December 24, 2009
Manganese Bronze Holdings PLC announced a pre-tax loss of more than £600,000 for the six months to June.
Parent company of taxi assembler LTI, Manganese Bronze – whose largest share holder is Chinese car maker Geely automotive – blamed the loss on slower UK sales demand as a result of the recession.
From Coventry to Shanghai?
Weak sales and over production have already resulted in short-time working at LTI’s Coventry base. This slow-down in output helped reduce overall stock holding, though this is still high, standing at £23 million. As a result the company also announced a further planned shutdown later in the year.
At the same time as cutting back production in the UK, LTI bosses announced that they are continuing to source more and more parts from China, as well as starting TX4 production there too.
Bonfire of the Dealers
In a further attempt to cut costs, LTI also announced that it is to terminate all of its independent dealers around the UK. The dealers are understood to be angry and upset at being dumped after what they describe as decades of loyal service, defending LTI’s product failings on the front line.
This has included facing the flack for the ill-fated TXII and the expensive TX4 recall, following a spate of under-bonnet fires. This recall process continued to prove a further drain on LTI finances.
Ironically one bright spot has been strong parts sales – not necessarily such good news for thousands of customers striving to keep their cabs on the road.
Commenting on the results, John Russell, Group Chief Executive, said: “UK sales performance continues to be challenging as driver’s confidence to commit to the purchase of a new taxi remains weak due to uncertainty about the general state of the economy”.
The underlying position is likely to be even more worrying for LTI. Despite a capital injection of £9.4 million, net debt only reduced by £3.6m, implying cash leakage in six months of £5.8 million.
The company also now faces leakage of sales in London to a new Mercedes cab. It also fears losing its remaining lucrative monopoly markets in the wake of a new High Court ruling against use of the ‘turning circle’ as a justification for restraint of trade.