Comment: Taxi to the terminal zone

3rd Oct 2009 03:01

Manganese Bronze is the UK’s largest publicly quoted car manufacturer but, given the history of the UK car industry, it should not come as a surprise that the maker of the iconic black taxi is struggling for survival.The company said in a trading update at the end of September that it needs to sell 2,000 black cabs in the UK a year to break even and, as at the end of August – three-quarters of the way through the year – it was barely three-fifths of the way towards reaching this break even point. Furthermore, sales in the second half are traditionally lower than the first half.Formal consultation between Manganese Bronze and its UK workforce as well as other stakeholders are in progress 'to identify means of returning its currently loss making UK operation to profitability.’ Manganese Bronze has not ruled out rationalisation of the current manufacturing operations ‘which could result in a number of redundancies.’The company seems to have resolved the problems it had last year with under the bonnet fires breaking out on 12 of the early production models of the TX4 black cab, but it has a bigger and potentially terminal problem on its hands in the form of a rival black cab model produced by German giant, Mercedes Benz.The Mercedes Vita taxi cab is reportedly claiming a quarter of all new taxi sales in the nation’s capital, making it harder still for Managanese Bronze’s LTI Vehicles subsidiary to hit its break even target; LTI has responded by offering ‘high discounts’ but this only serves to push the break-even volume figure higher. If the prospect of one of London’s best known symbols one day being exclusively produced by a German company causes you patriotic pain, this pain can be partially salved by the fact that the Vita model has been co-developed by British outfit Eco-City Vehicles which, coincidentally, issued a trading statement the day before Manganese Bronze.The tone of the Eco-City announcement was in stark contrast to the gloomy but still hopeful statement put out by Manganese Bronze.‘Sales of the new taxi continue to gain momentum leading to an increasing market share with September's performance the strongest to date,’ Eco-City said.Though obviously not a disinterested advocate, Eco-City claims the Vita taxi is a better choice than the TX4, offering better fuel economy, lower emissions, six passenger seats instead of five, more space and comfort with air conditioning for driver and passengers.Critics of the Vita argue that it looks more like a people carrier than a traditional black cab, but sentiment has little place in business unless you are selling memorabilia on eBay.Promised LandThen again, the world famous appearance of the London black cab may yet come to Manganese Bronze’s rescue if it can deliver on plans to make the turn-on-a-sixpence rugged black taxi the de facto standard for taxis worldwide.The company has closed down London Taxis North America and abandoned, for the time being at least, plans to supplant the yellow cab with a black cab in the US, but it is pressing ahead as fast as finances will allow with its Chinese joint venture, Shanghai LTI, which the company said ‘offers the greatest potential to achieve our vision and secure a long term future for the group.’Working in partnership with Chinese motor car manufacturer Geely, 109 vehicles have been sold into Asian markets with a further 15 sold outside Asia. Sales have been slowed, however, by the credit crunch, with orders for 150 vehicles in limbo until the customers can sort out financial issues.Beyond that, the company has ‘3,000 vehicles sold on sales contract over three years.’The company is looking to reduce its UK production costs by sourcing more parts from China but these plans have also been hit by delays, and the full benefit won’t feed through until 2010.By then the Vito will probably have gobbled up more of Manganese Bronze’s home market. Since the Vita’s July 2008 launch Eco-City’s KPM-UK subsidiary has sold 400 models, and the group has seen sales of the taxi in Coventry, Reading, Manchester, Trafford, Swindon and Milton Keynes, while the licensing authorities in Peterborough, Cambridge, Southampton, Birmingham and Maidstone have now given approval. The company also has plans of its own to expand internationally.‘Eco City is presently showing the vehicle at the Frankfurt Motor Show at the request of Mercedes-Benz following an approach by the German Taxi Association. The Association has 6000 members, many of whom are interested in the vehicle because of its wheelchair accessibility and six seats,’ the company said.With the backing of Mercedes-Benz the Vita will present formidable competition to LTI’s TX4, but the company has seen off competition before, most recently in the form of the angular Metrocab, which bit the dust in 2002. If it can survive long enough to bring out a new model - LTI is expected to launch an all-electric taxi, the TX4E – then it has a fighting chance of preserving its 60-year dominance of the black cab market.