A resurgent British car industry offers lessons in how to improve other areas of our economic output

Here at least, globalisation works to Britain’s advantage

The news from the British car industry gets better and better. Jaguar and Land Rover sales have jumped again, with strong sales in the now familiar booming markets of China, Russia and Brazil. As might be expected now that it is owned by the Indian group Tata, it is also making excellent headway in a new “home” market, India. And the US and Germany are also on an encouraging trend. It is a broad-based success.

At a time when most observers had written off the chances of any manufacturer building substantial new facilities in the UK, Jaguar Land Rover is doing precisely that, in Wolverhampton. Others – BMW, Toyota, Nissan, Honda, General Motors – are building new generations of successful models in Britain. In hybrid and electric car technologies Britain is starting to gain some critical mass, even a lead. Excellent sales of Jaguar, Bentley and Rolls-Royce models confirm that Britain can build the best limousines in the world.

Within five years the UK could surpass its record year for production – 1972 – of just short of 2 million vehicles. In those days the cars were built, by and large, with wafer-thin profit margins or at a loss, and the trajectory was shortly to turn sharply downwards. With desirable products such as the Range Rover Evoque, the omens now are vastly better than they were in the age of the Austin Allegro.

What could possibly go wrong? The exchange rate, for one thing. Sterling, despite the best efforts of the Bank of England, has strengthened in recent months and sales and investment plans can be very sensitive to sterling’s strength. For the car industry and for our resurgent manufacturing sector more generally, the authorities have to keep sterling’s feet on the ground. For a nation that makes much of its living by selling its goods and services abroad, and whose trade performance is still not as strong as it ought to be, that should be a powerful factor when the next move in interest rates – and forward guidance – is considered.

Second, we hope those same authorities learn the lesson that limited, intelligent, targeted intervention and subsidy can yield excellent returns. Had Peter Mandelson not extended aid to Tata in the depths of the depression five years ago, Jaguar Land Rover might not be around today. The Automotive Council, derided as a talking shop, has done some good, and will continue to do so, especially if it can extend its work to improving skill levels and the supply chain. Too many components going into “British” cars come from abroad simply because the long death of the indigenous industry denuded the base of suppliers.

Third, we should appreciate that, here at least, globalisation works to Britain’s advantage as an open society welcoming investment, managers and engineers from abroad. We have trans-national concerns, with German, Japanese, American, Indian and, for the rump of MG Rover, even Chinese bases rebuilding our industry. They are working with pragmatic ministers such as Vince Cable, and a co-operative workforce whose sacrifices in the bad years helped save many thousands of jobs. Yet as few as one in seven cars sold in the UK is built here. Our success is happily export-led, but it might be nice if a few more of us got a little more up-to-date with the quality and panache of the vehicles leaving our factories.