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?"