Global expansion makes Coventry black cab makers more secure
Anyone hailing a taxi in the Middle East, Africa, Scandinavia and all points east and west in Europe in the near future are likely to find a very familiar-looking vehicle pulling up at the kerb.
In fact it will be one of the most famous in the world, their own version of the famous London “black cab”.
It won’t have been built in Coventry, where Carbodies and its descendent companies have been making them for well over half a century.
It will have rolled off an assembly line in Shanghai where today’s black cab builder, London Taxis International, part of the Manganese Bronze group, has a joint venture with Chinese automotive company Geely.
So, while the Chinese have come to Birmingham to make MGs, LTI has gone to Shanghai to make cabs.
In a way, it’s a shame that the black cab has become so associated with London - it’s not as though they’re not out on the roads in their hundreds in other UK cities.
However, along with red double-decker buses (until Ken Livingstone killed off the Routemaster after saying anyone would be mad to want to) they’ve become a stock image of the capital for billions of people throughout the world.
On a purely business level, LTI’s move into China looks like being one of the shrewdest moves by a British manufacturer for many a year.
Shanghai’s lower cost base and its higher volumes means that LTI can now attack international markets that otherwise would have remained closed to it, constrained as it is by its UK base.
Were the company to be relying still on its home market its prospects would look very insecure. Not least because those famously talkative London cabbies are getting an earful of doom and gloom every time they pick up a fare in the City.
So if the suite in the back things are bad, they reckon, this is no time to be signing up for another five years’ worth of credit to get a new cab.
And that translate into a lower line rate back at Coventry.
But in Shanghai it’s very different. From an initial base of 500 units, the order bank has now grown to more than 6,000 with demand growing in 11 countries.
Which is precisely what an automotive manufacturer needs in today’s see-saw global economy. It innoculates LTI from an otherwise potentially lethal virus in its core market.
Land Rover has the comfort of selling into more than 160 countries while Jaguar is expanding its export base. It’s the same story for Mini, Toyota, Honda and Nissan in the UK. Even LDV is getting in on the act. It’s Russian owner, Gaz, understands the potential of the Birmingham-built Maxus and plans using it to attack markets in eastern Europe.
Needless to say, there’s a price to be paid for such geographical diversity. LTI will be shipping Chinese components into Coventry in order to cut its UK procurement costs and that will undoubtedly make some UK suppliers sore.
Which is will probably be the reaction in Russia when LDV’s UK supply base starts shipping parts to Nizhny Novgorod where Maxus will be built.
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