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While the big fish of the country's car industry have fallen into foreign hands, the minnows are growing from strength to strength, writes James Ruppert

AS ANOTHER British car manufacturer falls into foreign hands, following the takeover of Rolls-Royce by Volkswagen, the largest Brit- owned manufacturer of motor vehicles is now a company you have probably never heard of.

"I believe we have that distinction," says Terry Fryer, of LTI. "But I can assure you that we won't let it go to our heads."

We may not know LTI, but all of us will have seen, or ridden in, one of its vehicles. London Taxis International built more than 3,000 taxis this year, making it easily the biggest automotive fish in the tiniest of pools. The list of British car makers swallowed up by the foreign competition is long and depressing.

AC, the oldest-surviving British company, established in 1908, was bought last year by South African entrepreneur Alan Lubinsky. Ford bought Aston Martin in 1987 and has also owned Jaguar since 1989. Lotus was picked up by Proton Cars of Malaysia in 1996. Land Rover and Rover were bought by BMW in 1994, and General Motors bought Vauxhall way back in 1925.

Whatever happened to the British motor industry? It is still here, but different - and much smaller.

Ironically, as a motor manufacturer Britain has never been healthier. Although car production peaked at 1.92 million in 1972, that was also the time when poor management, underdeveloped products and quality vehicle imports all conspired to put the industry into freefall.

Recovery started only when foreign ownership was encouraged by Margaret Thatcher's market reforms. Nissan's factories in Sunderland and Toyota's Derbyshire plant have become among the most productive in Europe. In 1957 we built 861,000 cars; 30 years later that figure had increased to 1.7 million.

In global terms, Britain still has a huge influence, with well-placed British engineers and designers throughout the industry. Pre-eminent among them is the Scots-born Alex Trotman, who runs Ford. And then there is motor racing. Formula One and the American IndyCar equivalent are dominated by British companies and cars.

Meanwhile, some brave souls continue to make uncompromisingly British cars. Strongest of the survivors and in production terms the biggest car maker in the UK is TVR, which certainly doesn't build taxis. "A British car should be a front-engined, rear-wheel-drive sports car, painted green," says Ben Samuelson of TVR.

"Our export markets are in Surrey and Hampshire," he jokes. "The turning point was 1985, when we decided against expert advice to concentrate on what British buyers wanted." The firm aims to build up to 2,000 TVRs this year from their unfashionable Blackpool location.

Another company that famously ignored the expert advice is Morgan. Established in 1909, it makes Thirties-shaped, Nineties-powered, characterful, timber chassis, aluminium- bodied sports cars. On the BBC TV programme Troubleshooter, former ICI chairman Sir John Harvey-Jones urged the company to slash waiting lists and boost production.

As the early Nineties recession loomed, such a strategy would have been precisely the wrong thing to do. The hand-built Morgan is still in family hands and Peter Morgan, son of the founder, insists "This is the only British car company to have made a profit every year since 1945".

Closest in spirit to Rolls-Royce and Bentley is former aircraft builder Bristol, which now makes bespoke, six-figure-sum luxury cars.

Caterham, which sells about 750 sports cars a year, is run by the father- and-son team of Simon and Graham Nearn. It is the same at Marcos Cars with Jem and Chris Marsh, who produce 100 cars a year. Chris Smith and his family run Westfield, selling 400 cars a year, while Jonathan Heynes at Reliant Motors produces up to 700 three-wheelers each year.

Although survival as an independent car company is precarious, the idea of building a British car is still appealing. Last week Creative, a Redditch- based design and manufacturing group, announced plans to relaunch the famous Jensen marque. On the evidence, all they need to succeed is a single-minded owner, no meddling shareholders and a unique, ideally sporting, car.

In British motor manufacturing these days, it pays to be small.