The iconic London “black cab” made in Coventry is gearing up its move into new markets throughout the world, according to manufacturer Manganese Bronze (MNGS).
While production levels are being cut at the company’s UK plant at Coventry, advance orders for an international variant of the TXF cab now being built as part of a joint venture enterprise in Shanghai are flooding in.
Initially, the group, which trades as London Taxis International (LTI) said it order for 500 vehicles - to be delivered over three years - being built in partnership with Chinese carmaker Geely. By May this year there were an additional 2,500 orders in the bank.
“Since then we have signed agreements for over 3,000 additional vehicles,” MB said in its interim results statement. “This brings the total to over 6,000 London over a three-year period with deliveries commencing in early 2009.
“In total we have signed agreements with partners in 11 markets spanning the Middle East, Africa, Scandinavia, Eastern and Western Europe.”
MB is on record as saying that the deal with Geely had secured LTI’s long term future. It allows volume production of the London cab at a “significantly lower” cost and means the company can penetrate international markets that were previously closed to its low volume, high cost, UK operation.
In its home UK market, LTI has been hit by the economic downturn which means that London cabbies are putting off buying new vehicles.
UK turnover in the six months to June 30 fell by seven per cent to £42.4 million, MB reported.
Unit sales fell by 13 per cent to 1,169 vehicles compared with the same period last year. Comparisons are skewed, however, by the fact that the same period last year saw the launch of the TX4.
UK earnings have also been hit by the strength of the euro which has made its Italian-built diesel engines more expensive.
LTI has cut costs at its Holyhead Road plant in Coventry and has cut production by 15 per cent to about 2,000 vehicles a year to match demand , prevent inventory building up, and lower the break even point.
“UK sales performance continues to be challenging as drivers’ confidence to commit themselves to the purchase of a new taxi remains weak due to uncertainty about the general state of the economy,” group chief executive John Russell said.
“The actions we have taken to reduce our build rate and take out cost have been timely and effective.”
As well as building cabs in Shanghai, LTI has other projects on the block, including developing an electric-powered cab and a fleet of hydrogen fuel cell taxis for the 2012 London Olympics.
Interim pre-tax profits rose to £1.5 million from £700,000 in the same period last year on revenue of £42.4 million, down from £45.5 million last time.
Looking ahead, the company said it expects sales in the second half of the year to follow the normal seasonal pattern and be below those seen in the first six months.
“The board considers UK business conditions to be uncertain, which makes forecasting demand level for new vehicles more challenging.” the statement said.
“The break-even point of the busienss has been significantly reduced and the group has available cash and no long-term borrowings.
“These factors put the group in a good position to handle any future UK market challenges. In the short-term, management will continue to focus on operating costs and procurement savings from Chinese sourcing to offset any lower volume in the UK business.”
Ultimately, the Shanghai operation will “deliver a step change in the group’s prospects and financial performance with signifcant profit contributions for 2009 and onwards from procurement savings and international sales.”