Swallow was founded by two friends, William Walmsley aged 30 and William Lyons then aged 20. Their partnership became official on Lyons's 21st birthday, 4 September 1922. Both families lived in the same street in Blackpool, England. Walmsley had previously been making sidecars and bolting them onto reconditioned motorcycles. Lyons had served his apprenticeship at Crossley Motors in Manchester before moving to Blackpool Sunbeam dealers, Brown & Mallalieu, as a junior salesman. Their business partnership was known by three successive trading names: Swallow Sidecar Company, Swallow Sidecar and Coachbuilding Company, and Swallow Coachbuilding Company. In 1930 a limited liability company was incorporated to own their business.

Swallow Sidecar Company, Coachbuilding Company, and Swallow Coachbuilding Company were trading names used by Walmsley & Lyons, partners and joint owners of a British manufacturer of motorcycle sidecars and automobile bodies in Blackpool, Lancashire, later Coventry and then Warwickshire before incorporating a company to own their business which they named Swallow Coachbuilding Company Limited. Under co-founder William Lyons its business continued to prosper as SS Cars Limited and grew into Jaguar Cars Limited. The sidecar manufacturing business, by then owned by a different company, Swallow Coachbuilding Company (1935) Limited, was sold by Jaguar to an aircraft maintenance firm, Helliwell Group, in January 1946.

The first car that Lyons and Walmsley worked on intending to build and sell it in any quantity was the Austin 7, a popular and inexpensive vehicle. For their show car Swallow's Bolton, Lancashire agent had persuaded a dealer in Bolton to supply him under-the-counter (coachbuilders required Austin's prior approval or warranties might be voided) with an Austin 7 chassis. In 1929 an open 2-seater by Swallow was built on an Austin Seven chassis. Priced at only £175, the Swallow, with its brightly coloured two-tone bodywork and a style that imitated the more expensive cars of the time, proved popular in the prosperous late twenties and in the following depression. Soon after, a saloon version was produced: the Austin Seven Swallow Saloon.