The British car industry is doing well.

Jaguar Land Rover is taking on staff and is enjoying record sale increases in foreign markets. Vince Cable, the business secretary, has persuaded General Motors to keep Vauxhall's Ellesmere Port plant going - possibly at the expense of Opel's plant in Bochum, Germany.

A union chief there called British manoeuvring a declaration of war on German industry. BMW, which owns Mini and Rolls-Royce, plans to spend 500 million pounds in the UK by 2014. And Nissan's decision to build its new small hatchback in the north-east completes the good news.

Britain is now the fourth biggest car manufacturer in Europe, selling more than it imports for the first time since 1976, and within a snip of overtaking Spain as the third biggest car maker.

Under foreign ownership the British car industry - with British workers, designers and engineers - is doing rather well.

The picture for carmaking as a whole in Europe looks gloomier. Volume manufacturers for the European masses are particularly hit. Peugeot and Fiat are doing badly. So are some niche companies. Saab is in receivership. The Swedish "thinking man's" car was dropped by GM having failed to make a profit for them since 1999 and is just this week looking for buyers to take it out of bankruptcy.

The Swedish carmaker was looking at a Chinese buyer, Youngman cars, but GM vetoed the deal because it did not want to see the intellectual property work ploughed into Saab transferred to a Chinese company. Another deal may yet be in the offing, but whether that will solve Saab's chronic unprofitability problems is another matter.

You could blame the economic crisis. Europeans have less purchasing power than they used to and unemployment, particularly in southern Europe, is soaring. The binge that followed euro entry is truly over.
Europe's volume car makers are squeezed from below by cheap and increasingly well-designed Korean cars. The Kia Cee'd uses a German design team that worked on the Audi.

They are squeezed from above by entry level models of prestige car makers like Mercedes. The European company doing best, VW, benefits from a segmented product strategy using common platforms and for having the reputation for being a little bit more prestigious than its counterparts at each level it is competing at.

European management is sometimes said to be a problem. Much vaunted French management skills have come under criticism. French executives are parachuted in from other industries. German car executives, in contrast, are said to be passionate about motoring - and it shows. Conservative uninspiring designs are said to be a factor in at least some models.

Car makers know they are in trouble, and that they are suffering from enormous overcapacity. It is good to be a buyer on the Continent; show rooms are offering up to 30% discounts on new models. More long term solutions are already being worked out. Peugeot is taking the partnership route.

General Motors took a 7% share in the French company earlier this year, and the two will launch a raft of new models on shared platforms from 2016. Even so, there is speculation, Peugeot may have to close plants in France. The car makers themselves want to move more production abroad, keeping prestigious design and management elements back in Europe - though politicians on the continent are loath to allow this, regarding assembly plants as the visible sign of manufacturing a sign of virility. What persuaded the Americans to keep the Vauxhall plant going was commitment to wage restraints and full shifts.

But that is sure to produce overcapacity, Europe's problem, so not everybody will be able to do that. Going upmarket to appeal to the newly rich of the BRICS countries is again not a solution for volume car makers; besides taking a brand up market takes many years as the example of Audi shows. Europe's big motoring corporations are in a real bind. Solutions on a postcard.

-------------------------
Pelle Neroth -- EU correspondent