The UK maker is on a roll, with more fans here and increasing popularity stateside, writes Liz Turner

Before Gordon Ramsay there was Sir John Harvey-Jones, and instead of kitchens, the ex-ICI boss would tour small companies, shooting from the lip about how they could improve their prospects. His 1990 visit to the Morgan Motor Company, deep in the Malvern Hills, made for memorable television, as J H-J pulled out almost all of his grey mane over its chances of survival.

No reasonable observer would have guessed that, 16 years later, Morgan would be the only significant car manufacturer left in British hands, or that it would rely for much of its success on US buyers. And the odds increase from ridiculous to impossible when you add a £62,500 flagship that, from the front, bears a striking resemblance to Clarence the Cross-Eyed Lion.

At international motor shows, there's always a gasp as the covers are lifted off a new vehicle. As the Morgan Aero 8 was revealed at Geneva in 2000, a loud Australian voice behind me exclaimed, "Christ, that thing fell out of the ugly tree and hit all the branches on the way down!".

Since then, however, 400 satisfied owners have proved that looks aren't everything. And thus, somewhat implausibly, I find myself in Carmel, a golf ball's distance from the Pacific Ocean, chatting in the shade of cypress trees to Charles Morgan, the third-generation proprietor of the Morgan Motor Company, over sushi and then driving a third-generation car that really shouldn't be here.

The second-generation car appeared in 2004, and most of the changes were made to meet American regulations and tastes. The cockpit was widened by 6in, the boot (trunk) was redesigned to take a set of golf clubs, and an even more powerful 4.4 V8 was settled beneath the long bonnet. The headlamps on the inside of the wings remained.

The Mark 3, however, has finally been kissed by a princess. It looks the observer straight in the eye, and the front is closer to the look of the traditional Plus 4 and 8.

The Morgan design team achieved the facelift with the help of both a 21-year-old designer called Matthew Humphries, who has just graduated from Coventry University Design School, and - very un-Morgan, this - a computer.

Some design cues, including the repositioned headlamps, are taken from the Aeromax, a unique Morgan coupé recently created for Prince Sturdza, president of Banque Baring Brothers Sturdza.

The new Aero is a pleasing mix of old and new: a hybrid created with 21st-century technology while retaining the charm of the 1936 original four-wheeler. Instead of steel, the chassis is made of ultra-light bonded aluminium. In place of engines by Ford, Triumph and the famous Rover V8, it uses the latest version of BMW's four-cam 32-valve 4.4-litre V8, with its double "Vanos" valvetronic system delivering 325bhp at 6,100rpm and 330lb ft at 3,600.

So, how has Morgan beaten the odds? For one thing, the proprietors have always been careful with their resources. Workers suggesting a profit-boost-ing idea to HFS Morgan, Charles's grandfather and the company's founder, were rewarded with a Woodbine. The company always owned its land and never took out loans that would have given unimaginative bankers the opportunity to foreclose. The £4m spent on developing the Aero 8 over four years has been paid for almost entirely out of profits.

Most important, H F S, his son Peter, and now Charles have never overreached themselves with extravagant plans for increasing volume and profits. Harvey-Jones's suggestion to double production and raise prices by a third was politely resisted. Instead, Morgan continued to give its small but loyal fan base what it wanted: small, fun and usually affordable sports cars.

Morgans have been raced, rallied, trialled and thrashed on both sides of the Atlantic. They've also been restored: owners can still look up the original details of their car in handwritten volumes, and have a new wing made on the original jig. (Details of new cars are on computer, but Morgan's director of sales and marketing, Matthew Parkin, insists that it's quicker to grab the book.)

In the UK, the range starts with the 1.8-litre 4/4 at £24,322. The 2.0-litre Plus 4 is £29,081; and a Roadster powered by the Jaguar 3.0 V6 is £36,190. There are also four-seater versions of the Plus 4 and Roadster.

The US has always been a vital market for Morgan, but currently only the Aero 8 and Roadster are sold there. Loren Steck, a Carmel native, regularly drives his classic 1958 Plus 4, powered by a TR3 engine, up and down the Pacific coast. He and his wife are members of both the Northern and Southern California Morgan clubs and hold an annual party before the Pebble Beach Concours d'Elegance - this year, they had 20 Morgans lined up on their lawn. Loren is ecstatic about the Mark 3 Aero: "It's a different kind of car, but it has many of the same thrills as the old Morgans. It's great to see the bonnet stretching ahead of you!"

Next year, the Aeromax coupé goes into limited production at a cost of £110,450, including VAT, and the first customers will receive their cars early in 2009, Morgan's centenary year. Prospects for the venerable company's second century are looking rather good.

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