Manganese Bronze announces 37 per cent drop in sales
The manufacturer of London black cabs – now becoming almost as famous on the streets of Beijing as they are in the UK – has reported vehicle sales down by more than a third as a result of the economic uncertainty.
Coventry-based Manganese Bronze (MNGS), parent of London Taxis International, sold 1,628 vehicles in the first nine months of the year, compared with a near-record figure of 2,604 a year earlier.
I said it had cut costs in order to achieve a 15 per cent reduction in its manufacturing break-even level, at approximately 2,000 vehicles a year.
“The UK market place remains challenging and the board does not expect that UK sales will exceed the manufacturing break-even point in 2008,” the group said in a statement.
Investors reacted badly and shares closed down more than 10 per cent at 151p.
The update came as the company said it had completed work on 400 TX4 vehicles recalled following 12 cases of under-bonnet fires. A further 600 vehicles are off the road awaiting rework, while an additional 4,400 operational cabs are expected to be seen before the end of February.
Manganese said last month it expected the cost of the recall to be around £4 million. The company is in discussions with its insurers and relevant suppliers to pin down the liability for the problem and recover some of its costs. But it could face an extra bill for driver compensation during the period the vehicles were off the road, the firm added.
As well as the 37 per cent drop in nine month sales, Manganese said it expected that demand for new vehicles in the second half of the year would follow normal seasonal patterns and be below that of the first half.
It added: “UK business conditions continue to be uncertain, which makes forecasting the level of demand for new vehicles more challenging.”
The company said that earnings will also be impacted by the strength of the euro, which will increase the cost of engines purchased from Italy.
LTI has also struck a deal with Chinese carmaker Geely Automobile to manufacture the vehicles at a plant in Shanghai. By the end of the year the joint venture is expected to be producing around 2,000 of the iconic cabs.
Manganese Bronze said advance orders for the international variant of the TXF cab are flooding in.