`Absolutely bonkers!'

THAT'S WHAT THE BANKERS SAID WHEN PETER WHEELER TOLD THEM HE WANTED TO BUY A DEBT-RIDDEN BLACKPOOL CAR FIRM. TODAY, TVR IS THE BIGGEST BRITISH- OWNED CAR MAKER. IT'S PROBABLY ALSO OUR MOST UNLIKELY SUCCESS STORY

Peter Wheeler is squeezing out of the driver's seat of a gleaming green sports car. He shakes hands with a prospective customer. "Right, good to see you then," he says. "I'm going back inside, it's damned cold out here." He strides towards what looks like a metal shed. All around lie bright-coloured cars, awaiting testing and delivery. Peter Wheeler is having a good year. The car he has been in, the pounds 40,000 TVR Tuscan, is his company's latest model and has been reviewed ecstatically by the motoring press. The first deliveries are next week, and order books are full for two years.

Since he bought TVR Engineering in 1981, Mr Wheeler, 55, has turned the company from a struggling minor car manufacturer to our largest British- owned car producer. TVR is working at full capacity in Blackpool, producing more than 2,000 cars a year. As the company's chairman and sole shareholder, he has overseen a transformation that culminated in a turnover for the year ending 31 December 1998 of pounds 52.5m, up pounds 10m on the previous year and three times the figure for 1992.

Pre-tax profits for the year to December 1998 were at their highest at pounds 2.6m, up from pounds 950,000 the previous year. Company insiders say the figures for this year will be better. The low-slung, convertible roadsters, selling for pounds 35,000 to pounds 47,000, are renowned among motoring aficionados for their swooping curves and roaring performance. TVRs have become a must-buy for many of the rugby-playing, thirtysomething urban banker class. Available in a choice of 10,000 colours, including lurid purples and pinks, the cars have honed a distinctive style in a market dominated by hi-tech German and Japanese machines.

TVRs have become a modern symbol of British contemporary cool, despite the avowed traditional views of Mr Wheeler. "I have no truck with Blair's Britain at all," he says, in a gritty accent which combines his native Yorkshire with his adopted Lancashire. "I believe in old-fashioned values."

The collection of dishevelled sheds on an industrial estate on the eastern edge of Blackpool, two miles from the promenade, seem an unlikely location for a triumph of British industry. All around are rows of grey terraced houses. When Peter Wheeler first visited what was a much smaller factory there in 1980, he was a customer, one of around 600 people who bought a TVR every year. The company was in trouble, mired in debt, declining orders, and a lack of direction.

Mr Wheeler was about to sell the successful chemical engineering company he had founded in his twenties. "I had a TVR because it was the best car for me at the time," he says. "I would never buy anything foreign. When I first thought of investing in TVR my accountants and lawyers said I would be completely mad and stupid to buy it. And that's why I bought it. And they were absolutely right." He smiles.

Mr Wheeler is a laconic man, standing six feet six, with a shyness that means he rarely communicates in more than matter-of-fact terms with those he feels he needs to talk to. He is sitting, long legs stretched, in a wood-panelled meeting room on the first floor of the TVR factory. Through an open door we can see the main administration office, a modern loft conversion with doors all painted purple - the TVR corporate colour. Mr. Wheeler's desk is in the centre of the open-plan office, facing a white board on which every sale of a TVR anywhere in the world is notched up with a black marker pen. Colleagues say he has a habit of screwing unfavourable press articles up into balls and throwing them at the head of his press office, who sits a few feet in front of him.

A grammar school boy from Sheffield, Peter Wheeler never planned to become the boss of a car firm, even though he admits to "mapping out" his life while he was a teenager. He studied chemical engineering at Birmingham University while indulging in his hobby of buying and selling old cars, which soon became a lucrative sideline. After university he worked for a chemical plant manufacturing company, and soon set up his own business, out of the spare room of a doctor's surgery in Stafford, selling industrial equipment made by his friends. His company, PTA, grew to employ more than 70 people. His motoring hobby developed into a passion for running sports cars ("I didn't need to sell them by then") and by the time Mr Wheeler bought his first TVR he had owned a plethora of cars from famous British marques.

"I started visiting the factory to service my TVR, and I knew that Martin Lilley, the owner, wanted to sell," he says. Mr Wheeler, then in his late thirties, had been planning to sell his own business and retire to spend his time fishing, shooting and racing cars on the track. "All that went out the window when I got involved with this place," he says. When he took over in 1981, TVR was in a mess. "I ended up putting more of my money into it than I'd planned to," he says rather sheepishly. How much of his fortune did he end up putting into the company? "Over the next few years, I realised the situation was worse than I'd thought. Pretty much all of it went in." He refuses to put a figure on his investment.

In the early 1980s, a reasonably popular model line had just been discontinued, and sales of its replacement were minimal. TVRs had a reputation for flimsiness and chronic unreliability, and the British car industry was in crisis.

"My first real input into the company was to say, `Well, nobody's going to buy a TVR and complain about the performance'," he says. "So we immediately started putting in more powerful engines to get it in everybody's mind that we made very quick cars. That was a key change in the philosophy of the company. Since then we've always had a performance advantage for the price.

"During the 1980s we never got into a situation of deep borrowing because nobody would lend us any money. We were run on a very tight budget for the first 10 years and I made sure the company stopped making losses. I hadn't intended to stake all my money on it but it became a fairly heavy battle." Then in the early 1990s sports car makers including Lotus, Porsche and Lamborghini were feeling the recession. At the Birmingham Motor Show in 1990 Mr Wheeler unveiled a new version of the Griffith, a snub-nosed convertible which accelerated faster than a Porsche 911 and cost half the price at pounds 30,000.

His business strategy started paying dividends. Porsche sales slumped to a quarter of what they had been in the 1980s, and TVR increased its sales. "It has always been our philosophy to sell our cars without a heavy markup," he says. "We work out our cost, put a small margin on it and sell it to our customer." There are now 28 franchised TVR dealerships in Britain and 30 more overseas.

New models followed in the mid-1990s, all of them enthusiastically received by the motoring press and programmes such as Top Gear, which has given TVR more publicity than most marketing departments could dream of. The cars, which combine outrageous performance combined with wild looks, create their own publicity: the top-of-the-range Cerbera, introduced in 1998, has a top speed of 190 mph. TVR does not have an advertising budget.

Last year, when the company unveiled its latest car, the Tuscan, brimming with gimmicks including handle-free doors (they are opened by pushing a button) and a key-free ignition (a button again), a two-year waiting list appeared within weeks.The total production run has increased from 600 cars a year when he took over to more than 2,000 now, and the number of employees from 125 to nearly 700.

Mr Wheeler could double his production over-night and still sell all his cars. But he is reluctant because he doesn't want to be vulnerable to a recession or changing consumer demands. "You have to remember we are in the fashion business to some extent," he says. In the warehouse factory underneath the offices, seven lines of cars stand in varying degrees of completion. Some are no more than a skeleton of what look like metal pipes, which, Mr Wheeler explains, is the car's chassis. Others stand half-hung with purple body panels. Engines, bits of metal, wires and piping sit around the cars, sometimes interspersed with hammers, glue, or a half-eaten sandwich.

The use of a steel chassis hung with glass fibre panels - a method few other

manufacturers still use - means TVR does not need to create expensive new tooling to press steel body panels every time it creates a new model. Instead, Mr Wheeler, sometimes helped by his design engineers, hacks away at a block of polystyrene until they create a body shape they like, mould the panels in the factory's ovens, and hang them on the chassis.

But it is uneconomical for large production runs, when economies of scale kick in for cars made of steel without a separate chassis. "A lot of other smaller manufacturers said, `We have to make our car bodies like everybody else', and they disappeared because of the costs of tooling-up," says Mr Wheeler. "They got something wrong and they didn't have the resources to see it through. That's where Lotus went wrong. In the late 80s, some (Lotus) marketing man said, `We can create a new model and sell 5,000 of them a year'. So they tooled up to make them. But the problem was they hadn't got deposits from 5,000 customers. They were under huge pressure if they didn't get enough orders, because they had spent the money on the tooling. We don't do that, and we can adjust supply to meet demand much more easily."

Labour costs are also cheap. Blackpool is an area of high unemployment and TVR pays its blue-collar employees less than the unionised workforces of major car manufacturers. This leads to what is traditionally a very sensitive subject at the company, the cars' reputation for unreliability and less-than-perfect workmanship. Has TVR still got a reputation for unreliability? "Yes, they still do have a bad reputation," says Mr Wheeler. "We have a problem whereby everybody who goes into a showroom says, `Well, I've heard it's unreliable'. Now that's all based on one throwaway comment by Jeremy Clarkson on Top Gear. The TVR Chimaera won their competition as the best sports car, and he said, `But I've heard they're unreliable'. Four million people heard that, and that was it. The British are determined to put down their own products.It's a national characteristic."

So TVRs are reliable then? "Of course they are," he says. "Otherwise we wouldn't have customers who buy them and drive them. There are a lot of our cars on the road." In the last 30 years, Peter Wheeler has made one fortune, invested it all in what seemed like a lost cause, and made a bigger fortune. Is he motivated simply by the thought of making a profit? "It's not anything to do with making money as such," he says. "It's about making enough money for the company to carry on working and being successful. Money isn't a motivation except when you say we really should be developing this, and you can't afford to do it." He doesn't take holidays. The odd day off shooting near his country house in the Forest of Bowland, 30 miles from Blackpool, and racing cars on track days in nearby circuits is enough. He married for the second time a few years ago and has two daughters, aged six months and two years.

"I suppose I might have to start going on holiday again for the children," he says, a little grumpily. I ask what it feels like owning the largest British-owned car manufacturer. "It doesn't feel like a large manufacturer," he says. But isn't he extremely patriotic? "Oh, very much so. And to me buying British smacks of total common sense. I mean, it's all very well having a good service industry and nice restaurants, but unless someone's actually making something that makes money those things wouldn't exist. The Germans have always bought their own cars. The British forget to do that."

Isn't that because German cars have always been better? "That's absolute rubbish," he says. He launches into a monologue about how British cars were always better than German ones until the 1980s. Mr Wheeler does not seem the kind of man who will change his beliefs lightly, and you suspect it is this strict determination that has helped him succeed where others have failed. He says he set up his own business because he would never have been able to work for anybody else.

His plans for the future? "We want the company to grow, but not too fast," he says. "And we'll think about new cars. Now that we've got a bit more money to play with, we can afford to be adventurous."