Toy story: whatever happened to the old favourites?

Hornby's acquisition of Corgi is a courageous attempt to prove that traditional toys can compete with computer games for the attention of 21st-century children. By Jonathan Brown

Few names conjure up the spirit of post-war British childhood in quite the same way as that of the toy-maker Corgi. From 1956 the company, which started life as the brainchild of two pre-war German émigrés in the backstreets of Northampton, encapsulated an impassioned ethos that combined a drive for engineering excellence with the importance of playability.

Pioneering features such as doors that really opened, proper windows and wheels that actually span, Corgi steered its customers through the technological explosion of the baby boom years, straddling the age of mass motoring as well as the Space Race. It sold everything from trains to tractors, buses to bombers, dump trucks to the legendary Dolphinarium – a curious assemblage of flat-bed lorry used to transport two dolphins in a mobile water tank.

Most famous, however, were its range of lovingly crafted Formula 1 and performance cars culminating in Emerson Fittipaldi's classic 1972 John Player Special Lotus.

As television and film came to dominate the imaginations of children through the Sixties and Seventies, Corgi adroitly exploited the power of the media. From James Bond to Batman, it relentlessly expanded its range and sold tens of millions of toys worldwide. At its height, the Corgi factory in Swansea, named by founder Philip Ullmann after the Queen's favourite breed of dog in a self-conscious act of patriotism towards his adopted home, employed 6,000 people. Thousands of them were workers who had deserted the declining coal mines to join the production line.

Yesterday, in a move that would have been warmly welcomed by its founders, the company was back in British hands after it was effectively swallowed up by rival toymaker Hornby as part of a £7.5m deal, plus £800,000 for its existing stock. Enthusiasts hope this will breathe new life into the much-loved brand preserving it for future generations.

Despite boasting a worldwide collectors' club of some 10,000 members, the move comes amid a series of major challenges to the low-key charm of the die-cast toy. Manufacturers are faced with an ageing collector base being relentlessly whittled down by the ravages of time, combined with the inexorable rise of the multi-billion-pound global computer gaming industry.

The furore surrounding the launch of the eagerly awaited Grand Theft Auto IV this week, with the 18-rated game expected to sell some six million copies in its first week, demonstrates just how big the problems are for the little toymakers.

Hornby chief executive Frank Martin said his company planned to invest some £750,000 a year in Corgi in an attempt to expand it from its core market of Britishbased adult male collectors and appeal to a younger overseas market. It plans to do this by striking licensing deals, similar to its successful Harry Potter and Thomas the Tank Engine ranges, and by taking advantage of Hornby's international distribution network.

"We want to make it more relevant to younger audiences, which extends the life of the brand," Mr Martin said. "It is a fantastic brand and has a superb reputation worldwide. We intend to build on the brand's super heritage and invest to build its premier position in the market."

Hornby, which already owns such other classic names as Scalextric and Airfix, said it would retain "key" Corgi staff, taking on 10 in Leicester, four in Hong Kong and one in the US, but would not rule out the possibility of potential job losses.

Included as part of the deal will be Corgi's venerable model railway brand, Bassett-Lowke, which is more than a century old and counts among its customers high-spending model train enthusiasts willing to pay up to £699 for a replica Flying Scotsman.

According to Paul Kennelly, a collector of 37 years and co-founder of the West Wales Museum of Childhood, when the first Corgi toys appeared, the effect was revolutionary. "Before then model cars were dominated by Dinky which were very basic – no windows, no suspension, nothing like that. The innovation that really launched Corgi was the business of glazed windows – this really set them apart.

The James Bond Goldfinger Aston Martin had an ejector seat, while the 1960s Batmobile had a spring-released saw blade. "They became a must-have toy in just the same way that it works with kids today. If one has a mobile phone that texts and another has one that takes photographs and shows films, they all want the more technologically advanced one – the one that is brand new and exciting," said Mr Kennelly.

The genius behind Corgi's technological superiority was Marcel Van Cleemput. As well as pioneering the windows which wowed the audience at the groundbreaking British Industries Fair in 1956, he helped keep the innovations coming thick and fast before writing what many consider the definitive history of the toymaker, The Great Book of Corgi, 1956-83.

Perhaps the company's most successful model, and some say the ultimate manifestation of the miniature car craft, came in 1964 with the release of the Aston Martin Ghia L6.4. Collectors were stunned by the authenticity achieved by Corgi's engineers. Not only did its bonnet open – an innovation achieved four years earlier with the production of the Aston Martin DB4 – but so did the doors and boot. The interior detail was stunningly accurate, too, coming complete with rear-view mirror and folding seats. There was even a model Corgi dog sitting on the rear parcel shelf.

Ironically, while Corgi sold 1.7 million copies, Aston Martin managed to make only six copies of the original. But by the 1970s, despite the success of cars modelled on popular TV shows such as Starsky and Hutch and Kojak, a chill wind was blowing through the whole of British manufacturing and Corgi was no exception.

Rampant inflation made it impossible for the company to plan its costs. A devastating fire at the Swansea factory in 1969 destroyed a huge amount of stock and hampered future production. Not even the Golden Jack "Take-Off-Wheel" system could reverse the slide towards bankruptcy.

In 1983 – right on the cusp of the emerging computer age – the inevitable happened and Corgi called in the receiver. Dinky in Liverpool and Matchbox's huge site in London's East End also closed. The golden days were all but over.

However, there were still those who refused to let the dream die. A management buyout saw the company soldier on for a further five years before it was bought out by US toymaking giant Mattel, who also went on to take over the Matchbox brand in 1997. Corgi was bought out once again by management in 1995, before being sold to the Hong Kong model-maker Zindart in 1999.

Corgi recently moved production to the Far East to cut costs but failed to make a profit last year despite sales of around £6.5m. Yet whatever the bottom line, to those who love miniature toys , the old magic of Corgi and Co remains undimmed.

"Computer games give you so many options but if you are given a box of Lego, a police car and a couple of toy submarines you make a world of your own – it's up to you, you can do exactly what you like. The imagination required is so much greater and you are not stuck in front of a screen getting arthritic fingers," said Paul Kennelly.

Hornby

Hornby predates many of the other British toy manufacturers by nearly half a century. Founded in 1901 by Frank Hornby, a businessman and inventor, it was later known as Meccano Ltd and based in Liverpool. It was distinguished from other toy brands in producing miniature electric train sets. After sales struggled during the 1950s, Hornby was bought by Lines Bros Ltd, the parent company of rival, Tri-ang Railways. Renamed Hornby Hobbies in 1980, the movement of production to Guangdong province in China 15 years later boosted profits. Sets based on The Railway Children, Thomas the Tank Engine, and Harry Potter's Hogwarts Express all sold well. Today Hornby owns Airfix, Humbrol, Scalextric and Corgi Classics.

Corgi

Launched in 1956 in Swansea, Corgi cars went into direct competition with Meccano's Dinky Toys. The first few models were all quintessentially English, upper-class vehicles, designed either as free-rolling vehicles or with small motors that responded to friction.

The most celebrated Corgi model after the Aston Martin DB5 was the Vanwall Grand Prix car of 1957, a version of that driven by Stirling Moss. Special lines in emergency vehicles sold remarkably well too. Corgi was bought in 1983, eventually reforming as Corgi Classics Limited. It is now owned by Hornby.

Scalextric

The inimitable Scalextric slot car sets were first built in the late 1950s. They developed from the Scalex brand of Minimodels Ltd, a clockwork-powered race car set first sold in 1952. When their inventor found little initial appetite for his idea at the Harrogate Toy Fair in 1957, he sold his idea to Lines Bros Ltd, who operated as Tri-ang. They had the idea of making production cheaper by converting the cars from metal to plastic. Later the track would also be redesigned as plastic. Each set contains the race track, power supply, throttles, and at least two cars. Flamboyant vehicles including Lamborghinis, Ferraris, and Porsches were all featured prominently in the first editions. In addition to cars, vehicles have included motorbikes and go-carts.

Airfix

Founded in 1939 by the Hungarian businessman Nicholas Kove, Airfix was chosen as a name to give the company precedence when listed in alphabetically arranged catalogues of toy companies.It started off making rubber toys and pocket combs. When asked by Woolworth's to produce a version of Sir Francis Drake's Golden Hind, the company realised it could make models at a considerable profit. It went on to include aircraft and ships in the range of models, as well as miniature vintage cars that sold in the millions. The company expanded in the 1960s and 1970s, before being bought by the paint manufacturer Humbrol in 1986. Two decades later, Humbrol collapsed. Airfix is now owned by Hornby.