Fare game: Saving a struggling UK icon

London taxis from Saudi Arabia to Azerbaijan are dragging Manganese Bronze back into the black. Sarah Arnott reports

Manganese Bronze may have three years-worth of losses behind it, but with the help of the Chinese the maker of the iconic London Taxi is still planning to take over the world.

The recession did not treat any part of the motor industry kindly: globally sales dropped by more than a third. But Manganese suffered more than most. Until the downturn hit, the company was the UK's biggest domestically owned car maker. But therein lay its weakness. When the credit bubble burst and the bottom dropped out of the world economy in 2008, London cabbies stopped buying new taxis. Manganese slumped into the red and has stayed there ever since.

"Our business is driven by the confidence of London taxi drivers," Manganese's chief executive John Russell said. "Like all independent operators, if they feel gloomy they postpone big purchasing decisions."

The company has had a painful few years. Even now, with the economy showing cautious signs of recovery, taxi sales are a fraction of what they were – nearer 1,650 last year than the whopping 3,150 in the last boom year in 2007.

But things are looking up, albeit tentatively, according to financial results published yesterday. Revenues are still sliding – dropping from £73.1m to £69.6m over the year to the end of December. And losses of £6.3m are a bare £1m better than in 2009. But stripping out the effect of exceptional writedowns, losses improved from £7m to £2m, a sign of "good progress", according to Mr Russell.

The improving numbers have been hard won. Taxi bodies are now shipped in from Shanghai, leaving just the painting and assembly to be done in the Coventry factory that has been the home of black cabs since the 1920s. Manganese has stripped down its fixed costs, which included 60 redundancies out of a staff of less than 400, and closed its loss-making US business. The group has also streamlined the UK sales network, terminating supply deals with the six independent dealerships and bringing all the operations back in-house.

With the core London market not expected to return to pre-recession levels any time soon, Manganese is being forced to find a solution to the perennial problems of scale and cost which lurk beneath the surface even in the good times.

"Strategically, the problem we have always had is that we have one product and one market," Mr Russell said. "So our cost base was too high and our volumes too low and we couldn't break out of that."

The company hopes the answer is in Shanghai. The bodies shipped to Coventry for the British market are just one part of the joint venture with China's Geely Automobiles set up in 2006. Alongside low-cost components to help bring down the cost for a London cabbie, the Shanghai factory is also producing a lower-cost version of the current generation TX4 for sale in international markets.

The plan trades heavily on the world-renowned design: the iconic London taxi with its eight-metre turning circle laid down in the Public Carriage Office rules in 1906, allegedly to ensure the cabs could turn in the entrance of London's Savoy Hotel. The timing has been unfortunate, with the JV just up and running as recession hit in 2008. But there have been some notable successes. Following a deal in 2009, there are now 400 London taxis in Bahrain. Earlier this month Manganese concluded a 1,000-cab deal with Azerbaijan.

That's just the beginning, according to Mr Russell. "There are a lot of cities where the taxis are, frankly, rubbish – where they frighten tourists and simply do not provide a quality service," he said.

Another strand of the Shanghai-based expansion plan is for franchise-style London taxi businesses around the world. Schemes are already up and running in Saudi Arabia, Egypt and Kuwait, with more starting up in France, Italy and Turkey and burgeoning interest in South America. Given the high cost of even a Shanghai-built London taxi, Manganese is also developing a lower-price, saloon car version aimed at more mainstream markets. The TXN has previewed at autoshows in China and is scheduled for launch in 2013.

But the Chinese tie-up has been far from plain sailing. Geely's plans for a £14m cash injection giving the Chinese group majority control fell through last August, sending Manganese shares spiralling down by nearly a fifth in a single day. Although Geely still retains its 20 per cent holding in the group, and the industrial logic of a full takeover was never altogether clear, the move looked enough like a loss of interest in the venture to put a serious dent in investor confidence.

And for all Mr Russell's optimism, industry watchers remain equivocal on the question of Manganese's long term, international future.

Critics point out that the company's recent struggles in its core British market are not entirely down to the recession, but also to a surge in competition. London taxis are subject to such rigorous rules that the few attempts to take on Manganese's dominance have gained more than a toehold. But the Mercedes Vito minibus was signed off by the Public Carriage Office in 2008 and by the following year held around a quarter of the market (although Manganese managed to squeeze its share back up to 82 per cent last year, with the launch of the new TX4 model).

There are also major questions about whether the pull of the world-famous brand can make up for what will still be a price tag higher than that of rivals.

"It is a vehicle from a bygone age, an ultra-niche product that they want to exploit similar niches in the rest of the world," Professor Garel Rhys, at Cardiff Business School's Centre for Automotive Industry Research, said. "If Geely is willing to make the investments, then something could be done. But there are a lot of ifs – like why would you buy one of these when you could get an air-conditioned, modern saloon for less?"

Start your day with The Independent, sign up for daily news emails
Voices
Homeless Veterans charity auction: Cook with Angela Hartnett and Neil Borthwick at Merchants Tavern
charity appealTime is running out to secure your favourite lot as our auction closes at 2pm tomorrow
Arts and Entertainment
J Jefferson Farjeon at home in 1953
booksBooksellers say readers are turning away from modern thrillers and back to golden age of crime writing
Sport
Amir Khan is engaged in a broader battle than attempting to win a fight with Floyd Mayweather
boxing Exclusive: Amir Khan reveals plans to travel to Pakistan
News
Stacey Dooley was the only woman to be nominated in last month’s Grierson awards
mediaClare Balding and Davina McCall among those overlooked for Grierson awards
PROMOTED VIDEO
Voices
Joseph Kynaston Reeves arguing with Russell Brand outside the RBS’s London offices on Friday
voicesDJ Taylor: The great tradition of St Paul and Zola reached its nadir with a worker's rant to Russell Brand
News
Twitchers see things differently, depending on their gender
scienceNew study shows that birdwatching men have a lot in common with their feathered friends...
News
i100
Arts and Entertainment
Caroline Flack became the tenth winner of Strictly Come Dancing
tvReview: 'Absolutely phenomenal' Xtra Factor presenter wins Strictly Come Dancing final
Life and Style
A still from the 1939 film version of Margaret Mitchell's 'Gone with the Wind'
life
News
Xander van der Burgt, at the Royal Botanic Gardens, Kew
scienceA Kew Gardens botanist has found 25 new large tree species - and he's sure there are more out there
Arts and Entertainment
British actor Idris Elba is also a DJ and rapper who played Ibiza last summer
film
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Carlton Senior Appointments: Private Banking Manager - Intl Bank - Los Angeles

$200 - $350 per annum: Carlton Senior Appointments: Managing Producer – Office...

Carlton Senior Appointments: San Fran - Investment Advisor – Ind Advisory Firm

$125 - $225 per annum: Carlton Senior Appointments: San Fran - Investment Advi...

Sheridan Maine: Commercial Finance Manager

Up to £70,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...

Sheridan Maine: Regulatory Reporting Accountant

Up to £65,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...

Day In a Page

The week Hollywood got scared and had to grow up a bit

The week Hollywood got scared and had to grow up a bit

Sony suffered a chorus of disapproval after it withdrew 'The Interview', but it's not too late for it to take a stand, says Joan Smith
From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?

Panto dames: before and after

From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?
Thirties murder mystery novel is surprise runaway Christmas hit

Thirties murder mystery novel is surprise runaway Christmas hit

Booksellers say readers are turning away from dark modern thrillers and back to the golden age of crime writing
Anne-Marie Huby: 'Charities deserve the best,' says founder of JustGiving

Anne-Marie Huby: 'Charities deserve the best'

Ten million of us have used the JustGiving website to donate to good causes. Its co-founder says that being dynamic is as important as being kind
The botanist who hunts for giant trees at Kew Gardens

The man who hunts giants

A Kew Gardens botanist has found 25 new large tree species - and he's sure there are more out there
The 12 ways of Christmas: Spare a thought for those who will be working to keep others safe during the festive season

The 12 ways of Christmas

We speak to a dozen people who will be working to keep others safe, happy and healthy over the holidays
Birdwatching men have a lot in common with their feathered friends, new study shows

The male exhibits strange behaviour

A new study shows that birdwatching men have a lot in common with their feathered friends...
Diaries of Evelyn Waugh, Virginia Woolf and Noël Coward reveal how they coped with the December blues

Famous diaries: Christmas week in history

Noël Coward parties into the night, Alan Clark bemoans the cost of servants, Evelyn Waugh ponders his drinking…
From noble to narky, the fall of the open letter

From noble to narky, the fall of the open letter

The great tradition of St Paul and Zola reached its nadir with a hungry worker's rant to Russell Brand, says DJ Taylor
A Christmas ghost story by Alison Moore: A prodigal daughter has a breakthrough

A Christmas ghost story by Alison Moore

The story was published earlier this month in 'Poor Souls' Light: Seven Curious Tales'
Marian Keyes: The author on her pre-approved Christmas, true love's parking implications and living in the moment

Marian Keyes

The author on her pre-approved Christmas, true love's parking implications and living in the moment
Bill Granger recipes: Our chef creates an Italian-inspired fish feast for Christmas Eve

Bill Granger's Christmas Eve fish feast

Bill's Italian friends introduced him to the Roman Catholic custom of a lavish fish supper on Christmas Eve. Here, he gives the tradition his own spin…
Liverpool vs Arsenal: Brendan Rodgers is fighting for his reputation

Rodgers fights for his reputation

Liverpool manager tries to stay on his feet despite waves of criticism
Amir Khan: 'The Taliban can threaten me but I must speak out... innocent kids, killed over nothing. It’s sick in the mind'

Amir Khan attacks the Taliban

'They can threaten me but I must speak out... innocent kids, killed over nothing. It’s sick in the mind'
Michael Calvin: Sepp Blatter is my man of the year in sport. Bring on 2015, quick

Michael Calvin's Last Word

Sepp Blatter is my man of the year in sport. Bring on 2015, quick