BRITAIN'S auto industry can look toward a brighter future in the next decade, analysts say, but foreign capital and expertise will be mainly responsible for rescuing it from a lengthy slide.
Most of the input will come from Japan which plans to use Britain as a launching pad for expanding sales in Europe. The reasons for the downturn in Britain's car industry - the worst since World War II - go much deeper than Europe's current recession.
Sir Hal Miller, chief executive of the Society of Motor Manufacturers, says that for at least three decades the country's carmakers failed to match foreign competitors in innovation and marketing, bringing a steady decline.
The Rover Group, which made 14 percent of the cars sold in Britain last year, will sell 12.5 percent this year. Toyota, Nissan, and other Japanese carmakers together already have 12 percent of the British market.
Because of the huge investment Japan's auto companies have been making in Britain, they are expected in two years to be making 33 percent of all cars produced in this country. It began in 1986 with a Nissan factory in Sunderland. Honda and Toyota followed. By 1995 the Japanese, taking advantage of relatively low wages, insisting on single-union agreements, and using their own management methods, expect to be making 500,000 cars a year in Britain.
The government has long been resigned to the fact that car brands, once impeccably British, have been taken over. Vauxhall is owned by General Motors. Rover is heavily supported by Japanese capital.
Many British motorists prefer either Japanese or European cars to the locally made variety - France's Peugeot and Citroen account for 12 percent of the British market.
The recession has hit car sales badly. In 1989, 2.3 million cars were sold in Britain. This year, the Department of Trade predicts sales of 1.6 million. For the first time in years, Ford, with 23 percent of the market, has announced layoffs in its British plant. In response, Ford workers last month decided to hold a strike ballot. Ford's Dagenham plant - the largest in Britain - is on half-time production.
Two factors promise to ease the plight of the car industry in the short term. Devaluation of the pound last September may make it easier for British-made cars to compete in foreign markets. The government's abolition of the car tax in November, plus falling interest rates, may encourage potential buyers in Britain itself.
But Patrick Moon of Lloyds Bank says the key factor in coming years will be Japan's role. A Toyota executive said his company wanted to make inroads into the local market, but stressed that it will regard Britain mainly as a place from which to expand sales elsewhere in the European Community. Nissan has demonstrated the potential in this field. Today 80 percent of British-built Nissan cars are exported. Toyota and Honda say they have similar aims.
The downturn in the economies of Germany, France, Italy, and Spain means that there will be brisk competition in a shrinking European market.
The Japanese have lately been pursuing the lucrative car components market, including brakes, exhaust systems, and seats. A study by Cambridge University, Cardiff Business School, and Andersen Consulting showed that components made by British plants had 2.5 defects per 100, compared with 2.5 per 10,000 for Japanese competitors. Many Japanese firms produce twice as many parts with comparable numbers of employees. European manufacturers take an average of 26 hours to make a car. Nissan claims that it takes
only 10.5 hours to produce a Micra mini-car - one of the models it will be pushing hard in the EC.