London Taxi’s should now be renamed Hangzhou Cabs

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Late last night it was announced that the UK’s famed LTI taxi making company had finally come under Chinese control. Previously the owners of LTI, Magneze Bronze set up a joint venture between Geely and LTI to start production of the famous black cab in the Chinese market place which would then have been exported to other Asian markets. Due to poor sales in 2009 and 2008 LTI was running on bare minimum of cash inflow which lead to them visiting Geely cap in hand on several occasions to sell out ever increasing amounts of stock in exchange for cash flow. Geely being the new cash rich automaker on the block was only too happy to oblige, and has now added LTI to the list of its recent acquisitions which include DSI Transmissions, and Volvo.

From the Times Online:

Mini and Rolls-Royce are now German, Jaguar Land Rover is Indian, Aston Martin is Middle Eastern. In a few weeks’ time, Manganese Bronze, the owner of London Taxis International (LTI) and the maker of the latest model, the TX4, will be Chinese. The alternative may have been corporate failure.

Manganese Bronze has said that it will issue enough shares to Geely Automobile of Shanghai to give the Chinese 51 per cent control of the company. The shares are being issued at 70p each, to raise £14 million to pay down debt and inject working capital — an 18 per cent discount to the prevailing share price of 85½p, Minority shareholders who might think this a capitulation will be able to do little about it. Manganese is switching its London-listing to the lightly regulated AIM market where rules allow such a manoeuvre.

Manganese will still need the support of investors speaking for more than 50 per cent of its shares to make the move to AIM at a special meeting. That is in the bag.

John Russell, the chief executive of Manganese, said that the company had little alternative: “To compete in the low-cost taxi market we have had to source our parts from China.” The cuts at LTI’s Coventry factory mean that apart from the exhaust, the entire taxi is now made in China. The latest 60 job cuts leave just 120 people assembling the vehicles.

Manganese’s most recent results show the company has accumulated £21 million of losses on annual sales of £73 million. Taxi sales are down by a third in two years. The new six-seater Mercedes Benz Vito Taxi has eaten into the market and accounted for nearly a quarter of new black cab sales last year. The fears are that LTI will in time leave Coventry for good.

Middle England used to be quite the hub of automotive production, however in the past five years it appears that majority of it has been ‘lift and shifted’ to China, some of the more memorable causalities would have been: MG-Rover, Lawrence Automotive, LDV and now LTI.