Rover's biggest selling car by a long way, and the dealers were clamouring for a more capable replacement with which to tempt buyers back into their showrooms. Salesman Tim Wellington recalls: "The Metro appealed to all of our customers, and when we received the sneak-preview of the AR6, our hearts leapt for joy; here was a car that would sell itself to our buying public, building on the strengths of the car it replaced and taking the concept to a new level."

When the political storm of the mid-Eighties robbed us of that car, however, the company's chances of long-term future survival were almost fatally damaged.

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