Hamish McRae: Jaguar and the future of the British car industry

The news that Jaguar Cars' parent Ford is to end production at the old Brown's Lane factory in Coventry has caused an understandable amount of fuss.

The news that Jaguar Cars' parent Ford is to end production at the old Brown's Lane factory in Coventry has caused an understandable amount of fuss. But it still looks as though some 1.7 million cars will be made overall in the UK in 2004, near the peak level of the early 1970s. So, generally, the British motor industry, and despite the gloom about Brown's Lane, is a reasonable success story. But there is a certainly a paradox in this tale.

Most new British cars are not really British any more - but that is why we seem to have recreated one of the most successful motor industries in the world. The most "British" of our car companies, MG Rover, has well known problems. Ford, which we think of as almost British, does not make cars here now with the "blue oval" badge on them, though it does make a lot of engines and owns Jaguar, Land Rover and Aston Martin. Recently, Jaguar and Land Rover, where plants may also be in jeopardy, have struggled despite huge investment by Ford. Of the other bits of the old British Leyland group, once the world's third-largest manufacturer, only the new Mini, owned and engineered by BMW, is a true success. Yet Honda, Toyota, Peugeot thrive in the UK. What does this say about our ability to earn a living in what is still the world's biggest industry?

Four things, and they are all good-ish news.

One is that Britain is an okay place to make manufactured products. It may not be the cheapest in the world - that is China. It may not have a clear currency advantage, but then, no place has a lasting one. At the moment, Eastern Europe is one of the best places to build but its advantage will go as their currencies rise. But we have a skilled and adaptable workforce and flexible regulation and taxation. So we are all right.

Two is that we have brand image. As cars increasingly become a commodity, the added-value is in the brand. We like cars in Britain, despite the determined efforts of the authorities to make us feel bad about that. So we can create and sustain brands that are attractive to the world. As long as we can add that value - as does the Mini - some manufacturing will remain in the UK.

Third, there is a deep well of design talent in Britain. TVR sets the trend for Audi sports cars, just as Lotus inspired the Mazda MX5 and I suspect the Aston Martin DB9 will inspire the next generation of supercars. Nearly all cars now are competent. Nearly all are well-built. So the money is in shaping fashion and then fulfiling its demands. The trick is to earn the money in the UK, rather than have clever Brits forced to move to Germany or the States to ply their craft. That seems to be happening as the majors are locate design work here.

Finally, we have British buyers. The UK is the most interesting car market in the world, partly because it is big - almost as big as Germany - but more because it shows companies future trends. The UK, by contrast, has the highest proportion of soft-tops in the major world markets. It is also one of the best markets for supercars. We have a respect for good engineering, because we were so long exposed to the other sort. Companies make money selling in the UK but also catch a feeling for what might sell elsewhere.

In the future, the motor industry will head in two directions. There will be commodity cars, where volume matters. And there will be specialist cars, where there is a certain something that justifies the premium price. We will always be an offshore island in the commodity game, but some will stay here and we don't want to get into competition with China. But in the specialist game we can earn a living and, I suspect, a better and better one.

motoring@independent.co.uk